Stocks’ Details

Transurban Group

Growth Across All Markets:Transurban Group (ASX: TCL) is engaged in building and operation of toll roads. The company recently announced that it has appointed Julie Galligan as the sole Company Secretary in replacement for Amanda Street.


September Quarter Update:During the quarter, the company saw Average Daily Traffic increased by 1.8%, with continued progress towards development activities across the markets, served by Transurban.

Market-wise ADT:Average daily traffic (ADT) for Sydney stood at 838,000 trips, representing a yoy increase of 2.1%. The market saw large vehicle traffic being impacted due to weaker household consumption and reduced construction activity. Melbourne ADT witnessed an increase of 0.6% yoy, with the market coming out with positive movement in large vehicle traffic. Brisbane ADT stood at 425,000 trips with a yoy increase of 2.7%. In North America, ADT increased at a rate of 4.5% yoy.

FY19 Performance Highlights: During the year ended 30 June 2019, average daily traffic grew at a rate of 2.0%.Toll revenue for the year increased at the rate of 10.3%. EBITDA for the period stood at $2,016 million, up 12.3% on prior corresponding year.


FY19 Proportional Results (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 35.75% over a period of 1 year. As per the recent update in September quarter, the company reported decent performance across all markets. In FY20, the company is eyeing a growth of 5.1% in distribution per security over FY19. The period was marked by the completion of three major projects, adding one million trips in Queensland. In addition, the company has three additional ongoing projects with commencement targeted by the end of 2020. Considering the above factors and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $14.940, down 0.4% on 10 October 2019.
 

Reliance Worldwide Corporation Limited

Record Revenue and Earnings in FY19: Reliance Worldwide Corporation Limited (ASX: RWC) is engaged in designing and manufacturing of water flow control and monitoring products & solutions.

FY19 Performance Highlights: During the year ended 30 June 2019, the company recorded net sales amounting to $1.1 billion, representing an overall growth of 43% on pcp. Adjusted EBITDA for the year stood at $263.2 million, up 66% on prior corresponding year. Adjusted NPAT came in at $152.0 million, up 80% on the previous year.


FY19 Results (Source: Company Reports)

The period was marked by first full-year earnings after the integration of John Guest that supported strong net sales growth in the America segment. The acquisition provided a boost to the company’s adjusted earnings per share that, in turn, helped increase the total dividends to be paid to shareholders. In monetary terms, synergies realised from the acquisition stood above the $10 million target, at $14.2 million.

Outlook: In FY20, the company expects to report NPAT in the range of $150 million - $165 million, taking into consideration the possible impact of changes in economic conditions in key markets, foreign currency impacts, costs of raw material and Brexit disruption.

Stock Recommendation: Over a period of 6 months, the stock generated negative returns of 14.88%. In FY19, the company witnessed robust growth across key financial metrics on the back of synergistic benefits, derived out of John Guest. The inclusion of John Guest supported strong underlying growth in the America and is expected to offer synergies in excess of $30 million per annum by the end of FY2020. The company has built solid core businesses in the key markets of the USA and the UK, and expects multiple growth opportunities to strengthen the business further. Based on the aforesaid factors, we give a “Buy” recommendation on the stock at the current market price of $3.850, down 1.028% on 10 October 2019.
 

Premier Investments Limited

Record Sales from Online Business:Premier Investments Limited (ASX: PMV) operates speciality retail fashion chains in Australia, New Zealand, Asia and Europe.The company recently updated that the shareholding of Perpetual Limited reduced to 9.98%, from 11.63% earlier.

Performance Highlights of FY19: During the 52 weeks to 27 July 2019, the company reported Premier Retail sales amounting to $1.27 billion, up 7.5% on the previous year. Underlying net profit before tax stood at $177.6 million. Underlying EBIT for the period amounted to $167.3 million, up 11.5% on prior corresponding year. At the end of the period, the company had cash in hand amounting to $190.3 million. Net cash for the period stood at $123.3 million, up 32.3% on the previous year. Full year ordinary dividends totalled to 70 cents per share, as compared to 62 cents per share in FY18.


Consolidated Income Statement (Source: Company Reports)

During the year, the company witnessed strong growth in all apparel brands,reporting record online sales of $148.2 million, up 31.7% on previous year and witnessed significant progress on Smiggle’s growth strategy. The period was also marked by record sales of $247.8 million for Peter Alexander, with the 2020 Growth Plan delivered a year ahead of schedule.

Stock Recommendation: The stock of the company generated returns of 22.03% and 24.75% over a period of 1 month and 3 months, respectively. Premier Retail was the highlight of FY19 with record sales and EBIT that were achieved on the back of strong sales growth in apparel brands, record online sales and a remarkable performance by Peter Alexander and Smiggle. In addition, Peter Alexander is planning for further growth through opening 20-30 new stores over the next two years. The period was also characterised by strong cash flows and record full year increase of 12.9% in total dividends. Currently, the stock is trading close to its 52-week high levels of $20.12 with PE multiple of 28.14x and an annual dividend of 3.68%. Hence, considering the aforesaid facts and current trading levels, we give a "Hold" recommendation on the stock at the current market price of $18.970, down 0.158% on 10 October 2019. 
 

Pendal Group Limited

Foreign Exchange Rates Impacted FUM:Pendal Group Limited (ASX: PDL) is engaged in the provision of investment management services. The company recently updated that the voting power of Centuria Industrial REIT increased from 7.06% to 8.09%.

Update on Funds Under Management: The company updated that total funds under management for the quarter ended 30 June 2019 stood at $101.3 billion, up $0.4 billion on previous quarter due to foreign exchange impact.

Pendal Australia FUM: Total funds under management for Pendal Australia stood at $48.5 billion as compared to $48.6 billion as at 31 March 2019. The segment reported net outflow of $2.0 billion.

JOHCM FUM: Funds under management as at 30 June 2019 stood at $52.8 billion, up in comparison to $52.3 billion as at 31 March 2019. Net outflow amounted to $0.4 billion, which were offset by strong inflows into global strategies and the UK equities.

For the year ended 30 June 2019, Pendal Australia performance fees has been realised at approximately $1.6 million in revenue as compared to $6.9 million in prior corresponding year.


Funds Under Management (Source: Company Reports)

Stock Recommendation: The stock of the company generated negative returns of 1.17% and 9.25% over a period of 1 month and 3 months, respectively. In the first half of FY19, the company reported a strong balance sheet position with decent cash flow and no debt, despite difficult trading conditions. Gross margin for the half stood at 100.0% as compared to the industry median of 94.8%. During the quarter ended 30 June 2019, the company reported strong inflows into global strategies via the institutional channel and the US pooled funds, in relation to JOHCM FUM. The company’s operations are focused on expanding investment and distribution capabilities to drive the growth in coming times. Considering the above factors, we give a “Buy” recommendation on the stock at the current market price of $6.890, up 1.773% on 10 October 2019.

 
Comparative Price Chart (Source: Thomson Reuters)

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