Antipodes Global Investment Company Ltd

APL Details
Decent Portfolio Return Against Index: Antipodes Global Investment Company Ltd (ASX: APL) is a listed investment company with the market capitalization of circa $528.03 Mn as of November 05, 2018. The company reported FY18 investment income of $53.37 Mn, showing YoY growth of 25.1% over the prior year. Net profit after tax came in 26.8% higher for FY18 at $34.02 Mn compared to $26.83 Mn in FY17. As a result, the Board of Directors declared the first dividend of 5 cents per share, franked as to 50% and it was paid on October 31, 2018. Further, the company’s intention is to pay a dividend to shareholders at least annually, subject to available profits, cash flow, and franking credits. Recently, the company disclosed weekly Net Tangible Asset backing (NTA) per share after tax that came at $1.150 as at 26 October 2018.

In another release on ASX, the company has provided its investment update for September 2018 wherein the portfolio outperformed its benchmark while delivering strong absolute returns. The investment portfolio return was up by 1.8% during the month against the MSCI All Country World Net Index’s return of 0.4%. Moreover, the portfolio delivered decent returns against the benchmark over the previous one year and since inception. Hence, we expect that the company will continue to generate decent return and show better performance in years to come.



Investment Performance (Source: Company Reports)

Meanwhile, the share price has fallen 5.63 percent in the past three months (as of November 02, 2018) and traded at a lower level. The stock has PE multiple of 10.580x and P/BV multiple of 0.87x, signifying decent opportunity at the current juncture. Hence, by looking at its improvement in investment portfolio return and potentiality to generate shareholder return over the long run whilst focusing on mid to long-term capital growth through investing in a concentrated portfolio, mainly comprised of long and short positions in international listed securities, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.095. 
 

APL Daily Chart (Source: Thomson Reuters)
 

WAM Capital Limited

WAM Details
Update on Takeover Offer of Wealth Defender Limited:  WAM Capital Limited (ASX: WAM) has recently succeeded with its takeover bid for Wealth Defender Equities Limited (WDE) with the relevant interest of 95.26% in the WDE’s shares. Following this, WAM Capital will issue 39.0 million shares at a premium to its pre-tax net tangible assets. As per the terms of the offer, 1 WAM Capital share will be exchanged for every 2.5512 WDE shares and will proceed with the compulsory acquisition of any remaining un-hold WDE shares. As per the ASX listing guidelines, WDE will be suspended and removed from the ASX in due course. Importantly, the compulsory acquisition notices will shortly be dispatched to all WDE shareholders who have not accepted WAM Capital’s offer and their shares will be compulsorily acquired by the company and holders should expect to receive their WAM Capital shares within approximately 6 weeks. On the analysis front, Net margin for FY18 was recorded at 66.6% while in FY 2017 the figure stood at 63.6%, exhibiting YoY growth of about 300 bps. As a result, RoE substantially increased from 6.6% to 9.9% in FY18 over the prior year.

Recently, Wilson Asset Management Group became the substantial holder of Wealth Defender Equities Limited since October 31, 2018 by holding 95.26 percent of the voting power based on 120,088,839 ordinary shares. Moreover, Wilson Asset Management Group ceased to be a substantial holder of Pacific Current Group Limited since October 30, 2018. Besides this, the stock has generated a negative return of 1.67% on YTD basis. From the technical standpoint, Relative Strength Indicator is showing a sign of the stock being below the oversold zone, indicating that there is more room for the stock to grow and rebound is expected in the upcoming trading session. Therefore, we maintain our “Hold” recommendation on the stock at the current market price of $2.320.
 


WAM Daily Chart (Source: Thomson Reuters)
 

WAM Research Limited

WAX Details

Decent Investment Return since Inception: WAM Research Limited (ASX: WAX) is a small cap diversified financial company with the market capitalization of circa $ 428.34 Mn as of November 05, 2018. WAX has recently released its decent investment performance of September month wherein WAM Research Portfolio delivered a 1.4% return in one month (as of 30 September 2018) and was up by 2.5% as compared to S&P/ASX Small Ordinaries Accumulation Index return of -1.1%. Notable contributors to the portfolio were GTN Limited, Mayne Pharma Group, Myer Holdings and Primary Health Care during the period. In the past one year, WAX Investment Portfolio delivered solid returns of 17.9% (as at 30 September 2018) against the benchmark return of 14.7%, which is really good performance. Since inception, WAX Investment Portfolio generated 18.2% returns per annum against the S&P/ASX Small Ordinaries Accumulation Index returns of 9.4% p.a. Moreover, the Group posted Net Tangible Assets (NTA) per share before tax of 133.23 cents as on September 30, 2018 while NTA per share after tax amounted to 128.35 cents.



