Stocks’ Detail
Ramsay Health Care Limited
Australian brownfield program expected to deliver $242 million in FY19:Ramsay Health Care Limited (ASX: RHC) is a healthcare company based in Sydney, Australia. It provides acute and primary health care services all over the world. The company is continuing to expand the business to meet the demand including the Australian brownfield program which is expected to deliver $242 million in completed projects in FY19. The company will be announcing its interim results on 28 February 2019 and full year results on 29 August 2019 for FY19. The company paid a dividend per share of $1.44 in FY18 which was 7.1% more than the previous year dividend and is expected to pay an interim dividend for FY19 on 29 March 2019.
FY18 Financial Highlights (Source: Company Reports)
Over the past five years,the margins of the company have declined but are still in line with the industry medians. During FY18, the company reported EBITDA and Net margin of 13.5% and 4.5% respectively as compared to the industry median of 13.4% and 3.2% respectively. Similarly, the company is generating better returns for its shareholders than its peers as its ROE of 16.8% was above the industry median of 11.9% in FY18.The asset turnover ratio of 1.04x was also above the industry median of 0.69x showing thatthe company is utilizing its assets in a better way than its peers to generate revenue.
The company has ~202.08 million shares outstanding with the market cap of ~$11.79 billion, an annualized dividend yield of 2.47% and a beta of 0.84x. During the past three months, the stock has generated a positive yield of 11.67%. Today, the stock was down by 1.217% as compared to the previous close, currently trading at the price of level $57.640. The Relative Strength Index is seen in a neutral position, and the price is currently trading near to the Simple Moving Average line of the Bollinger band. With decent margins along with higher growth potential through the Australian brownfield programs, we maintain our“Buy” recommendation on the stock at the current market price of $57.640.
Collins Foods Limited
New stores to open in FY19:Collins Foods Limited (ASX: CKF) is a food retail chain based in Australia. The company operates KFC franchisee, Taco Bell franchisee and owns Sizzler restaurants. It has entered into a Development Agreement with Taco Bell to build 50 restaurants over the next three calendar years with ten Taco Bell restaurants to be opened in the calendar year 2019. The company also plans to build six new KFC Australia restaurants and four new KFC Europe restaurants in the second half of 2019. In December 2018, the company paid an interim dividend per share of 9 cents which was 8 cents in the previous corresponding period.
1H FY19 Financial Highlights (Source: Company Reports)
Over the past five years,the margins of the company have improved but are still below the industry medians. During 1H19, the company reported EBITDA and Net margin of 13.0% and 5.2% respectively as compared to the industry median of 22.3% and 10.5% respectively. Similarly, the company is not able to generate better returns for its shareholders than its peers as its ROE of 6.4% was below the industry median of 6.6% in 1H19.But the asset turnover ratio of 0.57x was above the industry median of 0.25x showing thatthe company is utilizing its assets in a better way than its peers to generate revenue.
The company has ~116.51 million shares outstanding with the market cap of ~$708.39 million, an annualized dividend yield of 2.96% and a beta of 0.02x (5-Years, Monthly). During the past six months, the stock has generated a positive yield of 16.25%. Today, the stock was down by 0.493% as compared to the previous close, currently trading at the price of level $6.050. The Relative Strength Index is seen in a positive direction, and the price is currently trading near to the lower band of the Bollinger band. With the improving margins, better utilization of resources, increasing number of stores, and the bullish indication through charts, we maintain our“buy” recommendation on the stock at the current market price of $6.050.
Telstra Corporation Limited
Outstanding returns to shareholders:Telstra Corporation Limited (ASX: TLS) is a telecom and technology company in Australia with its presence in 20 countries all over the world. As per the updated FY19 guidance, the total income is expected to be between $26.2 to $28.1 billion, EBITDA to be between $8.7 to $9.4 billion, and no change in free cash flow. On 10 December 2018, the company secured 30-80 MHz nationwide 5G spectrum for $386 million. The company paid a dividend per share of 22 cents in FY18 and is expected to pay an interim dividend for FY19 on 29 March 2019.
FY18 Financial Highlights (Source: Company Reports)
During FY18, the company reported EBITDA margin of 28.7% which was below the industry median of 30.9%. The net margin of 13.6% was above the industry median of 10.1%.Similarly, the company is generating outstanding returns for its shareholders than its peers as its ROE of 24.1% was above the industry median of 13.2% in FY18.The asset turnover ratio of 0.61x was also above the industry median of 0.49x showing thatthe company is utilizing its assets in a better way than its peers to generate revenue.
The company has ~11.89 billion shares outstanding with the market cap of ~$34.73 billion, an annualized dividend yield of 5.14% and a beta of 0.63x. The EV/EBITDA of 5.4x, currently below the industry median multiple of 6.0x shows that the scrip is undervalued.During the past six months, the stock has generated a positive yield of 5.82%. Today, the stock was down by 0.685% as compared to the previous close, currently trading at the price of level $2.900. The Relative Strength Index is seen in a neutral position, and the price is currently trading near to the Simple Moving Average line of the Bollinger band. With better returns provided to shareholders, better utilization of resources, and lower than industry EV/EBITDA multiple, we maintain our“buy” recommendation on the stock at the current market price of $2.900.
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Stock Price Comparative Chart (Source: Thomson Reuters)
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