Stocks’ Details
 

NEXTDC

Decent Performance in FY18: NEXTDC Limited’s (ASX: NXT) stock climbed up 3.4 percent on September 14, 2018 at the back of positive market sentiment as the group is launching their new planned facilities in Sydney, Melbourne, and Perth which will support to bag few more deals in years to come. The group is also aiming to work cordially with Asia Pacific Data Centre Holdings Ltd on the data centre related row. On the other hand, the group posted decent FY18 results with total revenue from continuing operation coming in 31% higher at $ 161.5 Mn compared to the prior year. It was mainly driven by the ecosystem growth and new facility developments and increased revenue per unit metrics. Underlying EBITDA grew by 28% to $62.6 million in FY18 from $49.0 million in the previous year. However, net profit attributable to equity holders decreased by 16.4% and amounted to $ 6.6 Mn in FY 18. It was primarily impacted by the rise in energy costs (accounted ~10% of total direct cost) and other cost associated with facility expansions.


FY18 Financial Highlights (Source: Company Reports)

Moreover, the capital expenditure of $285 million laid well below the underlying guidance range of $307-$327 million. Contracted utilization has also gone up by 28% to 40.2MW, including highest utilization of 15.2 MW from Sydney’s S1 development. Meanwhile, the share price has fallen 22.93 percent in the past three months (as at September 13, 2018) and traded at the higher PE level of 264.44x. Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $6.150.


 
NXT Daily Chart (Source: Thomson Reuters)
 

Rhipe

Growth Potentiality in Cloud Business: Rhipe Limited (ASX: RHP) posted stellar FY18 results with total revenue coming in 25% higher at $ 196.6 Mn compared to the prior year. It was mainly driven by the strong momentum in public cloud via the Microsoft CSP program with rhipe’s partners which are now consuming more than 260,000 Office365 seats. Resultantly, gross profit and reported EBITDA increased by 21% and 59% to $34.1 Mn and $6.4 Mn, respectively in FY18 as compared to the prior year. Net Profit After Tax (NPAT) stood $3.1 Mn in FY18, exhibiting growth of 22 percent on a Y-o-Y basis. At 30 June 2018, the Group had a cash reserve of $22.7 Mn compared to a cash balance of $19.8 Mn at 30 June 2017. This increase in cash resources is after undertaking a share buyback of $2.3 Mn, payment of the Company’s inaugural interim dividend of 0.5 cents per share or $0.7 Mn, the continued investment in Prism of $2.4 Mn, and also funding the continued growth in the business operations. Further, the Board of Directors declared fully franked final dividend of 1.0 cents per share for its shareholders and it will be payable on October 24, 2018 with the record date of October 5, 2018.

In addition to the strong profit growth, the group delivered two notable achievements in FY18. Firstly, the group was awarded a Microsoft Cloud Solutions Provider licence in New Zealand, one of its core markets and secondly, it added to its numerous vendor accolades by being named Microsoft Australia’s Partner of the Year. Moreover, the management expects that the company will continue to strengthen its public cloud business which will determine the revenue and margin growth for the business in FY19 and beyond.


Financial Highlights (Source: Company Reports)

Credit Suisse Holdings (Australia) Limited ceased to be a substantial holder of the group since September 07, 2018. Moreover, UBS Group AG and its related bodies corporate became the substantial holder of the Group since September 10, 2018 by holding 5.36 percent of the voting power. Meanwhile, the share price has risen 16.35 percent in the past three months as at September 13, 2018 and traded close to the 52-week high level. Looking ahead at growth potentiality in cloud business market, we maintain our “Hold” recommendation on the stock at the current market price of $ 1.22.


