Stocks’ Details

Webjet Limited

Record 1H performance delivered:Webjet Limited (ASX: WEB) had lately reported its 1H 19 results. As per the release, the company reported a TTV of $1.9Bn, up 29% on pcp. This growth was underpinned by a 2% increase in B2C and a 65% increase in B2B. Also, the B2B growth for the half incorporated 6 months of Jac Travel compared to 4 months in the Prior Corresponding Period (PCP). It also posted a 42% increase in EBITDA for the 1H19 which camein at$58.0 million. This growth was achieved predominantly on the back of the WebBeds B2B segments growth. WebBeds business was driven by strong growth seen in the key European and Middle East markets, with meaningful EBITDA delivered from the Americas.
 
What to Expect from Webjet: The management has reconfirmed guidance stating that it is on track to deliver an EBITDA (excluding one-offs which are associated with DOTW acquisition) for FY19 of at least $120 million.
 

WEB’s EBITDA Growth trend (Source: Company Reports)
 
On the financial metrics front, the company is having an adjusted cash conversion for the 1HFY19 (Adjusted OCF/EBITDA) @ 95%, depicting improved working capital management & good quality earnings performance. Meanwhile, the stock price has gained by 34.95% in the past one month as at 22 February 2019. Considering the tremendous rise in EBITDA, better working capital management and decent EBITDA margin, the stock is gaining traction from the market participants. However, we presume that at the current level, the price has discounted all the positive catalysts as it trading slightly towards the higher level. Hence, we have a wait & watch stance on the stock at the current market price of $16.140 per share (up 0.248% on 25 February 2019).
 

Altium Limited

Decent Outlook, however trading at higher levels:Altium Limited (ASX: ALU), has reported its 1HY FY19 numbers. The company has achieved a product revenue growth of 24% and thus it was clocked at US$78.1 million.The Altium Board and Systems business unit revenue grew and stood at US$58.4 million with increases in all the regions. The Earnings before interest, tax, depreciation and amortization (EBITDA) grew by 49% to US$28.4 million resulting in an EBITDA margin of 36.3%. This growth was on the back of operating leverage achieved through an effective resources allocation and leveraging low-cost resources.
 
The Board has declared an unfranked interim dividend for the half year of AU 16 cents per share, a 23% increase over the interim dividend for the prior year, the record date for which shall be 4 March 2019 & payment date will be 27 March 2019.
 
What to Expect From ALU: Going further, the company is focused towards achieving PCB market leadership by 2020 and market dominance by the year 2025and also expects to achieve $200 million in revenue by 2020. The company would continue to pursue the partnership as well as M&A opportunities to support the long-term vision of creating the product design as well as realization platform that is centred around electronics.
 

ALU’s 1HY FY19 Highlights (Source: Company Reports)

Meanwhile, the stock price has risen by 63.92% over the past three months and is trading close to its 52 weeks high. The company has a trailing P/E multiple of 69.48x which seems to be exorbitant, also the stock has provided an annual dividend yield of 0.87% as compared to the industry median (software & IT Services) of 2.10%. Hence, considering that all the positive catalysts have already been priced into the current market price, we, therefore, have a watch stance on the stock at the current price juncture of $34.050 per share (down 1.646% on 25 February 2019), wait for the better entry level.
 

Automotive Holdings Group Limited

Expecting Operating NPAT in the Range of $52Mn -$56 Mn in FY19:Automotive Holdings Group Limited (ASX: AHG) had reported its results for the H1 FY19. The Operating EBITDA has fallen by 16.1% & thus came in at $93.4 million vis-à-vis $111.4 million for the pcp. The margins were impacted on account of the challenging market conditions in Automotive and Logistics sectors. The statutory IFRS EPS from continuing operations decreased to a loss of 68.0 cents per share (2017: profit of 12.3 cents per share) due to the significant impairment and unusual items totalling $249.844 million booked in 1H FY2019, plus a decrease of $17.9 million in underlying Operating non-IFRS profit after tax.
 
What to Expect From AHG: The management has advised that its forecast for full?year Operating NPAT is now in the range of $52?million to $56?million. The Refrigerated Logistics division is delivering an improved performance post the recent transformation program and the business has a strong business development pipeline. H2 performance in RL will be a substantial improvement over pcp and that will add to Group earnings momentum.
 
The management has refrained from declaring any dividends and will be focussing on its cost out program. Also, it feels that the decision to modify the dividend policy is appropriate in an environment where market conditions continue to be challenging, to provide the needed financial flexibility.
 
 

1HFY19 Financial Highlights (Source: Company Reports)
 
Besides this, the dividend yield delivered by the company is 8.53% which is marginally higher than the industry median (Specialty retailers) of 6%. In the meantime, the share has risen 4.95% in the past three months (as at 22 February 2019) and is trading below the average of 52 weeks high and low level of ~$2.63. Thus, considering the modifications done in the dividend policy & cost out program undertaken along with higher dividend yield as compared to industry median, we maintain our ‘Hold’ recommendation on the stock at the current market price of $2.030 per share (up 6.283% on 25 February 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)  
 

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