Super Retail Group Limited

SUL Details

Awarded as Best Employer: Super Retail Group Limited (ASX: SUL) is into the operations of specialty retail stores in the automotive, tools, leisure and sports categories with a market capitalisation of ~A$1.93 Bn as on 21^st Aug 2019. Recently, the company published its investor presentation, wherein it communicated about its performance for the financial year 2019. It was mentioned that the company has been awarded an Aon Best Employer for Australia (2019), as part of Aon Best Employers global certification. The company’s net inventory has decreased. However, an increase in inventory investment has been fully financed through ongoing supply chain efficiencies. The net debt of the company has declined in comparison to the previous comparable period, which reflects strong operating cashflows and disciplined capital allocation.

The company declared a final fully franked dividend of 28.5 cents per share, which contributed to full year dividends totalling 50.0 cents per share. At the CMP of A$10.050 per share, the annual dividend yield of the company stood at 5.1% in comparison to the industry median (consumer cycles) of 4.6%, which might attract the attention of dividend-seeking investors.


Group Balance Sheet (Source: Company Reports)

What to Expect: Super Retail Group Limited anticipates capital expenditure to be in the range of $85 Mn -$90 Mn for 2019/20. SUL anticipates a proposed new Enterprise Agreement for retail and clerical workers to be implemented in 2019/20. If Enterprise Agreement is approved by Fair Work Commission, store wage inflation is expected to have a one-off incremental EBITDA impact of around $9 Mn in its first year.

Stock Recommendation: In FY19, the company reported 6.1 Mn of active club members with 4-year CAGR of 11.3% and YoY growth of 10.9%. The company reported normalised earnings per share of 77.3 cents with a rise of 5.0% on pcp. The return on capital increased to 13.3%, which remains above weighted average cost of capital. The closing net debt of the company stood at $386.7 Mn, which was $36.2 Mn lower than the prior year. Currently, the stock is priced close to its 52 weeks high level of $10.440 with reasonable PE multiple of 13.88x. Hence, considering the above-stated facts and current trading levels, we maintain our “Hold” rating on the stock at the current market price of A$10.050 per share (up 2.551% on 21^st Aug 2019).


SUL Daily Technical Chart (Source: Thomson Reuters)
 

Aventus Group

AVN Details

Key Points from FY19 Results: Aventus Group (ASX: AVN) makes investment in large format retail property assets. Recently, the company released its FY19 results and stated that it has a market leading share of LFR (Large Format Retail) centres. In FY19, the company reported like for like Net Operating Income Growth of 3.5% and its net asset value per security stood at $2.42.

The distribution per security of the company stood at 16.6 cents with CAGR growth of 5.3% in the time period from June 2016 to June 2019 as can be seen from the below picture.At the current market price of A$2.590, the annual dividend yield of the company stood at 6.52% in comparison to the industry median (real estate operations) of 4.6%.


Distribution Per Security (Source: Company Reports)

Future Aspects: In the next 12 months, the company focuses on (1) to actively diversify its tenant base with a priority on increasing everyday-needs to continue to driveweekday traffic and energise its centres, (2) continuing its investment in the expansion and development of the portfolio to enhance the shopper experience and capitalise on attractive development returns, and (3) maintaining disciplined capital management to allow for the execution of its business strategy.

Based on the continued momentum from the portfolio, the company anticipates FFO per security to grow in the range of 3-4%, which is equivalent to 19.0 – 19.2 cents per security. The company would continue to proactively drive asset performance and deliver strong returns from its development pipeline.

Stock Recommendation: The funds from operations of the company stood at $96 Mn in FY19, reflecting a rise of 8.2% and posted revaluation gains amounting to $85 Mn. AVN delivered a profit of $110 Mn, and the gearing stood at 38.7%, which is in the target range of 30%-40%.

On the stock’s performance front, it produced returns of 2.83% and 11.89% in the time period of one month and three months, respectively. Hence, considering the above-stated facts and looking at current trading levels, we give a “Hold” rating on the stock at the current market price of A$2.590 per share (up 1.969% on 21^st Aug 2019).  


AVN Daily Technical Chart (Source: Thomson Reuters)
 

Peet Limited

PPC Details

Payment of Interest: Peet Limited (ASX: PPC) is engaged into the development of broadacre residential land via syndicated, owned or joint venture projects. The market capitalisation of the company stood at ~A$550.96 Mn as on 21^st August 2019. The company recently announced that Eley Griffiths Group, ceased to be a substantial holder in the company since 2^nd August 2019. In another update, the company stated that it will be paying interest on the security “PPCHB - Simple Bond 3-BBSW+4.65% 05-10-22”amounting to AUD 1.4882. The interest amount is to be payable on 7^th October 2019 with ex-date and record date of 26^th September 2019 and 27^th September 2019, respectively. In 1H FY19, the company delivered operating profit after tax amounting to $23.1 Mn, reflecting a rise of 5% on pcp.

During the first half, operating profit after tax amounted to $23.1 million, up 5% on the prior corresponding period revenue of $21.9 million. EBITDA for the period was reported at $36.3 million, as compared to $41.7 million in pcp. An interim fully franked dividend of 2.0 cents per share was paid on 9 April 2019. At the current market price of $1.115 per share, the annual dividend yield of the company stood at 4.39% in comparison to the industry median (construction and engineering) of 2.7%.

Buy-Back Update- As per the release dated 14th August 2019, the company has extended its buy-back period to 30 August 2019 - 29 August 2020 from the prior buy-back period of between 10 October 2018 and 22 August 2019. It was also stated that the company reserves the right to suspend or terminate the buy-back at any time.


Dividend Per Share (Source: Company Reports)

Future Prospects: The portfolio of the company is well-placed to target longer-term growth and value creation. It is also focused on expanding market share by broadening product offering in Completed Homes and Medium Density product. Additionally, PPC is well-positioned to capitalise on a WA market recovery.

Stock Recommendation: In 1H FY19, the company posted operating EPS of 4.74 cents per share with a rise of 6% on pcp. The receipts from the customers stood at $120.7 Mn in 1H FY19 as compared to $154.4 Mn in 1H FY18. With respect to the stock’s past performance, it produced returns of 8.57% and 14.00% in the time period of three months and six months respectively. However, in the time span of one month, it delivered returns of -0.87%. Currently, the stock is trading slightly above the average of 52 weeks high and low level of $1.255 and $0.945, respectively. Based on the mixed scenario, we have a wait and watch view on the stock at the current market price of A$1.115 per share (down 2.193% on 21^st August 2019).

 
PPC Daily Technical Chart (Source: Thomson Reuters)

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