 
RHP Daily Chart (Source: Thomson Reuters)
 

Bigtincan Holdings

Upgraded Revenue Guidance for FY19:Bigtincan Holdings Limited (ASX: BTH) provides software as a services (SaaS) application platform and provides an artificial intelligence powered sales enablement platform that allows sales and service organizations and their employees to engage with customers. Recently, the group has delivered decent performance in FY18 wherein the group recorded Annualised Recurring Revenue (ARR) growth of 41% to $15.4 Mn in FY18 over the prior year. As a result, Revenue grew by 42% and amounted to $13.1 Mn during the same period. However, operating expenses increased by 35% in FY18 against FY17. Resultantly, Net loss after tax came in at $6.8 Mn in FY18, exhibiting fall of 15 percent on a Y-o-Y basis. Based on the strong revenue growth in FY18, the group has updated its guidance for FY19 to achieve in the range of 35%-40%. On the other hand, BTH advises that the customer retention rate was stable during the second half of FY18 and expects it to continue to remain stable during FY19.On the balance sheet front, the current ratio stood at 2.58x with zero debt.


FY18 Financial Summary (Source: Company Reports)

Meanwhile, the stock price was down by 24.0 percent in the past three months as on September 13, 2018 and traded above the average of 52 week high and low prices. Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 0.300, based on decent fundamentals and trading level.


 
BTH Daily Chart (Source: Thomson Reuters)
 

Nearmap

Strong Portfolio Growth: Nearmap Ltd.’s (ASX: NEA) share recently bounced after the stock was added to S&P/ASX 300 index effective at the Open on September 24, 2018. Recently, the company has also completed the $70 Mn capital raising which is intended to be used for expansion of group sales and marketing capability, ramp up the product and technology efficiency of the company and international expansion. The placement was highly successful and oversubscribed. In FY18, the company posted a record portfolio growth with Group annualized contract value of $66.2 Mn, an increase of $19.2 Mn. Global customer base exceeded 8,800 with group average revenue subscription increasing 25%. The company saw its ACV increasing in both the key markets – Australia and the United States. In United States, the figure more than doubled to largest incremental ACV in the country till date.

The company also expanded to New Zealand this year by establishing dedicated sales and marketing and product resources to tap the growth opportunity in the country. Dedicated products for the country would help the company to offer customized solutions with wide range of tools and data that hold relevant to New Zealand.


US ACV Portfolio Movement from FY16 to FY18 (Source: Company Reports)

The stock has been a winning trade for the shareholders this year, generating YTD return of 190.16%. NEA has maintained its upside trajectory for quite some time now and minor hiccups do not seem to pose any significant threat to the running trend. With the company performing well back home and expanding in the newer markets, there is no sign of the activity slowing doing any time soon. We therefore recommend a ‘Hold’ on the stock at the current market price of $1.700 (down 3.955% as at September 14, 2018).


 
NEA Daily Chart (Source: Thomson Reuters)
 

Xero

Decent outlook Ahead:Xero Limited (ASX: XRO) is a public software company. Xero offers a cloud-based accounting software platform to its clients. The company is serving different types of businesses like start-ups, hospitality, e-commerce, farming, manufacturing, real estate, and tourism. On the other hand, the company experienced first positive EBITDA of $43 million in the FY 2018 which was $59.9m higher than the previous year loss in FY 2017. It was due to the improved operating efficiencies across the business. Moreover, the group has recorded revenue growth at CAGR of 49 per cent over the three years. Resultantly, the group experienced improved operating and investment cashflow margins from (71%) to (9%). On the balance sheet front, the current ratio stood at 1.93x in FY18. Cashflow from operating business was $41.2 million in FY 2018 which is $45.6 million higher than last year. Cash outflow in FY 2019 is forecasted to be reduced from FY 2018. The company has no plan to draw down on its standby debt facility of $100 million. Meanwhile, the share price has risen 38.74 per cent in the past six months (as at September 13, 2018) and traded close to 52-week high level ($52.57). Hence, we maintain our “Hold” recommendation on the stock at the current price of $48.210, considering decent outlook ahead.


XRO Daily Chart (Source: Thomson Reuters)
 
 

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