Tabcorp Holdings Limited

Highlights of Annual General Meeting:Tabcorp Holdings Limited (ASX: TAH) provides provision of gambling and other entertainment services. The company has three operating businesses units being Lotteries and Keno, Wagering and Media, and Gaming Services. The market capitalisation of the company stood at $9.82 billion as on 25^th October 2019. The company reported strong revenue growth, supported by the excellent progress in delivering the integration synergies, resulted in a profit after significant items of $362 million. The company’s digital transformation program continues at pace, with the 73% digital growth in lotteries, which was the main highlight of the year.

The Lotteries & Keno performance in FY19 was the highlight across the group, with a strong digital performance, contributing to a record results, overall. Digital, now integrated with retail, is a significant opportunity for this business, and Tabcorp’s capabilities and investment strategies are being brought to take full advantage of it. Revenues were $2.86 billion, and EBITDA was $509 million. In fact, lotteries revenues grew more in FY19 than the previous seven years, combined.

Guidance for FY20: The company is focused on completing the integration program, which is on track to deliver on the synergy and business improvement targets.Lotteries & Keno is well-positioned to grow its share of the gambling entertainment market through the continued game innovation and delivering a compelling customer experience across the retail and digital channels.
 

EBITDA Target for FY20 and FY21 (Source: Company Reports)

Stock Recommendation: As per the ASX,the stock is trading close to its 52-week high levels. The company has a price to earnings ratio of 26.970x on TTM basis, which is high as compared with the average of hotel and entertainment services’ sector of 7.8x on TTM basis. The stock has given a total return of 5.66% and -1.22% over the period of three months and six months respectively. Hence, in view of aforesaid facts and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $4.840 per share, down by 0.206% on 25^th October 2019.

 

JB HI-FI Limited

Highlights of Annual General Meeting: JB HI-FI Limited (ASX: JBH) is a specialty retailer of home consumer products with particular focus towards consumer electronics, software, whitegoods and appliances. The market capitalisation of the company stood at $4.19 billion as on 25^th October 2019. FY19 was another solid year for JB Hi-Fi Limited and its subsidiaries as the company achieved sales of $7.1 billion, up 3.5% on the prior year. EBIT was up 6.4% to $372.8 million and NPAT was up 7.1% to $249.8 million. Earnings per share was up 7.1% to 217.4 cents per share and the total dividend for FY19 was up 10 cents per share to 142 cents per share.

JB HI-FI Australia reported total sales of $4.73 billion, which grew 4.1%, with comparable sales up by 2.8%.JB Hi-Fi Solutions recorded double-digit sales growth and is on track to deliver its longer-term aspirational sales target of approximately $500 million per annum. The following picture provides a brief overview of the company’s key numbers:


FY19 Group Results (Source: Company Reports)

Guidance for FY20: In FY20, the company expects total group sales to be around $7.25 billion, comprising sales from JB HI-FI Australia of $4.84 billion, JB HI-FI New Zealand (NZD) sales of $0.24 billion and The Good Guys sales of $2.18 billion.

Stock Recommendation: As per the ASX,the stock closed at its 52-week high of $37.190 per share. The stock has given a total return of 21.30% and 37.81% in the time period of three months and six months respectively. The business witnessed a decent performance in FY19 with EPS posting a growth of 7.1% on yoy. Hence, in view of the aforesaid facts, higher returns in the recent past, current trading levels, etc., we have a watch stance on the stock at the current market price of $37.190 per share, up by 2.03% on 25^th October 2019.
 
 

Flight Centre Travel Group Limited

Online Leisure Sales Doubles in September Quarter:Flight Centre Travel Group Limited (ASX: FLT) provides travel retailing in both the leisure and corporate travel sectors. The market capitalisation of the company stood at $4.4 billion as on 25^th October 2019.

The company recorded a good growth in online leisure sales in Australia during Q1FY20. The online leisure sales in the country had doubled during the first quarter of FY20, despite relatively challenging trading climate.Mr Turner, the Managing Director of the company, announced that TTV had continued to increase solidly across the group during Q1 and he also gave initial details of FLT’s likely trading patterns for the year in view of the challenging market conditions in Australia and some other key markets early in FY20.


TTV Contribution(Source: Company Reports)

Stock Recommendation:The total revenues of FLT have witnessed a CAGR growth of 6.25% in the time span of FY2015 - FY2019 and, thus, it can be said that FLT is possessing respectable capabilities to garner revenues which might support its long-term growth prospects. FLT’s current ratio stood at 1.31x in FY 2019, which is above the industry median of 1.09x, indicating company’s ability to meet its short-term obligations in an effective way. The stock has generated negative returns of 4.71% and 1.58% in the time period of three months and six months respectively. Hence, considering the outlined likely FY20 trading patterns, and current trading levels, we have a watch stance on the stock at the current market price of $43.250 per share, down by 0.506% on 25^th October 2019.

ResMed Inc.

Q1FY20 Results Highlights: ResMed Inc. (ASX: RMD) is a global leader in the development, manufacturing, distribution and marketing of medical devices and cloud-based software solutions that diagnose, treat and manage respiratory disorders.  The market capitalisation of the company stood at $26.66 billion on 25^th October 2019.

ResMed delivered strong performance in Q1FY20 with double-digit top-line revenue growth, further improvements in operating leverage and balanced growth across businesses and regions resulting in double-digit growth at the bottom line.The company is driving forward its business, leading the innovation of devices and software that create efficiencies, improve health outcomes and reduce overall healthcare system costs, through targeted acquisitions and organic growth. The company reported revenue of $681.1 million, up by 16% and up by 17% on constant currency basis.


Financial Results and Operating Metrics (Source: Company Reports)

Stock Recommendation: As per the ASX, the company’s stock is trading close to its 52-week high levels and has gained ~29.26% in the last 6 months. At the current market price of A$20.650, the stock is available at a price to earnings multiple of 46.140x with an annual dividend yield at 0.8%. Considering the trading levels and valuation parameters, we presume that most of the positives are already factored in at the current juncture. Therefore, we recommend an “Expensive” rating on the stock at the current market price of $20.650 per share, up 11.022% on 25^th October 2019, owing to the release of first quarter results for FY20.

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