Tabcorp Holdings Ltd (ASX: TAH)

TAH Details

Strength lying in core wagering and media business: Tabcorp Holdings, which has been part of the racing community for more than 50 years, reported for group revenues for the three months to 30 September 2017 of $578.8 million, up 5.7% on the prior corresponding period (pcp). Wagering & Media revenues have been $481.5 million, up 4.5% while digital channel is delivering double digit growth with turnover of $1,133.3 million, up 17.0% on the pcp. The group’s Gaming Services revenue was up 47.8% at the back of the acquisition of Intecq and benefits from TGS expansion while Keno revenue was down 5.3% impacted by a strong jackpot sequence in prior corresponding period. Sun Bets’ performance was below expectations, though the revenue of $1.1 million was up 5.3% on the pcp. 

Trading Update (Source: Company Reports)
 
Further, an opex to revenue ratio of approximately 23% in 1H18 is expected by the group while it is targeting an opex to revenue ratio of approximately 22.5% for the full year (both excluding Sun Bets). Another encouraging aspect is to target a payout ratio of 90% of NPAT before significant items, amortisation of the Victorian Wagering and Betting Licence and Sun Bets for FY18.

The group has been investing in new growth opportunities for delivering long-term value for shareholders, industry partners, and government and regulatory stakeholders. The proposed merger with Tatts is also expected to provide significant value. Looking at the efforts and potential, we give a “Buy” on the stock at the current price of $4.45


TAH Daily Chart (Source: Thomson Reuters)

Macquarie Group Ltd (ASX: MQG)

MQG Details

Hitting high levels and enhanced full-year earnings guidance: Macquarie Group has reported an interim net profit of $1.25 billion that is better than the expectations, for the six months ended September 30, 2017 (1H18). The group’s reported net profit is thus up 19% over the prior corresponding period (1H17) and 7% up on 2H17. The group’s operating income has also surged 3% to $5.4 billion over the prior corresponding. The group had also reported for a 28% rise in combined net profit of $2.1 billion, for the annuity-style businesses including Macquarie Asset Management, Corporate and Asset Finance and Banking and Financial Services. On the other hand, capital markets facing businesses’ combined net profit contribution has been down 18% on 1H17. Further assets under management also slipped 2% owing to net asset realisations in Macquarie Infrastructure and real assets and currency movements.

This led the financial player announce for an enhanced full-year earnings guidance. Earlier, the 2018 earnings were said to be broadly in line with this year’s result but now the group expects a better outlook. However, 2H18 result is expected to be below that of 1H18 given recognition of substantial performance fees in 1H18. MQG is also appointing Glenn Stevens (former governor at Reserve Bank of Australia) to its board. The stock rose about 3.9% on October 27, 2017 with the positive update. Given the run-up in the stock and trading scenario, we maintain an “Expensive” recommendation at the current price of $97.91


MQG Daily Chart (Source: Thomson Reuters)

AMP Ltd (ASX: AMP)

AMP Details

Growth in loan book: AMP shares fell about 1.7% on October 27, 2017 while the group announced for a slightly better cashflows’ scenario for Q317 over Q316, which was still not much different from expectations though. AMP’s Australian wealth management (AWM) assets under management surged $211 million during the third quarter to $125.3 billion. Net cash outflows of A$243 million were below the net cash outflows of A$327m in Q3 2016, reflecting high levels of discretionary super contributions brought forward into Q2 2017 ahead of 1 July 2017 changes to non-concessional caps. The group’s loan book has grown to A$19.2bn at the end of Q3 2017 from A$18.8bn as at Q2 2017. The group had otherwise reported for NPAT loss of 15% to $445 million for the half-year ended 30 June 2017 while revenues surged 25%. However, given the limited prospects and cost efforts yet to reflect in margins, we maintain an “Expensive” recommendation at the current price of $4.96


AMP Daily Chart (Source: Thomson Reuters)

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