Silver Chef Ltd

Appointment of new Chief Financial Officer: Silver Chef Ltd (ASX: SIV), which is focused on long term rentals of commercial equipment to small-to-medium enterprise in the hospitality space, witnessed its stock rising 15.13% in three months as on June 20, 2018. The company has appointed Graeme Fallet as Chief Financial Officer (CFO) with effect from 20 June 2018. On the other hand, the company in the first half of FY18 had reported the result below expectations, with lower than expected revenue growth and an increase in bad debts. The company experienced softer market conditions in Australia and made management changes in Canada due to GoGetta. As a result, the company for the first half reported the loss of $13m, including approximately $20m in impairment provisions against the GoGetta book and $4.8m against the Silver Chef book. However, SIV is on track to report a hospitality pre-tax profit in the range of $20 million to $24 million and a statutory loss in the range of $9 million to $12 million. SIV expects to deliver return on equity at historical levels of 20%-25% in coming years. Additionally, SIV has successfully renegotiated its senior debt and securitisation facilities. Further, the company had suspended the dividend reinvestment plan (DRP) for the interim dividend of 10c per share paid on 20 April 2018. Meanwhile, SIV is trading at a high P/E of 42.59x. Based on the trading levels and the loss reporting update, we give an “Expensive” recommendation on the stock at the current price of $ 3.940.
 

Smart Parking Ltd

Update on UK Business: Smart Parking Ltd.’s (ASX: SPZ) stock has fallen 51.32% in three months as on June 20, 2018. The company had terminated the employment of the company’s UK Managing Director and CFO on 15 May after being aware of conduct, which was not consistent with the company’s values and policies and was in breach of their employment contracts. However, SPZ’s Group CEO and Managing Director, Paul Gillespie, has assumed the role of UK Managing Director on an interim basis, until a suitable replacement is found. Moreover, the company during the winter months in the UK, experienced the coldest winter in 7 years, which had affected the car parks usage, car counts. As a result, fewer breach notices than expected were issued. The company generally faces a seasonal downturn in the winter months, but due to acute poor weather, the petrol sales in March was down 7.4% compared to the same month last year. This has also affected the company’s ability to install new sites throughout the winter and early spring. Further, there were also some challenges with system communications, that impacted the company’s ability to ensure that installed sites were able to go live. These have now been rectified. Meanwhile, SPZ now expects parking breach notices in the second half of FY18 to be approximately 180,000 to 190,000 due the cumulative effect of the challenges. This reflects a 23% growth on H2 FY17 (excluding the loss of Matalan), which is below the company’s expectations. Further, the non-recurring costs of approximately $0.6m will impact the UK result in the second half of FY18. Additionally, SPZ expects that, prior to accounting for one-off costs, underlying EBITDA for H2 FY18 for the UK Parking Management business will be in the range of $2.0m and $2.4m. However, SPZ expects that the renewed management focus in the UK will continue to be achieved and the long term prospects for the business will not be affected by the recent events. On the other hand, as per the smart parking systems market report, global smart parking systems market is expected to experience growth from US$ 398.6 million in 2016 to US$ 1462.3 million by 2025 at a CAGR of 15.7% between 2017 and 2025. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 0.180.

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