Stocks’ Details
 

Aventus Retail Property Fund (ASX: AVN)

Growth in Portfolio - Aventus Retail Property Fund is a managed investment trust that invests in Australian retail property. The Company will announce its June 2018 full-year results around 10 August 2018. The Group announced that the revaluation of the Portfolio as at 30 June 2018 has resulted in a $42 million increase ($18 million net of capital expenditure) in the value of the Portfolio and this preliminary $18 million net valuation gain will increase the Net Tangible Assets (NTA) of the Fund by approximately 4 cents per security. This was driven due to the Company’s focus on development and asset management initiatives to improve the Fund’s assets and increases in rental income. The weighted average capitalisation rate for the portfolio was recorded at 6.7 per cent which is unchanged from 31 December 2017.  


Investment Property Portfolio Valuation (Source: Company Reports)

This Retail Property Fund owns 20 retail parks across Australia and many of the country’s biggest retailers such as Bunnings, The Good Guys, and Officeworks are Group’s tenants. By looking at the present retail landscape and the blue-chip nature of many of its tenants, Aventus is not expected to witness store closures or default on rent payments in short to medium term. As of now, it is trading at an annual dividend yield of 7.29 per cent per annum. ROE on 31 December was 16.7 per cent which is more than the industry median that is 13.5 per cent. The stock was up by 4.69 per cent in three months as on 17 July 2018 but started falling since last one month. The stock is trading at $2.22 (marginally above than the average of 52-week high and low price). We give a “Speculative Buy” recommendation by looking at the portfolio growth and development initiatives that the Group has been taking.
 

WAM Capital Limited (ASX:WAM)

Improvement in NTA - WAM Capital Limited (WAM) is an Australia-based company, which is engaged in making investments in listed companies. As per the June 2018 report, NTA before tax stood at $2.03 which is slightly up from the May 2018 NTA before tax which was at $2.00. WAM has opposed the changes which were made by Federal Opposition regarding the current dividend imputation system that would impact self-funded retirees, older workers and low-income earners. It was worth noting that during the June month, the Australian Senate passed Prime Minister Malcolm Turnbull’s $144 billion package of income tax cuts and due to the threat from US Global Trade war the market was weighed heavily on sentiment. Further, US Federal Reserve lifted interest rates by 0.25 percentage points and highlighted that two more increases can happen in 2018 because policymakers gave a bullish assessment of the US economy citing accelerating growth and rapid job creation. However, the recent update on interest rates hike is still in doldrums.


Performance for June 2018 (Source: Company Reports)

The Group has been paying regular dividends and since inception it has paid 215.3 cents per share in fully franked dividends to shareholders. The Group has a diversified portfolio of undervalued growth companies that are listed on ASX that have been performing well since last few years and are expected to do the same in FY18. So, it is expected that the Company will raise its dividend for a ninth year in a row. The Group is trading at an annual yield of 6.38 per cent per annum. Since one year the stock price has been falling down by 1.24 per cent as on 17 July 2018. Its portfolio has underperformed by 1.5% against S&P/ASX All Ordinaries Accumulation Index in the month of June. We maintain our “Hold” recommendation at the current market price of $2.40 while the stock is slowly inching to its 52-week high price that is $2.55 and one can wait for the financial results of the Companies in group’s portfolio that may outperform and lead to further growth in returns.
 

Flight Centre Travel Group Limited (ASX:FLT)

Decrease in Return on Invested Capital - Flight Centre is Australia’s largest listed travelagent with operations throughout Australia and New Zealand as well as in South Africa, Hong Kong, Canada, United States and the United Kingdom. The Group is expecting to release its financials on 23 August 2018.During the year, the company has completed several deals and events such as network consolidation which saw overall sales staff numbers decrease modestly, pointing to further productivity gains. The share price has been increasing since it has been listed on ASX (up by 50.10 per cent in 5 years as on 17 July 2018).


Trend of FLT Capex spend  (Source: Company Reports)

The Debt-Equity increased from 0.04 in June 2017 to 0.06 in December 2017 and ROIC decreased from 10. 3 per cent in June 2017 to 6.5 per cent in December 2017. The Company is facing a lot of competitive  pressure in the industry. As per the 12 July 2018 Report on short selling, about 7.7 per cent of stock on issue was recorded as short. The Group is almost trading at its 52-week high price that is $67.74 and a higher PE level of 26.03. One can book the profits at the current market price of $67.11 while we give a “Sell” recommendation as boost from tourism trend seems to be factored in the price movement to a significant extent already.

 
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