Stocks’ Details

WAM Capital Limited

Decent Portfolio Attaining Growth: WAM Capital Limited (ASX: WAM) is one of the leading investment companies in Australia, which is managed by Wilson Asset Management. The market capitalisation of the company stood at $1.55 Bn as on 16 September 2020.

Investment Performance Supported by Technology and Medical Company: Since Inception in August 2020, WAM capital investment portfolio managed to deliver a return of 16.1% per annum. Also, the portfolio’s performance in August 2020 was supported by its holdings in communication technology company Codan (ASX: CDA) and medical imaging service company Integral Diagnostics (ASX: IDX).

Portfolio (Source: Company Reports)

Investment Approach Underpinned Portfolio Growth: During the highly volatile FY20, the investment portfolio outperformed S&P/ASX200 All Ordinaries Accumulation Index by 4.4% supported by the company’s diligent and proven investment approach, which focuses on identifying undervalued growth companies. The company recorded an operating loss after tax of $26.7 million because of a fall of 2.8% in the investment portfolio during the year. WAM declared a full franked final dividend of 7.75 cents per share, which took the full-year dividend to 15.5 cents per share. During FY21, the company’s ability to pay dividends is dependent on driving additional profit reserves and franking credits.

Stock Recommendation: At the end of August 2020, the net tangible assets per share after tax of the company stood at 179.43 cents. In the past one and three months, the stock of WAM has provided returns of 4.93% and 14.52%, respectively. On TTM basis, the stock is trading at a price to book value multiple of 1.3x as compared to the industry average (Financial) of 2.1x. On a technical front, the stock of WAM has a support level of ~$1.72 and a resistance level of ~$2.28. Therefore, considering the aforesaid fact along with the outperformance of investment portfolio and decent performance in August 2020, we give a “Hold” recommendation on the stock at the current market price of $2.130 per share on 16 September 2020.

WAM Leaders Limited

Deleveraged Balance Sheet: WAM Leaders Limited (ASX: WLE) a listed investment company with a market capitalisation of ~$916.54 Mn as on 16 September 2020.

Investment Portfolio Outperformed: Since Inception in May 2016, the investment portfolio continued its strong performance and delivered an annual return of 10.6%. In the month of August 2020, the investment portfolio increased by 2.7%, which was mainly contributed by its investment in Goodman Group (ASX: GMG) and Scentre Group (ASX: SCG). During FY20, the investment portfolio outperformed the S&P/ASX200 Accumulation Index by 10.4%  The company declared a fully franked final dividend of 3.25 cents per share, which brought the full-year dividend to 6.5 cents per share, reflecting a rise of 15% on YoY basis.

Key Metrics (Source: Company Reports)

Share Purchase Plan: On 20^th August 2020, the company announced a share purchase plan (SPP) in response to market opportunities and shareholder’s demand. Under the SPP, the company would provide shareholders with an opportunity to increase their interests in the company by up to 30,000 shares. 

Outlook: WAM Leaders Limited seems well placed to navigate the uncertainty in the retail sector as it owns its properties, providing collateral for debt facilities and the ability to sell assets if required.

Stock Recommendation: Current ratio of the company stood at 23.57x in FY20, reflecting YoY growth of 37.5%. This indicates that the company has improved its position to address its short-term obligations. The stock of WLE has provided positive returns of 12.02% and 20.10% in the past three and six months, respectively. On a technical front, the stock of WLE has a support level of ~$0.825 and a resistance level of ~$1.276. Thus, considering the decent liquidity position, growth in dividend, and share purchase plan, we give a “Hold” recommendation on the stock at the current market price of $1.175 per share, up by 0.858% on 16 September 2020.

WAM Global Limited

Decent Growth in Shareholders Returns:  WAM Global Limited (ASX: WGB) is an investment management company with global and Australian equity market expertise. The market capitalization of the company stood at $443.6Mn as on 16 September 2020. 

Operating Profit in FY20: The investment portfolio of the company has provided a return of 7.2% since inception in June 2018. The company added that the performance in August 2020 was underpinned by the US home improvement retailers Lowe’s (NYSE: LOW), European advertising company Stroer (ETR: SAX) and US financial service provider intuit (NASDAQ: INTU). During FY20, the company recorded an operating profit after tax of $5 million, which indicates the performance of the investment portfolio. In addition, the company has resolved to pay a fully franked final dividend of 4 cents per share on 30^th October 2020. This brought the full-year dividend to 7 cents per share.

Portfolio Performance (Source: Company Reports)

Stock Recommendation: The stock of WGB has provided returns of 1.95% and 8.29% in the last one and three months, respectively. In addition, the stock is inclined towards its 52-week high level of $2.350. The stock is trading at a price to book value multiple of 0.9x as compared to the industry median (Financial) of 2.1x on TTM basis. On a technical front, the stock of WGB has a support level of ~$1.421 and a resistance level of ~$2.257. Thus, in light of returns provided in the past months, the performance of investment portfolio, and dividend payment, we give a “Hold” recommendation on the stock at the current market price of $2.080 per share, down by 0.478% on 16 September 2020. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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