Stocks’ Details
 

Afterpay Touch Group Limited

Positive Market Sentiments: Afterpay Touch Group Limited’s (ASX: APT) stock climbed up 5.358 per cent on August 20, 2018 at the back of positive market sentiments ahead of its full-year result which will be published on August 23, 2018. Recently, the group has provided a strong positive business update for the three-month period ended 30 June 2018 (Q4FY18) including an update on a roll-out of the Afterpay product in the US market. As per the release, there are approximately 16,500 retailers now on-board which is in line with the prior guidance. US underlying sales for the first full month of June recorded $11Mn which indicates the bulk of the FY18 contribution given the timing of transacting merchants was late H2 FY18 weighted. Since launching of its product in the US market in mid-May 2018, there are more than 400 retailers signed to date and over 200 retailers are currently transacting on the platform, which includes major millennial-focused brands, URBAN OUTFITTERS (live since 16 May 2018) and REVOLVE (live since 9 July 2018).


Focus on Lifetime Customer Value (Source: Company Reports)

Based on the aforesaid facts, the group has indicated that Revenue and Other Income is expected to be around $142 Mn for FY18 while EBITDA was guided in the range of $33-34 Mn. In the meantime, it is noted that the share price has risen 128.47 per cent in the past three months as on August 17, 2018 and traded toward the higher level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 17.500, considering a positive outlook ahead.


APT Daily Chart (Source: Thomson Reuters)
 

BHP Billiton Limited

Update on Samarco Dam Failure: BHP Billiton Limited’s (ASX: BHP) shares scaled up 1.313 per cent on August 20, 2018 ahead of preliminary results announcement and detail of dividend determination for full-year which will be published on August 21, 2018. As per the release, the registered BHP Billiton Plc shareholders will not be able to dematerialize or rematerialize their shareholdings between the dates of 5 September and 7 September 2018 (both, inclusive), and not be able to transfer their interest between the UK register and the South African register between the dates of 31 August and 7 September 2018 (inclusive). In another release on ASX, the mining giant BHP Billiton Ltd has provided an update on Samarco dam failure in which the group has agreed to pay the plaintiffs US$50 Mn, with no affirmation of risk, and the agreement is subject to approval by the District Court. On the other hand, the company recorded debt-to-equity ratio of 0.49x, a current ratio of 1.75x and a quick ratio of 1.40x in 1HFY18. RoE and RoCE stood at 6.7 per cent and 4.5 per cent, respectively in 1HFY18, which is broadly in line with Industry median.


FY18 Final Dividend (Source: Company Reports)

Meanwhile, the stock has fallen 4.94 per cent in the past three months as on August 17, 2018 and traded close to a 52-week high of $35.290. The stock has a market capitalization of $105.15 Bn, a price-to-earnings ratio of 29.95x and a beta of 1.26 as of August 20, 2018. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $33.170 by looking at the positive outlook on copper and oil price along with decent fundamentals.


BHP Daily Chart (Source: Thomson Reuters)
 

Super Retail Group Limited

Mixed Trading: Super Retail Group Limited’s (ASX: SUL) stock climbed up 2.36 per cent on August 20, 2018 ahead of its full-year result which is expected to be released on August 21, 2018. During the period, the group acquired Macpac for the total consideration of NZ$144 Mn with the objective of improving the Macpac business into the leading outdoor adventure retail specialist across Australia and New Zealand. Following the acquisition, the management is expecting the contribution of circa 5 Mn to the Group EBIT in FY18. Besides this, Supercheap Auto business continued to perform strongly benefitting from its focus on customer experience, digital engagement and extension of services and recorded 319 super auto stores as at April 28, 2018. While BCF’s sales performance was impacted by differing weather conditions across the country during February and March with like for like sales in New South Wales growing by 6.5% in half year while the same fell by 4.5% in Queensland. Based on current trading conditions, FY18 Group EBIT margin (excluding 3 months contribution from Macpac) is expected to be in line against the prior year, with CAPEX of $100 Mn.


Robust Group Strategy (Source: Company Reports)

Meanwhile, the share price has risen 8.27 per cent in the past six months and up by 4.58 per cent in the past one week as at August 17, 2018. Hence, we maintain our “Hold” recommendation on the stock at the current price of $ 9.110 as it is trading at a reasonable PE level of 17.62x among its peer group.
 

SUL Daily Chart (Source: Thomson Reuters)
 

The A2 Milk Company Limited

Reaffirmed its Strategic Arrangements With CSFA: The A2 Milk Company Limited’s (ASX: A2M) stock climbed up 1.943 per cent on August 20, 2018 ahead of its full-year result which is expected to be released on August 22, 2018. Recently, A2M and China State Farm Holding Shanghai (CSFA) renewed their collaboration agreement in Canberra, as they have achieved unique success in the China market and brought the very high-quality infant nutrition to Chinese consumers. As per the agreement, CSFA Shanghai will continue to own the exclusive import and distribution rights for a2 Milk's products in China for the next three years. Hence, we expect that this renewal signals will strengthen its long-term partnership and provide the overall growth of the company in the forthcoming period with further opportunities in the domestic and international market via collaborations. Besides this, the company caught the public’s attention for violating China's advertising law by using children under ten years old in their advertisements. Further, expenses have been slated to be on a higher side going forward. Based on foregoing, we maintain our “Expensive” recommendation on the stock at the current market price of $ 9.970, as it is trading at a higher PE level of 51.020x among its peer group.

 
A2M Daily Chart (Source: Thomson Reuters)
 

WAM Microcap Limited

Rising Dividend: WAM Microcap Limited (ASX: WMI) has recently posted a decent set of FY18 results wherein the company recorded revenue of $47.03 Mn in FY18. The operating profit before tax (PBT) amounted to $42.4 Mn while an operating profit after (PAT) tax stood at $30.7 Mn for FY18. Based on decent performance, the Board of Directors has declared a fully franked final ordinary dividend of 2 cents per share (cps) and a special dividend of 2 cps, bringing the total dividend of 4 cents per share and it will be payable on October 26, 2018 with the record date of October 15, 2018.  It represents that the Board is committed to paying an increasing stream of fully franked dividends to shareholders, given the company has sufficient profit reserves and franking credits. Further, the dividend reinvestment plan (DRP) will be available to shareholders for both the final and special dividends and the plan has been said to operate at a 2.5% discount.


NTA before tax performance (Source: Company Reports)

During the period, the company invested in 216 individual companies and had investments in 72 companies of which the group generated a total shareholder return of 31.4 per cent as at 30 June 2018. It was mainly driven by strong portfolio performance of 31.2% and the share price premium to NTA. Meanwhile, the share price has risen 3.21 per cent in the past three months but down by 2.36 per cent in the past one months (as at August 17, 2018). Based on the aforesaid facts and trading level, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $1.440.
 

WMI Daily Chart (Source: Thomson Reuters)

 
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