Tabcorp Holdings Limited

TAH Details

Dividend to Be Paid in September 2019: Tabcorp Holdings Limited (ASX: TAH) is into the provisioning of gambling and other entertainment services. The company recently released its full-year 2019 results wherein it reported revenue and EBITDA amounting to $ 5,482.2 Mn and $ 1,064.7 Mn with a rise of 8.7% and 7.6%, respectively on pro-forma basis. This represents positive step change in performance, with record Lotteries & Keno result from successful game portfolio initiatives, robust growth in digital and retail channels and favourable jackpots. In the FY19, the company has declared a fully franked final dividend of 11.0 cents per share, which brings the full-year dividend to 22.0 cents per share. The record date for the final dividend was 22^nd August 2019, and its payment date is 20^th September 2019.


FY19 Results (Source: Company Reports)

What to Expect: For FY20, the company is focused on completing the core technology programs and also focused towards progressing the online Keno initiatives as well as the integration of SA Keno.The company stated that its biggest business, Lotteries & Keno, is positioned for sustainable growth as a result of investments in game innovation and technology and data capability. TAB added that its priorities in Wagering & Media are to wrap up the UBET/TAB integration and to implement a new data platform and further digitalise the venues. The company is targeting EBITDA for FY20 to $90 Mn and for FY21, it is expecting EBITDA in the range of $130 Mn-$145Mn.

Stock Recommendation: Tabcorp Holdings Limited provided a return of 1.76% and 1.99% in the time span of one month and three months, respectively. Hence, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$4.710 per share (up 1.948% on 30^th August 2019).


TAH Daily Technical Chart (Source: Thomson Reuters)
 

Downer EDI Limited

DOW Details

Dividend to Be Paid on October 02, 2019 with record date of September 04, 2019: Downer EDI Limited (ASX: DOW) is the leading provider of integrated services in Australia and New Zealand. The company recently announced that Vinva Investment Management, became an initial substantial holder of the group with the voting power of 5.00% since 27 August 2019. In FY19, the company reported total revenue including joint venture and other income amounting to $13,448.3 Mn, reflecting a rise of 6.6% on a Y-o-Y basis. This was mainly driven by increased activity in Utilities, EC&M and Mining, partially offset by lower revenue in Transport and Facilities. It posted utilities revenue of $2.5 Bn with a Y-o-Y rise of 25.0% or $501.8 Mn on the back of continuing strong contributions from NBN contracts in Australia as well as new renewable energy projects. In FY19, DOW reported a 14.7% increase in the Underlying NPATA (net profit after tax and before amortisation of acquired intangible assets) to $340.1 Mn and 8.0% increase in the operating cash flow to $630.2 Mn. Based on the performance, the Board of Directors declared a 50% franked dividend of 14 cents per share which will be paid on October 02, 2019 with record date and ex-date date of September 04, 2019 and September 03, 2019, respectively. This summarized a total dividend payment of 28 cents per share (franked to 50%) for FY19, which is 3.7% higher than the prior year total dividend payment of 27 cents per share.
 

Profit and Loss (Source: Company Reports)

Future Strategies and Guidance: As per the release of the FY19 results, the company expects consolidated NPATA to be around $365 Mn before minority interests for the 2020 financial year. The group’s strategic objectives revolve around maintaining a focus on Zero harm as a cornerstone of the safety pillar and to improve engagement with customers as a cornerstone of the Relationships pillar.
 
Stock Recommendation:  The stock of Downer EDI Limited produced a return of 4.97% and 6.28% in the time span of one month and three months, respectively.  Therefore, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$7.710 per share (up 1.314% on 30^thAugust 2019).
 

DOW Daily Technical Chart (Source: Thomson Reuters)
 

Qantas Airways Limited

QAN Details

Anticipating Transformation Benefits of Around $400 Mn:Qantas Airways Limited (ASX: QAN) is into the operation of international and domestic air transportation services. In FY19, the company reported underlying profit before tax amounting to $1.30 Bn, reflecting a fall of 17% due to rise of $614 Mn in fuel costs from higher oil prices and a further $154 million of the foreign exchange impacts on non-fuel net expenditure. The return on invested capital stood at 18.4% in FY19.  During the same period, the Board of the company has declared a fully franked dividend amounting to $204 Mn or 13 cps which is to be paid by the company on 23^rd September 2019 with a record date of 3^rd September 2019.


