Australian Vintage Ltd

Higher dividend as bottom line improves: Australian Vintage Ltd posted encouraging numbers in FY18 as revenue came in at $264.6 mn. Net debt for the company is reduced to $77.2 mn in FY18, compared to $82.8 mn in June 2017. Australian Vintage posted Net Profit after tax at $7.7 mn compared to $4.3 mn in pcp. The company’s strategy of focusing on three core brands – McGuian, Tempus Two and Nepenthe has paid off with each brand contributing significantly in the topline numbers. The company declared a fully franked dividend of 1.5 cents per share and this will be paid on 9^th November 2018. AVG has been a consistent dividend payer with annual dividend yield of 2.59%. The company has the five-year average payout ratio of 52.22%.


4-year Dividend History (Source: ASX)

Going forward, the company continues to focus on 3 key strategies, i.e. Growth in export business, increased branded sales and focus on cost control. Moreover, major brands of the company continue to thrive with sales of McGuian brand gone up 12%; and premium brand, Tempus Two registered the growth of 46%. Region wise also company witnessed growth in the United Kingdom, Canada and New Zealand with United States being an exception as the region registered a decline of 8% in exports. Recently, Renaissance Smaller Companies Pty Ltd has increased its stake and therefore voting rights have gone up 7.42%.

Stock Performance: Stock has generated positive year to date return of 26.09% and continues the upward momentum. Post good results, profit booking was witnessed in the stock, but the price has rebounded from the support level and continues to move northwards. We believe that the mix of winning strategy, uptick in demand from China and growing export levels would enable good quarters ahead which would translate into consistent dividend to the shareholders. We maintain our “Speculative Buy” recommendation on the stock at the current market price of $0.58.
 

Money3 Corporation Limited

Capitalizing on opportunities: Money3 Corporation Limited (ASX: MNY) has maintained its dividend payout in line with the higher revenue in FY18. The revenue for the company came in at $121.9 mn compared to $109.6 mn. Net Profit after tax also saw an uptick of 10.1% to $32.0 mn in FY18 against $29.1 mn in FY17. Money3 Corporation recorded earnings per share for FY18 at 19.91 cents per share compared to 18.81 cents per share in FY17. The company has declared final FY18 dividend of 5.00 cents per share, fully franked, taking full year dividend to 9.50 cents fully franked. Annual dividend yield stands at 4.63% with the five-year average payout ratio of 43.19%.


5-year Dividend History (Source: ASX)

The company is keen to capitalize on the huge Australian automotive market with over $80 bn in vehicle sales annually. As the number of vehicles increase, so would be the financing offering direct benefit to the company. As of now, Money3 has achieved 2% of its target market. The company has also witnessed an increase of 12.8% in Gross Loans Receivables to $308.1 mn.


Gross Loans Receivable $m (Source: Company Reports)

Stock Performance: Stock has performed well on YTD basis generating return of 22.75% and positive momentum. The stock has been a consistent value creator for the shareholders, and given the trend we believe that this would continue as the company seizes the right opportunity, registers growth in loan book which is a leading indicator of revenue going forward and increases its share in the thriving automotive industry in Australia. The company looks poised to grow which would in turn increase the shareholders value in the form of dividend and stock performance. We have a “Hold” on the stock at the current price of $ 2.000.
 

Paragon Care Ltd

Healthy financials: Paragon Care Ltd (ASX: PGC) has witnessed a transformation year posting revenue of $136.7 mn, up 17% from $117.2 mn posted in FY17. The company witnessed growth in both top and bottom line numbers with Net profit after tax coming in at $10.9 mn, uptick of 7% from FY17 NPAT of $10.2 mn. Sound financials have reflected in the bottom line numbers with Earnings per share at 5.4 cents per share. In line with its higher profit and cash balance, the company has declared fully franked, final dividend of 2.0 cents per share, payable on 12^th October 2018 in respect of FY18. This final dividend combined with the half year dividend of 1.1 cents per share would take the full year dividend for FY18 to 3.1 cents per share, an increase of 3% from FY17.  The company is a consistent dividend payer with the annual dividend yield of 4.22% and 5 average payout ratio of 59.74%. The average payout ratio is on at the higher end as per company’s dividend payment policy.


5-Year Dividend History (Source: ASX)

The stock performance has been sluggish with year to date return of -8.15% with the major fall coming over past two months.  The downside in the stock however looks limited now as indicated by strength indicators, as it bounced back from its oversold signal line. Going forward the company is determined to expand its footprints in South Australia, New Zealand and Queensland, offering entire Paragon Care Suit. Paragon has a growing health care sector in Australia ahead of it and as the company continues its efforts towards expansion of hospital, aged care and allied health and medical facilities, higher revenue is expected to be realized. Based on the foregoing, we give a “Speculative Buy” recommendation on the stock at the current price of $ 0.725.

 
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