Kogan.com Limited (ASX:KGN)

KGN Details

Encircled by a lot of speculations- In Australia, Kogan.com through its Mobile platform has been delivering on its promise to save Aussies more of their hard-earned money, and hundreds of thousands of customers have already migrated to Kogan Mobile in Australia over the past two years. Kogan Mobile has been an enormous hit with consumers in Australia, and Vodafone New Zealand is excited to be partnering with Kogan.com to deliver more choice to mobile customers in the New Zealand market. As per the management, Kogan.com commenced the new calendar year with a strong quarter of continued growth on the back of its long-term strategy.  Additionally, Kogan gained Active customers of about 1,288,000 as at 31 March 2018 and has a cash balance of around $19.3 million during the same period. Meanwhile, Kogan issued 21,708 Performance Rights under Kogan’s Equity Incentive Plan. The business is poised to continue its growth trajectory into the seasonally strong end-of-financial-year quarter.


Annual Revenue Per Customer (Source: Company Reports)

Kogan was involved in a lot of speculations like the Company’s managementwas trying to sell a monster stake in the business that is some 10 per cent of the interests and this happened when the Company announced its expansion plans related to logistics and distributions. The stock price which was up by 282.66 per cent in the past one year as on 5 July 2018 slipped by about 23% in last one month. The stock was further down 1.81 per cent on 6 July 2018. The stock experienced a short interest of 1.76 per cent (as per the report on 2 July 2018). Given the run-up and mixed updates, we put a “Sell” recommendation at the current market price of $ 6.5, as the stock is witnessing some volatility.
 

KGN Daily Chart (Source: Thomson Reuters)
 

Nearmap Limited (ASX:NEA)

NEA Details

Diverse Global Customer Base- Nearmap Limited is engaged in online aerial photomapping through its subsidiaries, Nearmap Australia Pty Ltd and Nearmap US Inc. The Group covers 88 per cent of Australia’s population up to 6 times per year and 67 per cent of the US’s population up to 3 times per year. The Group has expanded its footprint and are now photographing over 500,000 square kilometres annually that is a 90 per cent of increase over its FY17 capture program. In 2017, the Group had over 8000 subscribers worldwide. It is planning to export its 3D content and is looking for some strategic partnerships.


Group Subscriber Growth (Source: Company Reports)

Further, the US sales management team will continue to focus on accelerating the growth in the US within the small to medium enterprise segments and opportunities which are largely uncontested in the same market. The  Company issued fully paid ordinary shares to a member of the Company’s Key Management Personnel and employees on conversion of option on 30 June 2018. In the meantime, the Company issued 799,176 fully paid ordinary shares (on conversion of ESOP options). One of its Directors, Clifford Johann Rosenberg (having an indirect interest in the Company) acquired 1,000,000 fully paid ordinary shares and disposed off 1,000,000 Director Options (exercisable at $0.56 each on or before 30 November 2019). In the past one year, the stock price climbed up 82.26 per cent as at 5 July 2018 and is still trading close to its high level. The stock was up by 1.33 per cent as on 6 July 2018. In view of further growth expected from its efforts, we give a “Hold” recommendation on the stock at the current market price of $ 1.145.
 

NEA Daily Chart (Source: Thomson Reuters)
 

Ramsay Health Care Limited (ASX:RHC)

RHC Details

Significant centralisation Programme underway- Ramsay Health Care is one of the world’s largest private hospital operators with over 150 hospitals located across five countries; Australia, England, France, Indonesia and Malaysia. The Group is committed towards ongoing improvement of patient care in all areas and has an excellent record in delivering quality patient care and managing risks. The Group announced a Group Core Net Profit After Tax (Core NPAT) of $288.0 million for the six months to 31 December 2017, a 7.5 per cent increase on the previous corresponding period. The Board declared a fully-franked interim dividend of 57.5 cents, up 8.5 per cent on the previous corresponding period. It was observed that the Company’s brownfield development programme continues strongly reflecting the increasing demand for healthcare services. The Group is actively investigating opportunities across all markets and is expecting that the operating environment in Australia will remain positive while the environment in Europe will remain challenging.


