Stocks’ Details

Telstra Corporation Limited (ASX: TLS)

Strengthening position in the media market: Telstra group is expected to retain a high dividend yield while the group has reiterated to maintain a total dividend of 22 cents per share (including ordinary and special) for FY18. Telstra maintains a dividend policy to pay a fully franked dividend of between 70 to 90 per cent of underlying earnings from FY18. In addition to the ordinary dividend, the group intends to return in the order of 75 per cent of future net one-off nbn receipts to shareholders over time via fully franked special dividends. Needless to say that the long-term growth in dividends would depend on arrival of 5G, other investments and impact from nbn. Meanwhile, News Corp and Telstra completed the transaction to combine Foxtel and FOX SPORTS Australia and the commercial arrangements will remain unchanged which were announced on March 6, 2018. Telstra’s investment in the new company will be equity accounted on an ongoing basis. The Group expects to record a one-off accounting gain which will arise from the fair value of the combined business as compared with the book value and the current estimate of the gain is around A$263 million while has been said to be subject to the changes arising from the timing of the completion and finalisation of the adjustments on completion. This transaction did not impact the guidance for FY18 which was reaffirmed as stated earlier. According to the agreement, News Corp will have 65 per cent of the shareholding in the combined entity and Telstra will have 35 per cent. The combined company will provide Australian viewers with the best possible experiences while putting greater emphasis on live streaming products and will provide an expanded library. This transaction will help Telstra to strongly compete in the dynamic media market and would continue to be an important part of its media strategy. The stock price was down by 16.5 per cent in the past three months and the stock is available at an attractive level. The group is expected to benefit from the above transaction which can be one of the catalysts for growth. We recommend to “Buy” the stock at the current market price of $ 3.110.
 

Product-wise Income Growth (Source: Company Reports)
 

Accent Group Limited (ASX: AX1)

Positive Outlook for 2018: Accent Group has indicated of delivering sustainable and growing dividends based on high quality cash flows from its defensible business. The Group released half yearly results for FY18 and recorded a half-yearly profit (NPAT) of $26.3 million which was more than 13 per cent as compared to the same period in the prior year. Underlying Earnings before Interest Tax and Depreciation and underlying diluted Earnings per share rose by 16.5 per cent and by 12.1 per cent as compared to the same period in the prior year and amounted to $50.0 million and 4.94 cents, respectively. The Group declared a fully franked interim dividend of 3.0 cents per share and is expecting that it will continue its dividend pay-out ratio to be between 75-80 per cent of the underlying earnings per share for FY18.Retail sales were up by 4 per cent for the first 7 weeks of the second-half. The business is well positioned to defend against the new market entrants; and going forward, it will capitalise on its growth opportunities. Meanwhile, the Company disclosed to the ASX that Craig Thomson was holding 35,428,562 fully paid ordinary shares and ceased to be the director of the Company since 31 March 18. The stock prices were up by 64 per cent in the past six months and by 2.77 per cent in the past five days, so we give a “Hold” recommendation at the current market price of $ 1.310.


Key Drivers of Financial Performance (Source: Company Reports)

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.