Stocks’ Details

The Citadel Group Limited

A Look at 1H FY 2019 Results: The Citadel Group Limited (ASX: CGL) had published the results for 1H FY 2019 and it stated that results were aided by SaaS as well as new product growth. It posted total revenues amounting to $49.1 million in 1H FY 2019 which implies the rise of 5.5% as compared to 1H FY 2018. At the end of December 31, 2018, the company had cash position amounting to $16 million which reflects the payment of total dividends amounting to $5.7 million, repayment of loans amounting to $2.6 million as well as payment towards the Gruden acquisition which was of $1.2 million in December 2018, with $0.4 million payable in March 2019. 


Balance Sheet (Source: Company Reports)

In FY 2018, the company had the strong position with respect to its key margins.The Citadel Group Limited had posted net margins of 18.1% in FY 2018 reflecting a YoY improvement of 2.2% which implies the company’s improved capability to convert its top line into the bottom line. Moreover, the company’s operating margin stood at 23.9% in FY 2018 which happens to be higher than the industry median of 21.8%.

Robust Balance Sheet to Support CGL: The Citadel Group Limited is having a positive outlook. The company had stated that the robust balance sheet happens to support the business environment as well as growth initiatives. For 2H FY 2019, the company is well-positioned as it has robust pipeline of the opportunities for the SaaS products. Additionally, the company had stated that the recurring revenues from the SaaS products is expected to grow.

Stock Analysis: On the daily chart of CGL, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After observation, it was observed that the company’s stock price as crossed the EMA and had trended downwards after the crossover which reflects bearishness.

However, the company might be supported by its robust balance sheet. Also, there are expectations that recurring revenues from SaaS products would be growing. The only concern that has been of importance is the sluggish growth in profit which was not as expected and gives an indication to look for some strong catalysts.
 
On the backdrop of the above-mentioned factors, we give a “Hold” rating on the company’s stock at the current market price of A$7.500 per share.

Nearmap Ltd

A Look at 1H FY 2019 Results: Nearmap Limited (ASX: NEA) had released the results for 6 months ended December 31, 2018 in which it posted revenues amounting to $35.4 million which implies the rise of 45% on the prior corresponding period. The company also stated that its total subscription revenue has encountered the rise of 44% and stood at $35.1 million which implies strong growth in Australia as well as the US. The company’s ACV had witnessed the rise of 44% on the YoY basis and stood at $78.3 million with the growth in ANZ as well as the United States.  

  
Subscriptions Growth (Source: Company Reports)
 
The company also stated that they have been scaling for the global opportunity. The company is possessing strengthened balance sheet following the capital raise and it also added that the projects are underway.
 
What Expect From NEA: Nearmap Limited had reaffirmed the cash flow break even for FY 2019 (excluding the deployment of capital raise proceeds). The company has maintained its focus towards supporting the sustained growth. The company had also stated that the range of releases would be increasing the workflow utility as well as stickiness of the MapBrowser platform.
 
The company had also stated that more than $15 million of the capital raise proceeds have been committed towards the implementation of the growth initiatives.
 
Stock Analysis: On the daily chart of NEA, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After careful observation, it was observed that the stock price has crossed the EMA and had trended in the upward direction which reflects bullishness. Also, the capital raise (mentioned above) might help the company when it comes to growth initiatives.
 
Based on the backdrop of the above-mentioned factors, we maintain our “Hold” rating on the stock at the current market price of A$2.570 per share.
 
 

Appen Limited

Full Year Earnings Information Is Fast Approaching: Appen Limited (ASX: APX) had recently published the release in which it stated that it would be releasing the information about the earnings for full year ended December 31, 2018 on February 25, 2019. Also, the company had informed the market players about resignation of Ms Leanne Ralph from the designation of Company Secretary as well as appointment of Mr Carl Middlehurst on the designation of Company Secretary.

The company had already published the 1H FY 2018 results in which it posted revenues amounting to $152.8 million while in 1H FY 2017 the figure was $74.1 million. Talking about the balance sheet, the company’s receivables stood at $55.7 million at the end of June 2018 reflecting a rise from December 2017 number of $42.9 million which was because of rise in the revenue volumes.

1H FY 2018 Highlights (Source: Company Reports)

What to Expect From APX: Not so long ago, the company had issued a release which contained information related to the earnings upgrade for the full year. There are expectations that the company would be posting underlying EBITDA for FY 2018, which ended on December 31, 2018, between $62 million- $65 million (at A$1=US$0.80). However, earlier there were expectations that the company would be posting underlying EBITDA between $54 million-$59 million.

The company had stated that improvement in FY 2018 earnings forecast has been announced on the back of sharp increase in monthly revenues, primarily from existing projects from existing customers.

Stock Recommendation: At the end of June 2018, Appen Limited had net margins of 9.2% which is lower than the industry median of 23.2%. Talking about the past performance, the company’s stock had delivered the return of 64.83% in the time frame of previous 6 months, while in the previous month, the stock has posted the return of 19.19%.  

Also, the company’s stock price is trading towards the higher level. Considering that the all the positive factors have been discounted in the stock price, we have a watch stance on the company’s stock at the current market price of A$18.060 per share and the market players should wait for the FY 2018 earnings which would be announced soon.
 

Adacel Technologies Limited

USAF Renews Tower Simulator System Support Contract: Adacel Technologies Limited (ASX: ADA) that has a market capitalization of about $58.62 million, has recently received the contract, which is renewed by the United States Air Force (USAF) for its ATC Tower Simulator System (TSS) program. As per the contract, ADA will have to continue to offer services in support of TSS program, that includes the responsibility for the maintenance, support, and modernisation for the TSS units at US Air Force installations worldwide.

The company had already released the financial results for FY 2018 in which the company had posted profit before tax (or PBT) amounting to A$10.2 million implying the rise of 29.8% as compared to prior corresponding period.


Financial Overview (Source: Company Reports)
 
The company had net margin of 15.8% in FY 2018 which is marginally higher than the industry median of 15.5% which demonstrates the company’s capability to convert the top line into the bottom line. The company’s operating margin has also improved YoY in FY 2018. In FY 2017, its operating margin stood at 14.5% which got improved by 2.4% and stood at 16.9% in FY 2018.
 
What to Expect From ADA: The company had recently stated that it would be releasing financial results for 6 months ended December 31, 2018 on February 21, 2019.  However, earlier, the company had stated that it expects that, for the first half of the FY19, profit before tax would be approximately 65-70% lower than the prior corresponding period. ADA also expects that the second half of FY 19 would be stronger than the first half of FY19. ADA had also stated that, for the full year, the profit before tax would be 25-35% below FY18.
 
Stock Analysis: On the monthly chart of ADA, Relative Strength Index or RSI has been applied and default values were used. After observation, it can be assumed that the 14-day RSI has started to rebound from the oversold levels and soon the stock might witness a rise moving forward. Moreover, in the past one month, the company’s stock had delivered the return of 15.91%.

Based on the backdrop of the above factors, we maintain our “Hold” rating on the stock at the current market price of A$0.760 per share.
 

Comparative Stock Price Chart (Source: Thomson Reuters)

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