Challenger Limited

CGF Details

Decent Growth Prospects: Challenger Limited (ASX: CGF),is an investment manager with largest annuity provider in Australia. CGF intends to expand its business to international markets. Progressing with its strategic relationship with MS&AD, CGF will start a quota share reinsurance of US dollar denominated annuities issued by Mitsui Sumitomo Primary Life Insurance Company Ltd.

During 1HFY19, earning was largely impacted by the volatility in the investment market which further led the lower returns in the life business and lower fund management fees.Normalised NPAT at $200 million was also down by 4%. Higher capital levels and lower Normalised PBT impacted the ROE at 15.6%. The company’s management has declared a fully franked interim dividend of 17.5 cents per share.

 

Group AUM (Source: Company Reports)

In the meantime, the share price has fallen 13.96% on the past three months as at April 05, 2019 and is trading close to 52-week lower level, making it a decent buy opportunity. Annual dividend yield stands at 4.7% with stock trading at PE multiple of 36.30x. Considering the growth prospects and business penetration in the existing market along with decent financials, we maintain our “Buy” recommendation at the current market price of $7.950 per share (down 2.094% on April 05, 2019)
 

Automotive Holdings Group Limited

AHG Details

AP Eagers Made Takeover BidTo Form A Merged Group Of Automotive Retail Business: Automotive Holdings Group Limited (ASX: AHG) is a diversified automotive retailing and logistics group mainly operating in three segments – automotive retailing, refrigerated logistics; and other logistics. Geographical reach touches Western Australia, New south Wales, Queensland, Victoria and New Zealand. Recently, A.P. Eagers Limited made a takeover bid for all the ordinary shares in AHG which led the stock to run-up intraday with the gain more than 20% on ASX. As per the Offer, AHG Shareholders (other than Foreign Shareholders) will get 1 APE Share for every 3.8 AHG Shares owned by AHG shareholders.As per the release, the Offer provides AHG Shareholders with an opportunity to participate in the expected benefits and longer-term performance afforded by the combination of two complementary businesses in AP Eagers and AHG to create Australia's automotive retail group (Merged Group). The Offer signifies an opportunity for AHG Shareholders to participate in the expected benefits afforded by the enhanced diversification and flexibility of the combined group, particularly in the context of AHG’s deteriorating financial performance over time. Additionally, S&P Dow Jones Indices made an announcement about changes in the S&P/ASX indices. The release stated that Automotive Holdings Group Limited was removed from S&P/ASX 200 Index which got effective at the open on March 18, 2019. For 1HFY19, AHG posted operating NPAT at $ 24.2 million as compared to $ 42.1 million (pcp) due to tough market conditions in Automotive and Logistics. Statutory losses for the same period stood at $ 225.6 million due unusual items and non-cash impairment.


Consolidated 1HFY19 Financial Performance (Source: Company Reports)
In three months, the company’s stock posted the return of 24.04% in the span of three months. Considering today’s developments and future prospects, we give a “Hold” recommendation on the stock at current market price of $2.150 per share (up 20.787% on April 05, 2019).
 

Reliance Worldwide Corporation Ltd

RWC Details

Improving Balance Sheet: Reliance Worldwide Corporation Ltd (ASX: RWC) has lately announced that Macquarie Group Limited ceased to be a substantial holder of the group since 1st March 2019.

RWC's net sales for the half year ended 31 December 2018 was $544.2 million, implying a rise of 50% on the pcp. The company's reported EBITDA for the period was $120.7 million, an increase of 52% on the comparative period. These improvements in financial performance are indicative of the inclusion of the contribution from John Guest for the entire period.


1HFY19 Financial Highlights (Source: Company reports)

What To Expect from the company: As per the management, the outlook for 2H FY 2019 seems to be strong enough. The management expects the John Guest growth to speed up in the second half, consistently with the historical pattern. The lower cost copper (brass bar) to be processed in the second half is likely to cut the production costs.
 
On the analysis front, the company has substantially deleveraged its balance sheet, as the debt-equity has been reduced to 0.37x for the 1HY ended 31 December 2018 from the levels of 1.17x reported in the pcp. Meanwhile, the stock price has fallen 10.82% in the last six months and is trading close to its 52-week lower level, making it a decent buy opportunity. Hence, considering the company's focus on deleveraging its balance sheet and expectations for strong 2H FY 2019 results, we reiterate our "Buy" recommendation on the stock at the current market price of $4.450 per share (up 0.225% on 5 April 2019).
 

CSL Limited

CSL Details
 
Issued New Shares to Employees under PRP and GESP: As per the latest release, CSL Limited (ASX: CSL) has issued new shares of about 6,253 fully paid ordinary shares relating to the employees under the Performance Rights Plan (PRP) and Global Employee Share Plan (GESP) upon exercise of rights and options granted.
 
The board has decided to pay an unfranked ordinary dividend for the period ending December 31, 2018, of AUD 1.20317500, the record date for which was March 14, 2019, and the payment date shall be April 12, 2019.
 
Also, the company has declared its 1H FY19 results where it reported a decent profit growth. It posted a sales revenue of $4,505 million, up 11% in constant currency terms on pcp basis. This rise was on the back of an increase in the usage of immunoglobulin products used for chronic therapies, sales of transformational Hereditary Angioedema (HAE) product and improved sales of adjuvanted influenza vaccine.


1HFY19 Financial Highlights (Source: Company Reports)
 
What To Expect From CSL: The company expects NPAT for FY19 to be in the upper-end range of approximately $1,880 to $1,950 million in constant currency terms. Furthermore, the management assumes that there would be continued demand for plasma and recombinant products. The company expects to open 30 to 35 new collection centres moving forward, and this plan is on track.
 
In the meantime, the stock price has risen 5.0% in the past three months as at April 05, 2019 and is trading slightly above the average of 52 weeks high and low level of ~$193.74. Hence considering aforesaid parameters and current trading level, we maintain our Expensive”recommendation on the stock at the current market price of $196.88 per share (down 1.189% on 5 April 2019).
 

Webjet Limited

 
Record TTV, Revenue and EBITDAin 1HFY19: Webjet Limited (ASX: WEB) had lately declared that it would be paying an ordinary dividend of AUD 0.085 to its shareholders, the record date of which was March 21, 2019, and payment date shall be April 18, 2019. The company’s total transactional value (or TTV) for the half increased by 29%, representing a 2% increase in B2C and a 65% increase in B2B. The growth in B2B for the half incorporated 6 months of Jac Travel compared to 4 months in the Prior Corresponding Period (PCP).
 
It has also posted a 42% growth in EBITDA for the 1H19 which came in at $58.0 million. This growth was achieved predominantly on the back of the strong operational performance of WebBeds B2B segment. WebBeds business was driven by strong growth seen in the key geographical markets namely, Europe and Middle East, with meaningful EBITDA delivered from the Americas.
 
What to Expect From WEB: The management has reconfirmed its guidance stating that it is on track to deliver an EBITDA for FY19 of at least $120 million.
 
 

WEB’s EBITDA Growth trend (Source: Company Reports)
 
On the analysis front, the company is having an adjusted cash conversion for the 1HFY19 (Adjusted OCF/EBITDA) at 95%, portraying better working capital management & good quality earnings performance.

Meanwhile, the stock price has climbed 8.32% in the past six months and is trading slightly towards 52-week higher level of $17.735. However, considering the decent outlook coupled with the stable cash reserve and improving working capital,we maintain our "Buy" recommendation on the stock at the current market price of $15.150 per share (down 3.626% on April 05, 2019).


 
Stock Price Comparative Chart (Source: Thomson Reuters)        

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