Underlying Profit Before Tax (Source: Company Reports)

Future Prospects:The company continues to focus on matching capacity with demand, together with growing revenue to recover higher fuel costs. For FY20, the company is expecting total fuel bill to increase to around A$3.95 billion and is fully hedged. It stated that the group capacity is anticipated to increase by around 1% in the 1H FY20. The company is expecting inflation impact on group expenditure (which includes wage growth) of around $250 Mn. It anticipated transformation benefits to be around $400 Mn and gross capital expenditure to be $2.0 Bn for FY20.

Stock Recommendation: On the stock’s performance front, it produced returns of 3.27% and 8.89% in the time frame of one month and three months, respectively. Hence, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$6.110 per share (up 1.833% on 30^th August 2019).


QAN Daily Technical Chart (Source: Thomson Reuters)
 

The Star Entertainment Group Limited

SGR Details

Dividend to Be Paid on September 26, 2019: The Star Entertainment Group Limited (ASX: SGR) recently announced that it would be conducting its 2019 Annual General Meeting on 24^th October 2019. In FY19, the company reported statutory net revenue amounting to $2,158 Mn, reflecting a rise of 3.6% on pcp. It was also mentioned in the release that the balance sheet of the company supports the investment plans and SGR is having a gearing of 1.9x and committed debt facilities amounting to $1.7 Bn. The Board of Directors of the company have declared a final dividend amounting to 10 cps, fully franked at the company tax rate of 30%, which is to be paid on 26^th September 2019.


Financial Summary (Source: Company Reports)

Future Priorities:The company’s priorities revolve around improving and de-risking returns throughout the group. The priorities primarily include to deliver on investment strategy, to manage the competitive environment as well as to improve capital efficiency. With respect to Gold Coast, the company is expecting to complete the construction of the First JV Tower by FY22.
Stock Recommendation:  As per ASX, the stock of SGR is trading slightly lower than its 52-week low-high average. The company is focused on shareholders return as it gives priority to strategic positioning, operational leadership, continuous cost management, capital efficiency and dividend yield. Hence, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$4.110 per share (up 0.489% on 30^th August 2019).

 
SGR Daily Technical Chart (Source: Thomson Reuters)
 

1300 Smiles Limited

 ONT Details

Solid Progress on all Performance Measures:1300 Smiles Limited (ASX: ONT) is a provider of dental services in Australia. The company recently announced that it will pay a final dividend of AUD 0.125 per ordinary share on 16 September 2019 with record date of September 06, 2019.

Key Highlights of FY19 Results: During the financial year ended 30 June 2019, revenue from ordinary activities amounted to $40.31 million, up 3.2% on prior corresponding period.EBITDA for the period stood at $13.3 million, up 1.4% on pcp. Net profit for the period amounted to $7.77 million, up 1.8% on prior corresponding period.


FY19 Financial Summary (Source: Company Reports)

Road Ahead:The company expects to drive future growth through increased profits from addition of more dentists on its existing facilities. The company is looking forward to expanding its facilities, which are already at full capacity. It is also aiming to conduct training programs for dentists to increase their turnover. In addition, the company is planning to establish new practices in existing and new regions.

Stock Recommendation: The stock of the company generated negative returns of 3.97% and 6.36% over a period of 1 month and 3 months, respectively. In FY19, the company delivered a YoY growth of 1.8% in earnings per share and 4.2% in dividends per share. Dividend pay-out ratio of 76% for the year stood close to the higher end of the target range of 60% - 80%. Furthermore, the company is looking forward to future development through ongoing opportunistic acquisitions, continued organic growth of existing practices and investigation of greenfield sites for new practices. Considering the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $6.050, up 0.166% on 30 August 2019.


ONT Daily Technical Chart (Source: Thomson Reuters)
 

Super Retail Group Limited

 SUL Details

Period of Strong Operating Cashflow:Super Retail Group Limited (ASX: SUL) is primarily engaged in the retail industry.

Financial Highlights: During the 52-weeks period to 29 June 2019, the company reported total group sales amounting to $2.71 billion, up 5.4% on prior corresponding period. Group segment EBITDA amounted to $314.7 million, up 7.0% on pcp. Normalised net profit after tax amounted to $152.5 million, a rise of 5.0% on prior corresponding period. The period became another year of strong operating cashflow, supporting a reduction of $36.2 million in net debt.