Consolidated Balance Sheet and Leverage Ratio (Source: Company Reports)

However, the group has witnessed a disappointing month of May in terms of operations and with no material improvement anticipated for June, the Group downgraded its FY18 Core EPS growth to be approximately 7 per cent as compared to the guidance of 8 per cent to 10 per cent. On the other hand, 23 retail pharmacies were added to the Ramsay Pharmacy franchise network in Australia during the first half FY18 bringing the total number in the network to 54. The Group is undertaking a significant centralisation programme and will take almost three years. This programme will look after non-core hospital functions such as finance, administration and HR, located in a separate shared service centre in the outer suburbs of Paris. Some experts feel that the stock is overvalued, and it can face challenging industry dynamics from rising healthcare costs and the decline in private health insurance (PHI) participation. The stock price has been falling since one year (down by 27.02 per cent as on 5 July 2018) but recovered and climbed up by 1.69 per cent as on 6 July 2018. The stock is hovering around its 52 week low price that is $53.01. Given the short-term challenges, we recommend to “Hold” the stock at the current market price of $54.47.

 
RHC Daily Chart (Source: Thomson Reuters)
 

Scentre Group (ASX:SCG)

SCG Details

All active developments progressing well - Scentre Group manages, develops and has an ownership interest in Westfield branded shopping centres in Australia and New Zealand. The Company’s  strategic objective is to own the highest quality shopping centres in Australia and New Zealand and to focus on maximising their operating performance through strategic asset management and delivering attractive long-term risk-adjusted returns. The Group recently adopted a modified version of constituents of Scentre Group Trust 1, Scentre Group Trust 2 and Scentre Group Trust 3 and has been amended by supplemental deeds. With growing population and rise in need of having shopping centres with SCG having a majority of top shopping centres in Australia, the group seems to be well-positioned. If one buys shares in a REIT (Real Estate Investment Trusts) then it gives one an access to the rental income generated from the trust’s assets. The company has a solid financial position with total assets of $37.5 billion, gearing of 32.1 per cent and liquidity of $2.7 billion as at 31 December 2017. During the year, the group completed lease deal across all categories including 31 major stores with the average tenure of 15 years, and 2,466 specialty lease deal covering an aggregated of more than 345,000 square metres of space.


Region-wise Comparable Speciality In-store sales Growth (Source: Company Reports)

ROE stood at 13.1 per cent in 1HFY18 which is above the industry median. It is trading at 4.92 per cent of annual dividend yield. The stock was up by 1.13 per cent as on 6 July 2018 and was up by 12.76 per cent in three months as on 5 July 2018. We give a “Buy” recommendation at the current market price of $4.47 by looking at the on-going developments and in-store sales growth which are progressing well.


SCG Daily Chart (Source: Thomson Reuters)
 

National Australia Bank Limited (ASX:NAB)

NAB Details

Momentum in Business Banking- National Australia Bank Limited is a Melbourne based major Australian bank and is a diversified financial services group, traditionally focused on business banking with a strong presence in wealth. During the first half, National Australia Bank Limited (ASX: NAB) recorded decent set of results wherein revenue increased by 2.5 per cent to $9,093 million in 1HFY18 as compared to the prior corresponding period (pcp) while cash earnings contracted by 16.2 per cent. The top-line growth was mainly supported by business lending volume growth across the portfolio. Net Interest margin grew by 5 basis points, reflecting lower funding cost which was partly offset by the impact of the bank levy and housing lending competition and product mix changes. NAB’s Common Equity Tier 1 (CET1) capital ratio of 10.21 per cent as at 31 March 2018 marked a growth of 15 bps from September 2017 and the bank expects to achieve APRA’s CET1 ratio benchmark of 10.5 per cent by January 2020 in an orderly manner. On the other hand, NAB declared a fully franked interim dividend of 99 cents per share which is consistent with the interim dividend for the March 2017 half year. Meanwhile, the Group issued 11,024,404 ordinary shares (9,927,120 issued under Dividend Reinvestment Plan, 1,094,274 under Bonus Share Plan and 3,010 under Executive Participants Staff Share Scheme).


NAB’s Cash ROE vs Peer Average (Source: Company Reports)

The bank delivers 7.19 per cent of annual dividend yield. The stock was up by 1.59 per cent as on 6 July 2018. We give a “Hold” recommendation at the current market price of $27.96 as the Group has a potential to recoup in longer run at the back of business lending growth and macro-economic factors in Australia and New Zealand market while short term pressures and Royal Commission have been impacting the performance lately.
 

NAB Daily Chart (Source: Thomson Reuters)

 
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