Dicker Data Limited (ASX: DDR)

DDR Details

Profit tracking as per forecast - Dicker Data is a leading Value-Added Distributor, working in close partnership with its vendors to deliver their technologies into the corporate and SMB market channels. The Group continued its recent pattern of growth in 2017 by maintaining revenue growth across all business sectors and geographies. A total of 18 new vendors were added during the year that accounted for an incremental $86 million in revenue and it was noted that revenue increased by 10.2 per cent which was just ahead of guidance. The company continued to reduce its working capital and debt requirements that resulted in further improvements in the company’s balance sheet leverage. It was noted that total dividend paid during the year amounted to $26.3 million or 16.4cps, an increase of 5.5 per cent on FY16. Net profit after tax for FY17 increased by 5.1 per cent which included tax expense that was under objection with the ATO and Net Profit ($6.5 million) for 1QFY18 increased by 26.1 per cent as compared to 1QFY17. Revenue for 1QFY18 increased by 14.4 per cent as compared to corresponding period in the prior year and amounted to $319.6 million.


YTD Profit Before Tax Trend (Source: Company Reports)

Current Debt reduced from $75.0 million as on 31 December 2016 to $55.0 million as on 31 December 2017 and this resulted in an improvement in Debt to Equity leverage ratio from 1.54x to 1.26x. But Current debt has increased from $55.0 million to $82.0 million as on 31 March 2018. Net Tangible Assets improved from $43.5 million (December 2016) to $45.7 million (December 2017) during the year. The Group expects that Revenue and Net Profit Before Tax for FY18 will be $1.39 billion and $42.5 million, respectively. The growth in the Australian business is expected to be achieved through organic growth and full year contribution from new vendors. In FY18, the company intends to continue to streamline its dividend payment policy by paying the interim dividends in equal quarterly instalments of 4.4 cps per quarter and Board will pay its first interim dividend for FY18 on 1 June 2018. The stock was up by 26.27 per cent in one year and by 7.19 per cent in last three months. The stock price rose up by 2.05 per cent in last five days. We maintain our “Hold” recommendation on the stock at the current market price of $ 2.96 by looking at the overall performance and current IT landscape which is going through a major transformation and is evolving faster than ever.
 

DDR Daily Chart (Source: Thomson Reuters)
 

National Storage REIT (ASX: NSR)

NSR Details

Continuous Improvement in Organic Growth - National Storage is one of the largest self-storage providers in Australia and New Zealand that provides tailored storage solutions and recently it completed the acquisition of or entered into arrangements to acquire eight quality self-storage assets in Australia and New Zealand. The acquisitions in Australia amounted to approximately $33 million and comprised five centres in Townsville, Queensland and one centre in Mornington, Victoria and while the New Zealand acquisitions were in Ngauranga, Wellington and Te Rapa, Hamilton and amounted to approximately NZD $21 million. This transaction will be funded out of NSR’s existing debt facility. This kind of acquisition reflects the Group’s intention to build its presence in major metropolitan and regional markets by generating economies of scale and operational efficiencies from the National Storage operating platform.


Underlying EPS Guidance (Source: Company Reports)

Meanwhile, BlackRock Group, a substantial holder of the Group changed its substantial holding on 3 May 2018 and initially it was holding 7.82 per cent of the voting power and now it holds 6.78 per cent of the voting power in the Company. Throughout FY18, the Group will be focused on continuing to leverage its operating platform via a number of new initiatives, including further process automation and sustainability measures. The Group affirmed its FY18 Distribution Guidance of 9.6-10.1 cps and underlying earnings guidance of $51.5 million to $54.2 million, assuming no material changes in market conditions. The stock is trading at a current dividend yield of 5.83 per cent. Moreover, the Group paid a dividend of 4.7 cps that was previously declared on 13 December 2017 and paid on 26 February 2018. A strong development pipeline of eleven new developments and a number of new expansions will underpin this continued growth by providing important additional capacity for future portfolio growth. The stock price was down by 2.45 per cent in last six months but recovered in last five days and climbed up by 2.57 per cent. We give a “Hold” recommendation at the current market price of $1.595 by looking at the Company’s expansion plans and continuous demand for its storage facilities.
 