Group Results (Source: Company Reports)

Trading Update: During the first 6-weeks of FY20, the group’s largest three businesses delivered positive like for like sales growth. Supercheap Auto witnessed a growth of ~3%, BCF delivered a growth of ~5% and Rebel reported an increase of around 2%.

Outlook: Capital expenditure in 2019/20 is expected to be between $85 million and $90 million. In the same year, the company is also expecting a proposed new Enterprise Agreement for retail and clerical workers, that will have a one-off incremental EBITDA impact of approximately $9 million in the first year.

Stock Recommendation: The stock of the company generated returns of 1.51% over a period of 1 month. During FY19, the company strengthened its portfolio of powerful brands. All its brands hold a leading market position in growing lifestyle categories and have consistently demonstrated the ability to deliver top-line growth. The group’s club membership increased to 6 million in FY19 and now represents 56% of sales across the group. Moreover, investment in digital capabilities helped the company to achieve an annual growth of 25% in Group online sales. Considering the above factors, we give a “Buy” recommendation on the stock at the current market price of $9.350, down 0.426% on 30 August 2019.


SUL Daily Technical Chart (Source: Thomson Reuters)
 

Coronado Global Resources Inc.

CRN Details

FY19 Pay-out Ratio Expected to be 100%:Coronado Global Resources Inc. (ASX: CRN) is engaged with the development and operation of premium quality metallurgical coal mines.

H1FY19 Financial Performance: During the six months ended 30 June 2019, the company generated revenue amounting to $1,234.3 million, up 10.6% on prior corresponding period. Adjusted EBITDA for the period stood at $405.4 million, up 54.1% on pcp. During the period, the company declared an interim distribution of $0.41 per CDI, representing an interim dividend of $0.112 per CDI and Capital Return of $0.298 per CDI. The shareholders will receive the dividend on 20 September 2019.


H1FY19 Financial Results (Source: Company Reports)

Guidance: In 2019, the company expects production to be in the range of 21.1 – 21.6 Mt. EBITDA for the period is expected to be between $737 million and $807 million. Pay-out ratio for the period is expected to be 100%.


FY19 Guidance (Source: Company Reports)

Stock Recommendation: The stock of the company generated negative returns of 10.38% and 6.31% over a period of 1 month and 3 months, respectively. During H1FY19, the company’s reported net income increased substantially to $214.3 million, up 92.7% on pcp. The period also saw a development of new Curragh mine plan that will target 15Mt of production per annum by 2023. In addition, the company executed the New Coal Supply Agreement with Stanwell Corporation, that concluded in acquisition of the Stanwell Reserved Area. Based on the aforesaid factors, we give a “Buy” recommendation on the stock at the current market price of $2.660, up 0.377% on 30 August 2019.


CRN Daily Technical Chart (Source: Thomson Reuters)
 

Freedom Foods Group Limited

FNP Details

Capital Expenditure Program to Induce Growth:Freedom Foods Group Limited (ASX: FNP) is engaged in manufacturing and selling of food products.

FY19 Results: During the year ended 30 June 2019, the company reported net sales amounting to $476.2 million, up 34.9% on previous year. Operating EBITDA for the period stood at $55.2 million, up 40.9% on pcp. Operating net profit increased to $21.9 million, up 40.1% on pcp. Statutory net profit was reported at $11.6 million, down 9.0% on pcp. The company declared a final dividend amounting to 3.25 cents per share, to be paid on 02 December 2019.


FY19 Key Financials (Source: Company Reports)

Outlook: The company continued to experience strong demand across its business activities in Australia, China and SE Asia. The company completed stage one of a transformational Nutritionals capability that will positively impact its performance in the future. In the presence of new product revenue streams from major capital expenditure projects, the company will experience material impact on sales and earnings into FY20 and beyond.

Stock Recommendation: The stock of the company generated negative returns of 16.56% and 25.51% over a period of 1 month and 3 months, respectively. In FY19, the group substantially increased its investments in brand building and marketing. The company’s capital expenditure program provides a strong operational platform to significantly increase sales and operating financial returns. After FY2021, the group anticipates payment of fully franked dividends from increased profits. Hence, considering the above-stated factors and current trading levels, we give a “Buy” recommendation on the stock at the current market price of $5.050 per share. The stock was up 25.31% at the market close on 30 August 2019, on account of decent set of results for FY19.


FNP Daily Technical Chart (Source: Thomson Reuters)
 

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