Stocks’ Details

Vocus Group Limited (ASX: VOC)

Revision of Guidance for FY18 - Vocus, a Group that is avertically integrated telecommunications provider and operates in the Australian and New Zealand markets, has witnessed a rise of 4.5% on June 14, 2018. Lately, the group dropped the plan of divesting its NZ business as it was realised by the Group thatit is in the best interests of its shareholders to retain the Vocus New Zealand business and due to which it ceased all discussions with interested parties in the sale process. The Group’s lending syndicate agreed to amend its covenants under the existing debt facilities by extending the ‘surge limit’ relating to its Net Leverage Ratio cap of 3.5x. Vocus otherwise continued to progress towards its facility of refinancing plans and is in the process of finalising its appointment of several banks as joint Mandated Lead Arranger and Bookrunners which will enable the Group to refinance its debt facilities completely.Deutsche Bank AG ceased to be the substantial holder of the Group since 30 May 2018. There were also some management changes in the Company like Kevin Russell was appointed as Group’s Managing Director & CEO and in addition to that Mark Callander, CEO of Vocus New Zealand, also joined the Vocus Board on 28 May as an Executive Director.


Half year Revenue Bridge from FY17 to FY18 (Source: Company Reports)

The Group expects that its Net Leverage Ratio will peak in H1FY19 based on expected cash flows, including the final ASC project payment in H1 FY19. On the other hand, the Group downgraded its earnings guidance for the full year with Underlying EBITDA now expected to be in the range of $365-380 million (from previous guidance of $370 - $390 million) on revenue in the range of $1.9-2 billion (unchanged). It is worth noting that about 0.44 per cent of issued capital was reported as short sold (as per update for 12 June 2018). The stock prices have declined in the last six months by 21.2 per cent and by 17.7 per cent in past one month as on 13 June 2018. We recommend to “Hold” the stock at the current market price of $2.33 due to the negative market sentiments and overall outlook.
 

Praemium Limited (ASX: PPS)

Growth of Managed Accounts - Praemium, a global leader in the provision of investment administration services, has separately managed Account (SMA) that provides financial planning technology platform. The Group recently agreed to the terms with Morgan Stanley Wealth Management Australia so that it can broaden its longstanding relationship to include Managed Accounts. The Group’s market-leading SMA technology will provide a completely automated Managed Accounts investment solution that will supplement its existing performance and tax reporting services that Group has been providing to Morgan Stanley since 2005. This partnership with Morgan Stanley which has also included its Managed Accounts technology was a tremendous validation of the robustness of its technology and the breadth of its offering that it continues to attract such high-calibre institutional clients. This factor of fulfilling the unique needs of institutional clients in a timely and efficient manner sets the Group apart from its peers. This move affirmed its position as the leading Managed Accounts provider in Australia. Despite an increase in investor uncertainty, the Group reported that its asset inflows held up and the overall FUA increased by 5 per cent in March quarter over the December quarter. The stock was up by 51 per cent in the past six months and has rallied 1350 per cent up in last 5 years. We give a “Hold” recommendation at the current market price of $ 0.875.


Product Revenue Growth (Source: Company Reports)
 

Panoramic Resources Limited (ASX: PAN)

Trading at higher levels – Down 5.2% on June 14, 2018, Panoramic Resources Limited, a Western Australian mining company whose main purpose is developing the Savannah Nickel Project in the East Kimberley, has otherwise demonstrated excellent potential for mine life extension through its exploration success. The Group released a Feasibility study regarding its Savannah Project and demonstrated that it is a financially robust project with a long mine life, modest pre-production capital and competitive operating cash costs. The Company secured funding in February 2018 amounting to $19.9 million (after costs) via an Entitlement Offer to progress critical-path pre-production activities at the Savannah Project. It was driven due to the result of the positive feasibility study of its Savannah Project, and improvement in commodity prices along with the positive demand outlook from Electric Vehicle (EV) battery metals, especially for nickel and cobalt. 


Group Cash Movement from 1 January 2018 to 31 March 2018 (Source: Company Reports)

The Company will re-start its operations at Savannah in a short time frame once the decision is made, and this comes after the group’s call on putting the mine on maintenance in 2015 with collapse in nickel prices. The Company allocated about $4 million that was collected from the Entitlement Offer towards Company’s exploration and business development initiatives. The ROE was recorded at (0.3 per cent) in December 2016 and (5.1 per cent) in December 2017, which is not a positive sign. In past one year, the stock moved in an upward direction (up by 232.3 per cent) and jumped up over 7 per cent as on 13 June 2018. Despite the recent fall, the stock looks “Expensive” at the current market price of $0.635 as it is trading near its 52-week high level.

 
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