Vocus Group Ltd

VOC Details
Splendid performance:Vocus Group Ltd (ASX: VOC) reported a solid 403.9% rise in revenues to $ 888.2 million for the first half of 2017. Underlying EBITDA grew 200.8% to $187.2 million. The increase in revenue and underlying EBITDA was due to strong demand for Vocus’ products and the acquisition of Amcom, M2 and Nextgen Networks. Profit after tax was higher by 94.9% to $47.18 million while underlying profit after tax grew 235.6% $91.85 million.
 
Diluted EPS was at 7.71 cents as compared to 10.56 cents in the corresponding half while diluted EPS on underlying profit was at 15.01 cents as compared to 11.94 cents in the prior corresponding period. Interim dividend was announced at 6 cents per share for FY2017.  Going forward, the company guided FY17 EBITDA in the range of $430-450 million. The acquisition benefits, diverse product base and large and growing network of fibre optic cables is expected to drive future cash flow for the company. VOC has signed a 15-year indefeasible right of use agreement with Superloop Ltd for international, intercapital, regional Ethernet access and metropolitan fibre capacity in Australia. The stock has risen 7.09% in last one month (as at March 06, 2017). We believe the stock is a “BUY” at the current market price of $ 4.47

 
VOC Daily Chart (Source: Thomson Reuters) 

Estia Health Ltd

EHE Details
Strong NPAT growth during H1FY17: Estia Health Ltd (ASX: EHE) reported a 5% rise in revenues for H1FY17 to $263.1 million as compared to the previous half driven by increased places and higher revenue POBD offsetting a decline in occupancy rates in the period. EBITDA grew 26% to $43 million on previous half but underlying operating EBITDA was at $45.2 million which was down 9%. The net RAD receipts were at $38.7 million. On the other hand, the company reported NPAT of $19.8 million, a splendid 85% rise on H2FY16. The diluted EPS was at 10.3 cents. Consequently, the company has an operating cash flow of $98.7 million. The company incurred capital expenditure of $24.8 million in H1FY17 and has reduced net debt to $140 million. EHE has opened 108 new places through brownfield development during H1FY17 and expects capex of $4 million for FY17 and $8 million for FY18 on brownfield developments. The company has finished six significant refurbishment projects comprising 330 places and refurbishment is underway at five further homes at an estimated capex of ~$9 million in FY17 and FY18. The group guided EBITDA of $86 - $90 million for full year. On the other hand, the group’s EBITDA and declining occupancy rates remain a concern. We believe that the stock is “Expensive” at the current market price of $ 3.15

 
EHE Daily Chart (Source: Thomson Reuters) 

Downer EDI Ltd

DOW Details
Extension of maintenance contract:Downer EDI Ltd (ASX: DOW) reported a 1.7% rise in total revenues including other income and joint venture to $3.6 billion for the first half of FY17. EBIT was higher by 6.7% to $120.8 million while profit from ordinary activities after tax was higher by 8.5% to $78.2 million. The company reported a 13.2% rise in diluted EPS to 17.1 cents and announced an interim dividend of 12 cents. Downer reported return on funds employed of 13% up from 12.5% and work in hand of $21.1 billion up from $18.6 billion at June 2016. Meanwhile, the group reported that Sydney Trains had exercised its options to extend Downer’s maintenance of the Millennium passenger trains for a further 10 years. The ten-year contract extension begins in June 2017 and is valued at approx. $225 million. Addition to Millennium maintenance, the company would maintain the Waratah trains for another 26 years and in near future will maintain, the new Sydney Growth trains for 25 years and Victoria’s High Capacity Metro Trains for 30 years. In addition, the Downer Bombardier join venture would continue to maintain the Western Australian Public Transport Authority’s A and B fleets until 2026.

Rail Revenue and EBIT (Source: Company Reports)
 
Moreover, Downer is targeting NPAT of ~$175 million for FY17 up from earlier guidance of $163 million. On the other hand, Downer is trading at very high levels, and we believe the stock is “Expensive” at the current market price of $ 7.21

 
DOW Daily Chart (Source: Thomson Reuters) 

NEXTDC Ltd

NXT Details
Ongoing boom in the business:NEXTDC Ltd (ASX: NXT) reported 39% rise in revenues to $58.7 million while EBITDA grew a massive 110% to $23.9 million for H1 FY17. Revenue per square meter increased 4.3% since the end of FY 2016 to $8,837. NXT reported a rise in operating cash flow to $25.4 million. The contracted utilization was up 32% to 30 MW at December 2016 while interconnections were up 42% to 5,472. The company reported a 23% rise in customers to 699. Operating cash flow was up $19.5 million to $25.4 million while the company has invested $75.7 million in H1FY17.  The company said its B2 and M2 projects are on track to achieve practical completion towards the end of H2FY17. For the full year, the management reiterated its guidance for revenue between $115 million - $ 122 million, with EBITDA in the range of $46 million to $ 50 million.
 

1H 17 Highlights (Source: Company Reports)
 
We believe the stock has more upside potential given the growing demand for cloud services. We recommend a “Hold” at the current market price of $ 3.87

 
NXT Daily Chart (Source: Thomson Reuters) 

Monadelphous Group Ltd

MND Details
Reported weak bottom line in H1FY17: Monadelphous Group Ltd (ASX: MND) reported a 14.4% fall in revenues to $630.7 million in H1FY 17 as compared to the corresponding H1FY16. Net profit was down by 24.1% to $28.6 million during the period while EPS was at 30.5 cents and interim dividend was down 14% to 24 cents. The company received new contracts worth $700 million in the first half of FY17. In February 2017, the company got new contractual work worth $120 million from customers in the resources, energy and infrastructure markets. Meanwhile, the company is investing in water infrastructure, minerals processing and industrial maintenance services. However, the management expects its business activity levels to stabilize in H2FY17 and expects revenues similar to the first half. Trading at a high level, we believe that the stock is “Expensive” at the current market price of $ 12.76

 
MND Daily Chart (Source: Thomson Reuters)

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