Mantra Group Ltd

MTR Details
Expanding portfolio via acquisitions: Mantra Group Ltd (ASX: MTR) stock has been under pressure in last year and lost over 38.7% (as of January 03, 2017) due to concerns over the Australia’s property and tourism markets. On the other hand, we view this as a bargain opportunity to investors, given the group’s solid pipeline and decent performance. Mantra generated a revenue of $606.1 million, which is an increase of 21.5% against FY15 while underlying NPAT rose $7.6m to $43.8 million during the year.  Mantra had appointed Tomas Johnsson as Chief Operating Officer. The group has a decent dividend yield and paid fully franked dividend of 10.5 cents per share for FY16.
 

Properties scheduled to enter portfolio (Source: Company Reports)
 
Mantra expanded their presence in Hawaii via acquisition of Ala Moana Hotel, which has more than 1000 rooms with record occupancy. The group acquired 11 new properties in FY16 leading to a total of 126 properties across Australia, New Zealand, Asia and Hawaii. To revamp the earnings and Security Holder value, Mantra is focusing on improving quality room inventory across the portfolio, strengthening management, upgrading website to support volumes and mobile capability. Mantra expects a better RevPAR (revenue per available room) driven by their sales and marketing efforts. The group reiterated their FY17 EBITDAI in the range of $101m to $107m after seeing the first four months of FY17 performance. We give a “Buy” recommendation on the stock at the current price of – $ 3.02

 
MTR Daily Chart (Source: Thomson Reuters) 

Xero Ltd

XRO Details
Finished re-platform project to Amazon Web Services: Xero Ltd (ASX: XRO) recently reported that they completed their 2-year re-platform project to Amazon Web Services (AWS). Among other features recently released, XRO has come-up with ‘Apple Pay’ integration for setting a fast and easy way for customers to get paid.

 

Diversified portfolio (Source: Company Reports)
 
The group’s technology continues to be number one accounting solution in Australia, as per Canstar Blue report. Xero had reported to have 862k subscribers globally after adding 269k in FY16. Annualized committed monthly revenue (ACMR) rose 53% year on year (yoy) to $303 million. The group also reported a year-on-year change of 17 percent points in EBITDA margin excluding share-based payments for 1H FY17 while total revenue has been up 48%. We maintain a “Buy” on the stock at the current price of - $ 16.99

 
XRO Daily Chart (Source: Thomson Reuters) 

G8 Education Ltd

GEM Details
Improving funding flexibility: G8 Education Ltd (ASX: GEM) recently reported about extension of their $50 million working capital facility with Bankwest for two years till December 31, 2018. The group has appointed Gary Carroll as the new Chief Executive Officer and Managing Director from January 2017 after Mark Johnson. GEM forecasted FY16 EBIT to be in the range of $158m and $162m based on 10 months to October 2016 trading performance and November preliminary estimates. Management reported that their costs, acquisition contribution and organic revenue performance are on track with their second half performance estimates. GEM stock recovered over 8.9% in the last four weeks (as of January 03, 2017) and we believe this momentum will continue in the coming months. Having a solid dividend yield, we give a “Buy” recommendation on the stock at the current price of - $ 3.66

 
GEM Daily Chart (Source: Thomson Reuters) 

Crown Resorts Ltd

CWN Details
Legal challenge regarding Crown Sydney planning approval being dismissed: Crown Resorts Ltd (ASX: CWN) made further agreements with Melco Crown Entertainment Limited (NASDAQ: MPEL) shareholders to cut their stake in Melco to 11.2% of MCE shares (but with an economic hedge referencing just over 5.5% of MCE shares). The group is selling 40.9 million MCE shares for US$5.33 per MCE share. As a result, Crown is expected to get net proceeds of over $1.9 billion and the group intends to use these proceeds to cut their net debt position. The group also intends to use the funds for buy-back of over $500 million. Moreover, the group decided not to proceed with Alon project sale. Meanwhile, on December 23, 2016, the group reported that the legal challenge from Millers Point Fund Incorporated, against validity of the decision of the NSW Planning Assessment Commission (“PAC”) to approve applications for modification of approved concept plan for Barangaroo (known as “Mod 8”) and construction of Crown Sydney Hotel Resort at Barangaroo South development has been dismissed. Crown Sydney is now expected to be completed in 2021. Crown stock lost over 11.3% in the last three months (as of January 03, 2017) due to lower than estimated VIP program performance. But given their efforts to decrease their exposure to Melco Crown business, strengthening balance sheet and enhancing focus on core business, there seems to be potential in the stock. We give a “Hold” recommendation on the stock at the current price of – $ 11.62

 
CWN Daily Chart (Source: Thomson Reuters)

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