Investment Performance (Source: Company Reports)
Meanwhile, the stock has generated a negative YTD return of 1.32% and is trading close to the lower level. The stock has PE multiple of 12.95x and a low beta below 1x indicating undervalued scenario at the current juncture. However, the chart structure of the stock price looks strong as the long-term support level of $1.389 has been held on to. The momentum strength indicator, RSI is expected to rebound from the lower band and would be representing the bullish momentum. Based on trading level and expecting decent investment return in the upcoming period, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.480.
 


WAX Daily Chart (Source: Thomson Reuters)
 

Thorney Opportunities Ltd

TOP Details

NTA Growth Impacted by TPI Enterprises Limited: Thorney Opportunities Limited (ASX: TOP) ended FY 2018 by generating net profit before tax amounting to A$12.8 million. The company’s NTA or Net Tangible Asset growth was negatively impacted by the unfavourable performance of the TPI Enterprises Limited (ASX: TPE). This company has replaced the Chairman and it is expected that it would be focusing on delivering value with the help of integrated production, distribution model as well as the manufacturing process. The management of TOP believes that in 2019 the company’s performance might get improved.


NTA Performance (Source: Company Reports)
The company has gathered A$24.1 million of the investment capitals and it has already invested towards the fresh and new opportunities. As of June 30, 2018, the cash and cash equivalents of the company stood at $14.5 million reflecting a rise on the YoY basis thanks to the gross proceeds which the company managed with the help of the redemption of the bonds as well as Placement and Share Purchase Plan. However, the company has also made an investment of capital in some of the existing investment positions as well as new investment opportunities.

Robust Financial position, New Investments to help with Opportunities Moving Forward: The fresh capital raising of A$24.1 million coupled with the proceeds it had gathered from the profit-taking trading make Thorney Opportunities well-positioned to achieve strong growth momentum moving forward. The company has managed to shell out total dividends of 1.5 cps in 2018 which are fully-franked. This represents a YoY rise of 20%. The board of the company is expected to increase the dividend payments moving forward in the situation where it deems fit.

Not so long ago, the management of TOP has released a press release which stated that good company’s earnings have been aiding the investment markets domestically as well as overseas. This has helped in navigating the tensions of the trade wars and other major factors.   

Analysis from Technical Standpoint:A technical indicator, Moving Average Convergence Divergence or MACD, has been applied on the daily chart of Thorney Opportunities by using the default values. As per the observation, the MACD line is about to cross the signal line and is expected to move upwards. However, as per the management, it has a substantial amount of cash and they are analyzing the equity markets to make investments. The markets have been very sensitive to the global macro events recently which could impact the company’s investments. Therefore, we maintain “Speculative buy” on the stock at the current market price of $0.650.
 

TOP Daily Chart (Source: Thomson Reuters)
 

Blue Sky Alternatives Access Fund Limited

BAF Details

Closed ended investment funds impacted BAF’s performance: Blue Sky Alternatives Access Fund Limited (ASX: BAF) has experienced significant market and operating disruption during FY18. The company has made several announcements including the removal of earnings guidance, review on their business and changes to its board of directors and senior management, and varied changes to the balance sheet items.

As per the management, the investment performance was not up to the mark. The robust performance of Blue Sky Water Fund got offset by the unfavourable momentum with respect to the holding values with respect to the closed-ended investment funds.
Weaker financial metrics: Approximately 61% drop in the net profit after tax up to $5.04 Mn in FY18 as compared to $13.03m in FY17 was reported. Pre-tax NTA (net tangible asset) posted fall of approximately 13% from $1.1452 in 2017 to $1.1299 in FY18. Earnings per share (EPS) for the period was down by 69% up to 2.55 cents per share in FY18 as compared to 8.44 cents per share in FY17.


BAF’s financials (Source: Company Reports)

Focused on maintaining a well-diversified portfolio: Around $57.5 million was deployed in FY18 in new and follow-on investments, increasing the portfolio holding of underlying investments to 49 holdings. The substantial number of new deployments has the potential for future NTA growth.

The long-term goals of the company revolve around delivering long-term returns (absolute) to the shareholders with help of favorable momentum in the NTA as well as dividend yield, providing the investors with the numerous alternative assets and making easy for the investors to deploy in the alternative assets via an ASX-listed structure.

Meanwhile, Relative Strength Index or RSI has been applied on the daily chart of BAF using the default values. As per the observation, the 14-day RSI is in the middle and is moving upwards. Once it reaches the overbought region, a downfall is expected. However, it might also trend downward from the present levels. Therefore, the investors need to wait and watch the stock at the current market price of $0.865.
 


BAF Daily Chart (Source: Thomson Reuters)

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