Stocks’ Details

Appen Limited

Added in S&P/ASX200 Index: Appen Limited’s (ASX: APX) stock climbed up 6.538 per cent on August 03, 2018 at the back of the positive market sentiments related to the brighter outlook for technology stocks and that of artificial intelligence and machine learning business landscape in the industry. Appen is well positioned to benefit from growth opportunities that are consistent with the company’s long-term strategy to be the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. The annual global revenue for artificial intelligence products and services will grow from $643.7 Mn in 2016 to $36.8 Bn by 2025, a 57-fold increase over that time period. Since the start of the year, the price was up by 29.90 per cent and the stock is trading at a point near to 52-week high level ($13.980). APX stock has been added to S&P/ASX200 Index, effective from June 18, 2018 as per June 2018 Quarterly Rebalance of the S&P/ASX Indices. Looking at trading level, we maintain our “Expensive” recommendation on the stock at the current market price of $ 11.570 ahead of half year earnings release due on August 28, 2018.


Huge Market Opportunity (Source: Company Reports)

Wisetech Global Limited

Lucrative Acquisition of Pierbridge: Wisetech Global Limited (ASX: WTC) has recently acquired US parcel shipping TMS provider Pierbridge. The purpose of this acquisition is to expand WTC's capabilities in global e-commerce fulfilment and this appears in line with its stated acquisition strategy.  The purchase cost comprises $37.0 Mn upfront with a further multi-year earn-out potential of up to $22.4 Mn related to business and product integration, and revenue performance. On the financial front, RoE stood at 7.1% in 1HFY18 which is broadly in line against 1HFY17. Meanwhile, the share price has risen 31.94 per cent in the past three months and traded at very high PE level (128.67x) among its peer group and the stock seems to be overvalued at current price. Hence, we maintain our “Expensive” recommendation on the stock at the current price of $14.970 (up by 2.957 per cent on August 03, 2018).

Xero Limited

Poised for Growth: Xero Limited’s (ASX: XRO) stock surged up 4 per cent on August 03, 2018 at the back of positive market sentiments. Further, rise in stock price ahead is expected to be backed by business potentiality with the support of recent acquisition of Hubdoc. As of now, the group focuses on growing globally. As a part of its strategy, the group established a global ecosystem to help millions of small businesses around the world. In February 2018, XRO opened a new office in Wellington. It also focuses on enhancing customer value by introducing innovative products and services. Over the past 12 months, Xero introduced more than 1,500 feature and product updates. The current ratio stood at 1.93x in 1HFY18. Meanwhile, XRO stock has risen 28.40% in the past six months as on August 02, 2018 and trading towards a higher level. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 44.720, ahead of the AGM scheduled for August 16, 2018. 

Netcomm Wireless Limited

Retirement of Company Secretary: Netcomm Wireless Limited (ASX: NTC) had recently announced that Mr. Peter Beveridgehas retired from the role of alternative Company Secretary on 2 July 2018. However, Board of Directors appointed current Commercial and Legal Manager of the companyMr. Clint Bellas the alternative Company Secretary on the same date. Besides this, Mr. Chris Last, Chief Financial Officer will continue to act as the primary Company Secretary for NetComm. NTC’s operating revenue grew by 89% to $88.6 million for the half year ended 31 December 2017 (H1 FY18) at the back of product mix growth. EBITDA stood at $9.2 million, marking 13 times growth against 1HFY17. Based on the topline growth, NPAT turned around to positive and recorded $3.7 Mn in 1HFY18 from the loss of $1.7 Mn in 1HFY17. We expect that the company will deliver healthy revenue and EBITDA growth over the remainder of FY18 as key contracts are planned for further rollout. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $ 1.240.


1HFY18 Financial Highlights (Source: Company Reports)

Nearmap Limited

Decent Outlook: Based on positive market sentiments, Nearmap Limited’s (ASX: NEA) stock price was up by 1.773 per cent on August 03, 2018. Recently, the group provided FY18 preliminary result wherein it exceeded its guidance which was provided at the time of the 1HFY18. According to the release, the group’s Annualised Contract Value (ACV) portfolio witnessed 41% growth while US portfolio doubled with largest annual ACV growth as at June 30, 2018 against the prior corresponding period. This was mainly driven by strong enterprise customer base and the significant opportunity in the US market. Meanwhile, the stock price climbed up 89.26 per cent in the past six months as at August 03, 2018 and is still trading close to its high level ($1.620). Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 1.435, considering a positive outlook ahead.

Afterpay Touch Group Limited

Positive Business Update: Afterpay Touch Group Limited’s (ASX: APT) stock jumped up 4.073 per cent on August 03, 2018 due to positive sentiments related to bright and profitable future ahead. In the recent business update, the group disclosed processing of over 10 per cent of online retail in Australia through its platform. It indicates that the company’s expansion strategy into the United States has started well. The company has signed over 400 retailer contracts and over 200 retailers are currently transacting on the platform, which includes major millennial focused brands, URBAN OUTFITTERS (live since 16 May 2018) and REVOLVE (live since 9 July 2018). A review of the European E-Services business is in progress. On the financial front, the current ratio stood at 5.97x in 1HFY18. Given the backdrop of strong fundamentals and ongoing developments that involve expansions and new innovations which are the drivers for the sustainable growth, we maintain our “Hold” recommendation on the stock at the current market price of $ 14.310.

NEXTDC Limited

Update on Notes IV – Upsized to $300 Mn: NEXTDC Limited (ASX: NXT) announced the completion of Notes IV at $300 Mn. These Notes IV consist of a floating rate tranche of $200 Mn at 3.75% over 3-month BBSW and a fixed rate tranche of $100 Mn at 6.0%. As per the release, Notes IV is complementary to the $300 Mn fixed rate Notes III security issued by the Company in May 2017, with a similar structure, albeit a different maturity date (June 2022), compared to June 2021 for Notes III. The Company further updated that Notes IV is scheduled to settle on 17 July 2018. The Company intends to use the net proceeds from the issue of the Notes IV for general business and financing purposes, including investment in the development of new data centre sites and the core supporting infrastructure at these sites. On the financial front, RoE stood at 1.6% in 1HFY18, against the value of 0.7% in 2HFY17, marking the growth of 90 bps on six months basis. Meanwhile, the stock price has risen 13.65 per cent in the past six months but down by 4.66 per cent in the past one month as at August 02, 2018. The Group is almost trading at its 52-week high price that is $8.19 and a higher PE level of 175.92x. Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $7.390 (up by 3.212 per cent on August 03, 2018).

 
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