Cabcharge Australia Ltd

CAB Dividend Details
 
Impact from lower service fee income: Cabcharge Australia Ltd.’s (ASX: CAB) 2015 overview shows $ 188 million in revenues, $ 65.6 million as EBITDA excluding profits from associates, $ 46.5 million in profit after tax and earnings per share of 38.7 cents. Total revenue was down by 4.7% over the previous year. Taxi related revenues grew by 2.6% to $ 99.1 million because of taxi fleet growth of 7.9% as more taxis chose to get affiliated with the network in Sydney and Melbourne. Taxi service fee income was down by 15.3% to $ 75.9 million because of a government imposed limit of 5% for service fees on taxi payments in Victoria, New South Wales and Western Australia.
 

FY15 Overview (Source: Company Reports)
 
Other revenues were up 17.3% to $ 12.6 million because of increased bus revenues in South Australia and revenues from other equipment. Total taxi fares increased by 8.5% with increasing market share. Reported net profit after tax was down 17.1% over the previous year primarily because of lower service fee income in major domestic markets and lower equity accounted profits in associates which outweighed market gains in both taxi related services and payments. Major cost reduction projects will result in $ 7 million annually in savings and have already delivered $ 4.5 million in FY 2015. Net debt as at 30 June 2015 was $ 104.3 million and debt to equity was 26% compared to 32% in the previous year. The company has a reasonably strong position in a highly fragmented market and we believe that performance should continue. CAB also does not seem to be much affected by the draft determination issued by the Australian Competition and Consumer Commission (ACCC) which proposes to deny authorisation to ihail Pty Ltd for joint venture arrangements between Australian and international taxi networks and other participants in the taxi industry to launch and operate a new smartphone taxi booking app. The stock has fallen about 45.64% in the last six months (as at November 16, 2015). We think that the stock is still expensive at the current price.
 
 

 

Recall Holdings Ltd

 

REC Dividend Details
 
Growth from Acquisitions: In the latest development, The Australian Competition and Consumer Commission (ACCC) which is the competition regulator in Australia has cast a shadow over the proposed takeover of Recall Holdings Ltd (ASX: REC) by Iron Mountain Inc. The regulator thinks that the agreed buyout worth $ 2.7 billion may damage competition, drive up prices and reduce the levels of customer service. The regulator said that the combination of the two big data security firms in the country could give the combined firm up to 71% of the national market share. As per ACCC, smaller suppliers or new entrants would be unlikely to provide any constraints to the merged entity and this would leave customers vulnerable to price increases or reduced levels of service. Clearly, it seems to us that regulators are getting increasingly concerned about their role as increased equity market volatility is setting up a flurry of global M&A activity. There was media speculation that Recall wanted to renegotiate the scrip payment though it has reiterated that it is continuing to recommend the deal.
 

Acquisition Revenue (Source: Company Reports)
 
For the year ended 30 June 2015, the company reported that it had made significant progress on its strategic objectives, delivered operating leverage and launched its digital strategy. The continuing business delivered strong constant currency growth in line with guidance and all business lines contributed the revenue growth of 7.5%. EBITDA margins improved as a result of operational efficiencies and grew by 10.1%. Underlying profit after tax of $ 75.4 million generated underlying EPS of 24 cents per share which is an increase of 23.2% in constant currency terms. The final dividend was 10 cents per share which was 20% higher than the previous year. Organic growth was supplemented by 12 acquisitions during the year which contributed $ 23 million during the year in revenues and are expected to contribute annual revenues of $ 48 million. We believe that the stock is expensive because the pending Iron Mountain bid is pushing up valuation and the premium is likely to drop if the acquisition does not go through.
 
 

 

Vicinity Centres

 

VCX Dividend Details
 
Potential yet to be unveiled: Vicinity Centres (ASX: VCX), the Australian property group formerly known as Federation Centres has commenced trading under its new name, Vicinity Centres with effect from November 02, 2015. The group was created by the merger of Federation Centres and Novion Property Group in June 2015, and, following the name change, each stapled security of Vicinity Centres was said to be comprised of one share of Vicinity Limited and one unit in Vicinity Centres Trust.
 

Overview (Source: Company Reports)
 
Meanwhile the group has announced a new Executive Committee member with the appointment of Simone Carroll as EGM Digital, Marketing, People and Culture. CEO and managing director Angus McNaughton said that he was happy to welcome somebody of this outstanding calibre to the team. This is part of a strategy to become more innovative in how the company works as a team with retailers and how they interact with more than 500 million people at their centres every year. She will be responsible for human resources strategy, people development and culture as well as developing a group marketing and digital strategy. The stock is trading at a high P/E ratio in comparison to VCX’s peers. We believe that the stock is overvalued at the current price.

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