NSR Daily Chart (Source: Thomson Reuters)
 

Rural Funds Group (ASX: RFF)

RFF Details

Expansion through acquisitions - RFF owns a diversified portfolio of high quality Australian agricultural assets and its investment objective is to generate a stable income stream derived from leasing its assets to suitable counterparts and capital growth through any appreciation in the value of those assets. Recently, Rural Funds Management Limited (RFM), as responsible entity and manager for the Rural Funds Group (RFF), entered into a contract to acquire Comanche, a 7,600-hectare cattle property located in central Queensland for a consideration of $15.7 million which will be debt funded. The Group’s bank facility provides access to $50 million in funding the current facility limit of $275 million and it is expected that transaction will be settled in July 2018. The property offers opportunities for productivity enhancements similar to those proven on Rewan – a central Queensland cattle property that was acquired by RFF in July 2016. This acquisition supports RFM’s strategy to acquire assets where productivity can be improved with the help of an increase in capital value and rental income.


Adjusted Property Assets Movement (Source: Company Reports)

The Group issued 371,850 Units for a purchase price of $2.15 per Unit under the RFF Distribution Reinvestment Plan. RFM will seek acquisition opportunities in both infrastructure and natural resource predominant assets and RFM reaffirmed FY18 Adjusted funds from operations (AFFO) and distribution forecasts of 12.7 cpu and 10.03 cpu, respectively, and the Group forecasted FY19 distribution that amounted to 10.43 cpu which represents a 4 per cent increase on FY18. Many of the properties of the Group were rented out to some of Australia’s biggest producers and exporters and it is expected that they will remain tenants for decades. The stock has been falling in the last six months and was down by 10.88 per cent and declined marginally in last five days. It’s better to “Hold” the stock at the current market price of $2.13 as it is expected that the stock will grow its earnings based on its rental contracts.
 

RFF Daily Chart (Source: Thomson Reuters)
 

Money3 Corporation Limited (ASX: MNY)

MNY Details

Growth in Company’s Loan Book -Money3 Corporation is a credit provider thatspecializes in the delivery of secured and unsecured personal loans and itsBroker division was on track and recorded a number of settlements in May 2018. Its investment in Bundoora contact centre solution and additional seat capacity is on track for completion by the end of FY18. Its’ completed integration with broker CRM resulted in productivity and application growth. It started building momentum and now Website and Broker applications are now on track and exceed 70,000 in number. Basis EPS as on 30 April 2018 (YTD) amounted to 16.20 cents per share and increased by 9.8 per cent as compared to the same period in the prior year; and whereas the group reported an increase of 12.7 per cent in NPAT as on April 2018 (YTD) and the same amounted to $25.7 million as compared to same period in the prior year.


Gross Loan Book Growth (Source: Company Reports)

Its lending momentum is building up in May 2018 with a record of settlements and observed a growth of 14.1 per cent in secured automotive lending prior to additional funding facility. The Group recorded a DPS of 4.5 cents for 1HFY18. At present, the Company is providing a dividend yield of 3.96 per cent (fully-franked). Moreover, Software development between Money3 and payment gateways is driving efficiencies & improved collection outcomes. The Group expects Net Profit After Tax of $31 million for FY18. It is expected that Royal commission will likely drive greater levels of conservatism in main stream lending for personal and automotive loans which will increase Money3 market opportunity. The Group has a robust process that is compliant with current regulatory headwinds around flex commissions and which is an add on to its insurance products and interest rate caps. In one year, the stock jumped up by 40.88 per cent; and by 19.88 per cent in last six months. The stock moved up by 1.58 per cent in last 5 days. We recommend to “Hold” the stock at the current market price of $1.92 as the Company’s loan book is growing which will help earnings and dividend.
 

MNY Daily Chart (Source: Thomson Reuters)

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