Stocks’ Details

Super Retail Group Ltd

BCF Segment Comes Out as Ace Performer: Super Retail Group Ltd (ASX: SUL) is primarily involved in the retail industry. Founded in 1972, as an automotive accessories mail order business which evolved into Supercheap Auto, the Group has grown through both organic growth and mergers and acquisitions. The company recently updated that Commonwealth Bank of Australia has become an initial substantial holder of the group with the voting power of 5.01%.

Trading Updates For First 17 Weeks Of 2H19:The company recently provided a trading performance update and outlined the immediate priorities for the Group. The presentation provided a trading update for the first 17 weeks of the 2H19 for its reported segments.

Like for like sales for the Group came in at 3.3% YTD to 27 April 2019 with Group’s unallocated cost to be circa $21 million and capital expenditure of circa $85 million. Performance of the Auto and Sports business was in-line with the expectations. BCF segment maintained its revenue growth trajectory even after facing ongoing pressure from the margin side. Supercheap Auto, Rebel, and BCF enjoy market-leading customer loyalty performance. While Macpac is an emerging & credible brand in a high growth segment. BCF recorded the highest like for like revenue growth, which came in at 5.3%, followed by Supercheap Auto posting a like for like revenue growth of 4.2%.


Sales Growth Compared to pcp (Source: Company Reports)
 
Outlook & Stock Recommendation: The management expects that the company will further enhance omni-retail channels to provide better offerings to the customers and to expand further growth for the overall group. Along with that, strong customer base for the company presents substantial opportunities to capitalise on the potential of SUL’s brands. Going Forward, with the extensive store network, sector leading brands, customer loyalty and increasing e-commerce ability, the company is well positioned for future growth within the retail sector in Australia and New Zealand.

At the current market price of $9.430 per share, the stock is trading at price to earnings multiple of 14.420x. The stock has generated a return of ~27% in the last 3-months. Annual dividend yield for the stock comes in at 5.25%. Hence, considering the above-mentioned facts and current trading level, we recommend a “Hold” rating on the stock at the current market price of $9.430 per share (up 1.072% on 05 June 2019).
 

NEXTDC Limited

Property Acquisitions and New Contracts Impact FY19 Guidance: NEXTDC Limited (ASX: NXT) operates in the information technology sector and engages in the development and operation of independent data centres in Australia. In a recent announcement to the exchange on 4 June 2019, NEXTDC revealed that it has raised an amount of $200 million in senior unsecured debt. This was put in place through an additional fixed and floating rate tranche of its existing $300 million Notes IV due on 9 June 2022, hereinafter referred to Notes IV-2.

The $170 million Floating Rate Notes IV-2 was valued at par at a margin of 3.75% over 90-day BBSW and $30 million Fixed Rate Notes IV-2 was valued at 102.466% at par on a coupon rate of 6%, which implied a 4.92% yield to the first call. NEXTDC will own $800 million of senior unsecured medium-term notes on issue post completion of Notes IV-2.

Financial Highlights: During 1HFY19, the company recorded a revenue amounting to $90.8 million, reporting an increase of 17% on the prior corresponding period. The amount of Underlying EBITDA during the period was $42.2 million, depicting an increase of 26% on 1HFY18.During the period, NXT’s number of customers also went up by 25% to 1,090. Interconnections went up by 34% to 9,982.

As at 31 December 2018, the cash and term deposits amounted to $344 million. The company reported liquidity of $644 million, which included undrawn senior syndicated debt facility of $300 million.


 
1H19 Financial Highlights (Source: Company Reports)
 
During the period, the Company continued to expand its network through acquisitions and new facilities.It opened a P2 microsite and connectivity hub to provide customers with easier access to Indigo subsea cable system and other network providers.
 
FY 2019 Guidance: Interest and distribution income will be lower in 2H19 due to the property acquisitions. The revenue guidance for FY 2019 is in the range of $180 million to $184 million while underlying EBITDA is expected to be between $83 million and $87 million. However, capital expenditure is anticipated to be between $430 million and $470 million.
 
Stock Performance: The company’s stock yielded returns of 4.44% and 2.49% over a period of 1 month and 3 months, respectively. 1HFY19 was predominantly characterised by strong growth in customers and connectivity, a diversified recurring revenue model, and strong market presence with an unprecedented level of sales. Furthermore, the above mentioned showcase the possibility of decent performance during 2HFY19. Hence, we give a “Buy” recommendation on the stock at the current market price of $6.770 per share (up 2.731% on 5 June 2019).
 

Evolution Mining Limited

Quarter of Consistent Operational Performance and Strong Cash Flow: Evolution Mining Limited (ASX: EVN)is a company based out of Liverpool Street, Sydney, Australia. The company is engaged in development and operation of gold related projects in Australia. On 3 June 2019, the company released a presentation on its mining projects. The company has a focused portfolio of 6-8 assets and has a strategy in place to upgrade its portfolio asset quality. It aims at reducing costs and grow free cash flow per share and simultaneously extending the reserve life. Some of the projects in its portfolio include Cowal, Ernest Henry, Mungari, Drummond Project, Connors Arc Project and Murchison Project.


Evolution 2018 Gold Mineral Resources (Source: Company Reports)
 

Evolution 2018 Gold Ore Resources (Source: Company Reports)
 
Key Highlights of Quarter Ended March 31, 2019: As per the quarterly report for the period ending 31 March 2019, the company reported a consistent operational performance with Gold Production of 175,901 ounces and a reduction in All-in Sustaining Cost by A$48/oz to A$925 per ounce. During the period, the company commissioned the Cowal Float Tails Leach Project and achieved 4.6% increase in recoveries in the month of March. The quarter was characterised by a strong cash flow position. The group reported an operating mine cash flow amounting to A$168.3 million. Group net mine cash flow during the period stood at A$107.8 million.

As at March 31, 2019, the overall Group cash balance amounted to A$255.9 million as compared to A$313.6 million as at 31 December 2018. The decrease in cash balance was a result of dividend payments, acquisition of stake in Tribune Resources and debt repayments.
 

Consolidated Production and Sales Summary (Source: Company Reports)
 
All the operations during March 2019 quarter depicted consistent position of being cash flow positive. This was witnessed after all the operating and capital investment programs were met.Return to shareholders during the period amounted to A$59.3 million.
 
FY19 Guidance: The group guidance for FY19 was maintained with production guidance between 720,000-770,000 ounces at an AISC of A$850 – A$900 per ounce. The production guidance for June 2019 quarter was 190,000 – 195,000 ounces.
 
Stock Performance: The company’s stock yielded returns of 33.01% and 20.88% over a period of 1 month and 3 months, respectively. At the current market price of $3.880 per share, the stock is trading slightly towards its 52-week high price of $4.180 with price earnings multiple of 30.020x. Looking at the company’s operational performance in terms of production and cost, accompanied by a strong cash flow position and the stock performance, Evolution is well positioned to generate favourable returns for its shareholders. Based on the foregoing, we give a “Hold” recommendation on the stock at the current market price of $3.880 per share (down 5.596% on 05 June 2019).
 

Comparative Price Chart (Source: Thomson Reuters)    

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