WAM Global Limited

Portfolio represents decent exposure: WAM Global Limited (ASX: WGB) is engaged in the business of making investments in listed global securities. The company raised $465.5 million through IPO in June 2018 by issuing 211,607,622 fully paid shares at an issue price of $2.20 per share. The company was registered with ASIC (Australian Securities and Investments Commission) on 21 February 2018 and commenced operations on 18 June 2018.

The company recently released its shareholder presentation. The management understands that after China stimulus, the credit growth is rebounding which augurs well for exporters to China provided the trade war issue is not escalated further.

Top holdings of the portfolio by WAM Global are:


Top Holdings (Source: Company Reports)

Investment Update-April 2019: After a strong first quarter of 2019, the global equities continued to rally in April 2019. The cash weighting of the portfolio was 11.5% for WAM Global with gross assets at $478.2 million. Contributors to the investment portfolio performance during the month included CDW Corp (NASDAQ: CDW), CME Group (NASDAQ: CME) and United Technologies (NYSE: UTX).


Portfolio Composition by Geographical Exposure (source: Company Reports)
 
Financial Performance in FY18: The investment portfolio decreased 9.0% in FY18 with operating loss before tax of $45.31 million and operating loss after tax of $31.56 million. The incurred losses in FY18 were on account of unrealised gains or losses due to changes in the market value of investments and foreign currency movements during the period. Before tax NTA (net tangible assets) declined by 9.8% for FY18. Difference between the decline of investment portfolio and NTA was due to management fees of 0.6% and other company related expenses of 0.2%. The after tax NTA decreased by 6.9% for FY18 due to corporate tax benefits. The NTA before tax at the end of FY18 amounted to $1.98 per share whereas NTA after tax came in at $2.05 per share.

What to Expect: The management intends to pay a fully franked dividend to shareholders as the company has enough profit reserves and franking credits and it is within prudent business practices.

Stock Recommendation: Looking at the historical price performance, the stock has remained almost flat with a mild negative return of 0.26% on YTD basis. 52-week high and low range for the stock stands at $2.210-$1.850. It reported a TTM P/B multiple of 0.9x which is lower than the industry median of 1.2x. Further, the systemic risk due to global uncertainty exposes the portfolio to underperform which is in-line with the general trend.

However, given the quality of stocks under portfolio, positive net asset value and valuation, we give a “Buy” recommendation on the stock at the current market price of $2.00 per share (up 2.828% on 15 May 2019).

MFF Capital Investments Limited

Higher NTA at $3.144 as on 10 May 2019: MFF Capital Investments Limited (ASX: MFF) is a LIC (Listed Investment Company) with the principal activity of the investment in a minimum of twenty exchange-listed international and Australian companies.

Weekly Net Tangible Assets (NTA) Update: The company updated that its approximate weekly NTA per share as on 10 May 2019 stood at $3.144 pre-tax, as compared to $2.762 as on 30 June 2018. Post-tax NTA came in at $2.601. NTA figures were ex-dividend (1.5 cents per share fully franked, payable 17 May 2019).

1H FY 2019 Performance: MFF recorded a net loss after income tax of $12.96 million and a net loss before income tax of $18.512 million in 1H FY 2019. Performance in the first half of 2019 largely reflects mark to market reductions in the market value of the company’s portfolio as compared to a profit in 1HFY18.

The pre-tax NTA of $2.649 per ordinary share (before net tax liabilities of $0.399) as on 1H FY19 was slightly lower as compared with $2.762 per ordinary share (before net tax liabilities of $0.473) as at 30 June 2018. Post-tax NTA of $2.250 per ordinary share as on 1H FY19 was also a bit lower compared with $2.289 per ordinary share as at 30 June 2018. On 30 January 2019, the company declared a fully franked interim dividend of 1.5 cents per ordinary share for December 2018 half year, which is expected to be paid on 17 May 2019.

Holdings of the portfolio as a % of total investment assets with market values of 0.5% or more of the portfolio as on 31 December 2018 are shown in the picture below:

Holdings as at 31 December 2018 (Source: Company Reports)
 
Stock Recommendation: The stock has given a return of 11.86% in last one-year. The company invests in equities with a focus upon equities of non-Australian domiciled companies and this business strategy is expected to be continued.
Considering market prices, risks and alternatives, the management continues to have modest expectations for future investment returns in comparison with high returns achieved in past decades. Hence, we give a “Hold” recommendation on the stock at CMP of $2.860 per share (up 1.06% on May 15, 2019).
 

Spheria Emerging Companies Limited

Pre-Tax NTA at $2.137 as on 03 May 2019: Spheria Emerging Companies Limited (ASX: SEC) invests in an actively managed equities portfolio that provides exposure to Australian Small Cap Securities. The company recently updated that Pre-tax NTA and Post-tax NTA as at 3 May 2019 stood at $2.137 and $2.151, respectively.

Investment Update As At 30th April 2019: Pre-tax NTA increased 5.6% to $2.141 for April 2019 and the company has a management fee of 1% (+GST) per annum and Performance Fee of 20% (+GST) of the portfolio’s outperformance.An increase in Pre-tax NTA represented outperformance of 1.5% as compared to the S&P/ASX Small Ordinaries Accumulation Index which was up 4.1%. Top 5 holdings of the portfolio are given in the picture below:


Top 5 Holdings (Source: Company Reports)
 
1H FY19 Financial Performance: The company recorded an operating loss of $9.2 million for 1H FY19, reflecting weaker market conditions and a difficult December quarter. However, the company outperformed its benchmark by 2% during the period despite weak market conditions. NTA declined by 10.7% when adjusted for dividends paid, compared to a decrease of 12.7% in the Benchmark.

Portfolio Performance in 1H FY19: The investment portfolio declined 10.5% for 1H FY19, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 2.2%. The small-cap stocks in Australia were particularly hard hit on concerns with respect to the domestic economy.  The portfolio performed on a relative basis bolstered by takeovers of several key positions including Navitas, Trade Me, Greencross, and Sigma Health.

Outlook and Recommendation: The stock has given a negative return of 11.54% in the last 1-year. The management is satisfied with the recent performance and looking for solid long-term investment opportunities with favourable risk-reward profile. The Management believes in picking the stock with comfortable valuation while avoiding pockets of extreme over-exuberance where valuations are a matter of concern.

Hence, considering the prudent strategies adopted by the company, we give a “Speculative Buy” rating on the stock at the current market price of $1.700 per share (down 1.449% on May 15, 2019).

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.