Baby Bunting Group Limited (ASX: BBN)

BBN Details

Increase in Operating Expenses in 2018: As per the March quarter rebalance of S&P/ASX indices, BBN has been removed from S&P/ASX 300 Index effective from March 19, 2018. The Group released its first half yearly results for 2018 and reported a net profit after tax of $3.5 million (for 27 weeks to 31 December 17).  The pro forma EBITDA was $8.4 million which was down by 19.2 per cent for the period (27 weeks) as compared to the same period in the prior year. Total comparable store sales for the half declined by 1.7 per cent against the prior corresponding trading period. Comparable store sales growth for the first 6 weeks of 2HFY18 was 4.5 per cent with comparable store sales degrowth at -0.5 per cent for year-to-date till 11 February 18.
 

Operating Expenses Trend (Source: Company Reports)
 
There were also some supply issues which were related to the car seat, baby carrier and toy categories, and these negatively impacted comparable store sales. On the other hand, investment in new stores is growing the market share of the Company. The Board declared an interim fully franked dividend of 2.8 cents per share (being 100 per cent of 1H of earning per share). It expects that investment in operational expenditure for the full year will be around $1.5 million. The stock was down by 29.89 per cent in the past six months and by 9.47 per cent in the past one month. Despite of the dip, the stock looks “Expensive” at the current market price of $1.270, given the challenging conditions and rising competition.
 

BBN Daily Chart (Source: Thomson Reuters)
 

Australian Finance Group Limited (ASX: AFG)

AFG Details

Strong organic growth and cash flow generation: With evolving nature of the lending industry, AFG has gradually gained attention from many lenders and broking groups, and with non-major market share being above 37% of AFG’s flows, the group has a zone of opportunities. AFG’s first half results for 2018 supported the scenario and entailed an underlying NPAT of $14.4 million which represents an increase of 11 per cent on the same period of the prior year. AFG Home Loans continued to deliver positive financial growth and the settlements grew by 31 per cent and amounted to $1.62 billion. The strong organic growth and cash flow generation of the business allowed AFG to pay a Special Dividend of 12 cents per share. Company’s lack of debt continued and allowed it to take the advantage of merger and acquisition opportunities without any significant strain on its balance sheet. AFG continued to evaluate financially material strategic opportunities. Its commercial broking platform, AFG Business was launched towards the end of Q2FY18 to select a group of AFG brokers with commercial mortgage products.
 

Dividend Growth Trend (Source: Company Reports)
 
ROE in 2017 was 39.9 per cent against 2016 figure of 28.2 per cent. Commonwealth Bank of Australia, a substantial holder of the Group has also increased its holdings to 15,610,903 securities with 8.51 per cent of the voting power since 29 March 18. However, the market volatility led the stock price tumble by 12.7 per cent in the last one month. Given the potential, we recommend to “Buy” the stock at the current market price of $ 1.445.
 

AFG Daily Chart (Source: Thomson Reuters)
 

Cedar Woods Properties Limited (ASX: CWP)

CWP Details

Decent growth outlook: The Group announced a $35 million of temporary increase in its corporate finance facility to facilitate the completion of Target Australia’s new headquarters at Williams Landing in Victoria. The increase in the facility will remain in place until the sale of the completed project is settled which is expected to happen in mid FY19. ANZ and Bank of Western Australia are providing the corporate facility on a joint basis. This increase in the corporate facility will help the Company in funding of its existing operations, ongoing development and for future acquisitions.
 

Dividend Growth Trend (Source: Company Reports)
 
Meanwhile, Minister of Planning announced that WA Government will not support the rezoning of the Mangles Bay Project under the Metropolitan Regional Scheme, and therefore CWP reported to not proceed on the project and any cost not recovered on the project will be recognised as impairment in FY18 result. On the other hand, the profit for first half of 2018 was reported at $3.22 million which was in line with the guidance and up by 6.5 per cent as compared to 1HFY17. The Net Bank Debt to Equity is now expected to fall to the lower end of its target range by 30 June 18. The stock price was up by 19.35 per cent in the past six months and is inching towards its 52-week high level. We give a “Hold” recommendation on this real estate stock at the current market price of $ 6.280.
 

CWP Daily Chart (Source: Thomson Reuters)
 

Villa World Limited (ASX: VLW)

VLW Details

Targeting consistent performance: The Group made a Club Financing Arrangement of $190 million with Australian and New Zealand Banking Group Limited (ANZ) and with Westpac Banking Corporation (Westpac) which will help the Company to fund its core business. The Group got an extension of the maturity date for $50 million of the Westpac facility till March 2021 and for a $10 million component of the ANZ facility till October 2020. On the other hand, 2017 ROE was quite decent at 14.4 per cent and percentage of debt in total capital employed was 22.1 per cent in 2017 against 35.2 per cent in 2016. While 1H FY18 profit was low (though within guidance provided), the Company has delivered a cumulative EPS growth of 14.3 per cent over the period FY14-FY17.
 

Financial Performance (Source: Company Reports)
 
The Board declared fully franked interim dividend of 8.0 cents per share and this was paid on 29 March 18. VLW further targets at least 10 per cent of NPAT growth in FY18. We recommend to “Hold” the stock at the current market price of $ 2.440.
 

VLW Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.