The Citadel Group Limited

Positive Outlook backed by Organic growth: Citadel Group (ASX: CGL) ended FY 2018 with total revenues amounting to $108.5 million which implies the YoY growth of 9.8%. During the same period, the company generated gross profit amounting to $54.3 million reflecting 17.8% increase YoY. The factors which helped the company’s revenues were contract wins, favorable momentum in the products’ cross-selling as well as roll out in regard to Australian Federal Government Agency (multi-year) contract. Moreover, the group also witnessed favorable momentum in the gross profit margin in FY 2018 and was supported by roll out with respect to software solutions, extensions of the contracts as well as strong delivery execution in the existing contracts.

Citadel Group’s revenues and NPAT (Source: Company Reports)

What to Expect from Citadel Limited: The management of Citadel Limited is having an optimistic outlook. As per the management, there are substantial yet-to-be-tapped opportunities for the company which could boost the company’s performance with respect to both the markets i.e. private as well as public. The management is favorable regarding the company’s health offerings as well as unique technology. Moving forward, the company is expected to achieve organic growth as well as with help of M&A (mergers and acquisition) opportunities. 

On the technical standpoint, Moving Average Convergence Divergence or MACD is being used on the daily chart of Citadel Group by considering the default values. As per the indicator, the MACD line is about to cross the signal line and is expected to move upwards. However, the stock price is trading in the higher range. Based on aforesaid facts, we maintain our “Speculative buy” rating on the stock at the current price of $8.80.

Nanosonics Limited

Expanding presence into Geographic Boundaries will support growth momentum: The management of Nanosonics Limited (ASX: NAN) reflected positive views for the FY 2018 results. The global installed base witnessed the favorable momentum and rose to 17,740 units. The company recorded revenues amounting to $60.7 million in FY 2018. The revenues which are related to the service as well as consumables increased 25% to $35.2 million thanks to the ongoing installed base growth.

Nanosonics Limited’s installed base (Source: Company Reports)

What Strategies Could Help Nanosonics: The management of Nanosonics Limited plans to increase the usage of Trophon with respect to the existing markets. The company would be working to create Trophon as the standard of care with respect to the semi-critical probes. Moving forward, the management plans to increase its geographic presence. In order to this, the company plans to enter the new and fresh markets through new products such as Trophon. It also plans to work towards the expansion of the products. 

Technical overview: Relative Strength Index or RSI has been applied on the daily chart of Nanosonics Limited and the default values have been considered. As per the observation, the 14-day RSI is near the oversold region. MACD indicates that further downtrend is possible. If that happens, 14-day RSI would reach the oversold region and then it is expected to rebound. Hence, we maintain our “Hold” rating on the stock at the current market price of $3.190.   
 

Emeco Holdings Limited

Improving Free Cash Flow: Emeco Holdings Limited (ASX: EHL) garnered operating EBITDA amounting to A$153 million in FY 2018 reflecting the substantial increase on the YoY basis. In FY 2017, it was $83.5 million. The company also witnessed a rise in the operating free cash flow from $36.9 million in FY 2017 to $178.2 million in FY 2018 mainly because of strong operating EBITDA. The decrease in the working capital YoY also aided the operating free cash flow in FY 2018.

Leverage Metrics (Source: Company Reports)
What Emeco Holdings Plans to Do Moving Forward: Emeco Holdings plans to work on achieving the revenue growth with the help of improvements in respect of rates as well as utilization. Further, the company expects to increase the revenues of the retail workshops. It also plans to work towards deleveraging itself and then plans to refinance the present debt with much more favorable terms and conditions.
Technical Overview: MACD indicator has been applied on the daily chart of Emeco Holdings and the default values have been considered. As per the observation, the MACD line is about to cross the signal line and is expected to move upwards after the cross over. However, the stock price is currently trading in the higher range. Hence, we maintain our “Speculative buy” rating on the stock at the current market price of $0.37. 
 

Great Boulder Resources Limited

Strategic Joint Venture with Ausgold Limited: Great Boulder Resources (ASX: GBR) earlier came forward and made an announcement regarding the joint venture with Ausgold Limited’s Yamarna nickel project. If this joint venture or JV gets executed the shareholders of Ausgold would be receiving 1.5 million shares of Great Boulder. As per the agreement, Ausgold has granted Great Boulder as option to form a joint venture on granted tenement E38/2129 and application E38/3311 via the expenditure of $50,000 on E38/2129 during the current reporting year. Upon exercise of the option, GBR will have a right to earn a 75% interest in the Yamarna Project by issuing Ausgold 1,500,000 fully paid ordinary shares and spending minimum $500,000 on exploration activity on the tenement over term of four years. On the analysis front, the company has decent liquidity position with current ratio of 11.81x in FY18 as compared to the Industry average of 1.69x, signifying an ability to meet its short-term obligations. 

Meanwhile, the Relative Strength Index or RSI has been applied on the daily chart of Great Boulder and default values have been considered for the same. As per the observation, the 14-day RSI has crossed the oversold region and is expected to move upwards. Secondly, the EMA has also been plotted on the daily chart using the default values. The stock price is expected to cross the EMA and is expected to rise post crossover. Based on foregoing and current trading level, we maintain our “Speculative buy” on the stock at the current market price of A$0.190 per share.
 
 

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