Stocks’ Details
 

Premier Investment Limited

Half Yearly Result Review:Premier Investments Limited (ASX: PMV) was established as an investment vehicle to maximise growth in capital returns to shareholders through the acquisition of controlling or strategic shareholdings in premier Australian companies with a focus on retailing, importing and distributing. The market capitalization of the company stood at A$2.5 billion as on 12^th September 2019. The company reported a net profit after tax of $88.8 million in 1H19, up by 13% as compared to 1H18. It was stated that Apparel Brands delivered strong sales growth in 1H19 with sales up by 7.5%. Online sales were up by 35.2% to $75.7 million as compared to 1H18. The following picture provides a broader overview of apparel brands sales growth:


Apparel Brands Sales growth (Source: Company Reports)

Decent Gross Margins: Premier Retail reported a gross margin of 63% and it was stated that key long-term foreign currency hedging policies allow for long-term merchandiseplanning.Direct sourcing continued to deliver benefits from new and existing suppliers. By investing in better merchants and delivering better products.

Focus on CODB: The Cost of Doing Business (CODB) decreased by 68 basis points as a percentage of sales to 46.3% in 1H FY19. The group continued to control costs despite structural inflationary pressure. Over the past 12 months, Premier Retail has closed 16 stores taking the total closed over the past six years to 101 stores as part of the ongoing program to close unprofitable stores.

Dividend: Due to continued strength of the Premier Balance Sheet and the strong performance of Premier Retail, the Board of Directors declared an increased record interim dividend of 33 cents per share (fully franked) up by 13.8% as compared to 1H18.

Stock Recommendation: The company produced returns of 5.03% and -6.40% in the time period of one month and three months, respectively.  Therefore, considering the above-stated facts and decent dividend-related parameters, we give a “Buy” recommendation on the stock at the current market price of A$15.900 per share (up 0.76% on 12^th September 2019).
 

Westpac Banking Corporation

Company’s CFO to Retire In 2020: Westpac Banking Corporation (ASX: WBC) is one of the leading banks in Australia and it provides broad range of consumer, business and institutional banking and wealth management services. The market capitalisation of the bank stood at ~A$103.34 billion as on 12^th September 2019. Westpac Group CEO, Mr Brian Hartzer, announced that Peter King, CFO, has decided to retire in 2020 after a career of 25 years. Mr King has been the CFO of the company since 2014 and prior to his current role was Deputy CFO.

ASIC To Appeal Westpac Responsible Lending Federal Court Decision: ASIC has filed an appeal with the Full Federal Court of Australia against the decision of the Honourable Justice Perram regarding ASIC’s allegation against Westpac for contraventions of responsible lending provisions of the National Consumer Credit Protection Act 2009.

Westpac confirmed that it had received a class action filed against its subsidiary companies, BT Funds Management Limited (BTFM) and Westpac Life Insurance Services Limited (WLIS) in relation to aspects of BTFM’s BT Super for Life cash investment option. The claim has been filed by Slater and Gordon on behalf of Ms Tracy Ghee.

Financial Highlights: WBC reported results for 1H19 in which its Statutory net profit was down by 24% to $3,173 million. Cash earnings were down by 22% to $3,296 million in 1H19. Despite the challenging period, the balance sheet remained strong across all dimensions of asset quality, capital and liquidity. While the cash earnings were lower, CET1 capital ratio of 10.64% has enabled the group to maintain its interim dividend at 94 cents per share.


 
CET1 Ratio (Source: Company Reports)

Outlook: In the release dated May 6, 2019, the bank’s key personnel stated that the houses prices are likely to remain soft and home building is set to reduce through 2019 and into 2020.System housing credit growth is expected to slow to 3% in the current bank year and 2.5% in the next year.

Stock Recommendation: The bank produced returns of 4.22% and 4.63% in the time period of one month and three months, respectively. Currently, the stock is trading close to a 52-week high level of $29.970 with PE multiple of 14.370x and an annual dividend yield of 6.35%. Hence, in view of aforesaid facts and current trading levels, we maintain our “Hold” rating on the stock at the current market price of A$29.660 per share (up 0.169% on 12^th September 2019).
  

Altium Limited

Decent Performance in FY19: Altium Limited (ASX: ALU) is into the development and sales of computer software for the design of electronic products. The market capitalisation of the company stood at A$4.75 billion as on 12^th September 2019.Altium Limited’s director named Wendy Stops has transferred some Altium stock from one personal holding to a new personal holding. There has been no change in Wendy’s total beneficial shareholding.

The company reported a decent revenue growth of 23% to US$171.8 million. The EBITDA margin stood at 36.5% in FY19 up from 32%. Altium delivered record growth in new Altium Designer seats of 27% and record growth of 13% in the subscription base to more than 43,600 subscribers.


Financial Highlights of the company (Source: Company Reports)

Dividends: The Board of Director declared an unfranked final dividend of AU 18 cents per share, with full year dividends up 26% over the previous year.The key dates for the final dividends are:

(a)  Announcement date-19^th August 2019,
(b)  Record date-4^th September 2019
(c)  Payment date-25^th September 2019.

Stock Recommendation and Outlook: The proliferation of electronics through the rise of smart connected devices continues to drive growth for the business in the foreseeable future.ALU is confident of achieving its 2020 target of US$200 million revenue and commits to a higher EBITDA margin floor of 37%. The company is anticipating reaching its halfway mark of 50,000 subscribers as early as 2020. As per ASX, the company’s stock price is trading towards its 52-week higher levels and, thus, it can be said that the stock price might witness some correction moving forward. Thus, we advise the investors to keep a close watch on the stock at the current market price of A$35.720 per share (down 1.435% on September 12, 2019) and wait for better entry levels.

 
Comparative Price Chart (Source: Thomson Reuters)

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