NextDC Limited (ASX: NXT)

NXT Details

Indicative offer from APDC: NextDC previously rejected the APDC Trust offer of $300 million for all the data centre properties. APDC recently announced that it has received a non-binding offer from an undisclosed third party which may be prepared to purchase all three data centres owned by the APDC Trust at a headline price of $280 million which is subject to final contracts, securityholder approval, FIRB and other unspecified conditions. NextDC has not received a valid right of first refusal notice and will consider its terms once it receives them before deciding whether or not to exercise its pre-emptive rights. Due to the limited information available about the terms of the sale, NextDC is not currently prepared to acquire the APDC Trust’s assets at a $280 million price. In the meantime, NextDC continues to proceed with its proposal to wind up the APDC Trust and other related court proceedings. APDC Limited agreed to the terms and exchanged nonbinding letters with the preferred purchaser for the sale of the Portfolio. The agreed price of $280 million equates to a 5.0% of initial yield and a premium of $67.2 million or 31.6% to the last independent valuation.


Comparative Analysis (Source: Company Reports)
 
If NextDC does not accept the offer within 20 business days of receiving APDC Trust’s offer, for the next 180 days APDC Trust may sell the data centres to a third party on terms no more favourable than those set out in its offer to NEXTDC. APDC will be releasing its results for the 6 months to 31 December 2017 on 27 February 2018. If NextDC does elect to exercise its first right and refusal and accept APDC Trust’s offer, the offer will be subject to AJD obtaining security holder approval under Listing Rule 10.1. It looks unlikely that NXT will take up the centres at the lower price against the earlier offered $300 million. Meanwhile, NXT stock price has increased by 46.81% in the past six months and the same slipped by 3.4% on February 15, 2018. We give a “Sell” recommendation at the current price $6.00
 

NXT Daily Chart (Source: Thomson Reuters)
 

NetComm Wireless Limited (ASX: NTC)

NTC Details

Long Term Growth Opportunities: Up 4.5% on February 15, 2018 with improving sentiments, NTC had lately appointed Mr David Stewart as a Non-Executive Director of the Company. It also developed Network Connection Device (“NCD”) and secured a large order from its initial customer, NBN Co. Ltd. This product will be used in global markets and in conjunction with NetComm Wireless’s world leading Distribution Point Unit (“DPU”). NCD will undergo operational, customer, business and field testing with the nbn prior to the commercial launch.
 

Sales Strategy (Source: Company Reports)
 
Post the success of NBN in respect of their Fibre-to-the-Curb project, NBN proved to be a natural inaugural customer and was also delighted to provide this NCD technology to further enhance the effectiveness of the Fibre-to-the-Curb rollout. The group enhanced their Fixed Wireless coverage to 555k as of November 2017, from June 2015. The take up rate rose to 37.4%, showing rising market penetration. For fiscal year of 2017, the group delivered an EBITDA of $3.6 million, which was in line with their expectations. They delivered a solid revenue growth of 26.3% to $107.6 million for the year. The share prices decreased by 24% in the past six months owing to volatility. At the back of the long-term view, we maintain a “Buy” at the current price of $1.17
 

NTC Daily Chart (Source: Thomson Reuters)
 

Integrated Research Limited (ASX: IRI)

IRI Details

Maintains a Strong Financial Position:The Company announced a record first half result for 2018 and profit after tax increased by 20% and amounted to $9.3 million when compared to the prior corresponding period; and the results were within guidance provided to the ASX.  The Company continued to have a robust renewal rates for both Unified Communications and Infrastructure which was more than 96% and is comparable to historical rates. Over 95% of the Company’s revenue was derived from over 75 countries outside of Australia. It also entered into an agreement with Cisco to join its Solutions Plus Program. From 2018, IRI is one of a select group of companies with Cisco-certified products that are available for purchase through the Cisco Global Price List. The Company continued to invest in its future with gross spending on research and development representing 18% of the revenue. Group’s operating margin for the current half was 20% as compared to 18% for the previous corresponding period.


Revenue Growth Trend (Source: Company Reports)
 
Directors also declared a fully franked interim dividend of 3.0 cents per share. IRI remains free of debt with a total cash position on 31 December 17 of $9.6 million and $9.5 million as on 31 December 16. When growth was adjusted to constant currency, new license sales would have increased by 8%, revenue by 7% and profit after tax by 25%. The share price increased by 15.6% in the past six months but there was a dip of 8.77% in the past one month. The stock surged up 4.4% on February 15, 2018 with the result highlights. Given the uptrend movement, we have a “Hold” recommendation at the current price of $3.80
 

IRI Daily Chart (Source: Thomson Reuters)
 

WiseTech Global Limited (ASX: WTC)

WTC Details

Expansion Strategy in linewith its long-term growth: WiseTech acquired Intris N.V, the leading Belgian provider of freight forwarding, customs and warehousing management solutions. Intris provided its integrated software and cloud-based solutions to customers including Panalpina World Transport, Bollore Netherlands, Rhenus, Gosselin Support Services, AML and many other logistic services providers in Belgium and more recently, the Netherlands. For Intris, the purchase price cost comprised of ~$11.9m (EUR 7.5m) upfront with a further multi-year earn-out potential of up to ~$5.5m (EUR 3.5m) related to integration, product development and customer version. Intris is expected to be consolidated into WiseTech Global accounts from March 18. This transaction is in line with its stated strategy of accelerating long-term organic growth through targeted, valuable acquisitions across new geographies. It is continuing to progress its pipeline of opportunities in key target regions of Europe, Asia and Latin America and in additional adjacencies.
 

Financial Performance Trend (Source: Company Reports)
 
Meanwhile, WTC stock has risen by 89.88% in the past six months (as at February 14, 2018) and now trades at a very high price to earnings level. The stock looks “Expensive” at the current market price of $13.98
 

WTC Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.