Capitol Health Limited

 

CAJ Details
 
Higher Investments in Research & Product Development to Aid Business Prospects:Capitol Health Limited (ASX: CAJ) is engaged in providing diagnostic imaging services to the healthcare market in Australia. The company owns and operates clinics in Victoria, Western Australia, Metropolitan Melbourne and Tasmania.
 
Shareholders Update: On 6December 2019, the company announced that Justin Walter, who has an indirect interest in the company, acquired 2,385,280 performance rightsat the company’s AGM held on 19 November 2019. On 5 December 2019, the company announced that Regal Funds Management Pty Ltd, Inc has been ceased to be a substantial shareholder, with effect from 3 December 2019.
 
Financial Results for the Year Ended 30 June 2019: In FY2019, the company reported revenue amounting to $149.2 million, up 25% on the prior corresponding year. Underlying EBITDA for the period came in at $26 million, up 21% on the previous year. Underlying EBITDA margin for the year remained flat in comparison to the previous year at 17.4%. Net profit after tax came in at $27.5 million in FY2019, up 386% year over year. The final dividend payment stood at 0.5 cents per share, taking FY19 total dividend to 1 cent per share.
 

Financial Highlights (Source: Company Reports)
 
Outlook: In FY20, the company expects to deliver a strategy for achieving long-term sustainable growth across the business. The company will take necessary measures to continue investing in Enlitic, to grow in the diagnostic imaging AI space. Further, the company expects operating EBITDA to grow modestly in FY2020.
 
Valuation Methodology:Price to Earnings Multiple Approach
 

Price to Earnings Based Valuation (Source: Thomson Reuters) 
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, *NTM-Next Twelve Months
Stock Recommendation: As per ASX, the company’s stock is trading slightly above the average of its 52-week trading range of $0.145 - $0.285. As on 16 December 2019, the company’s market capitalisation stands at ~$165.21 million, with 768.4 million outstanding shares.  FY19 was characterised by several acquisitions along with expansion of the clinic network and new market entry. Going forward, the company is aiming to implement scalable systems and business processes to drive growth in FY20. Considering the aforesaid facts, we have valued the stock using price to earnings based relative valuation method and arrived at a target price of lower double-digit upside (in % terms).  Hence, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.215 as on 16 December 2019. 
 
 
CAJ Daily Technical Chart (Source: Thomson Reuters)
 
 
 

Experience Co Limited

 

EXP Details
 
Focus on Skydive Product Enhancement: Experience Co Limited (ASX: EXP) is an adventure and tourism online and real-life store, which operates in skydiving activities. It provides experiences, which involves tandem skydiving, hot air ballooning, white water rafting, etc. in Australia and New Zealand.
 
Shareholder Update:On 12^th December 2019, the company issued an announcement stating that Forager Funds Management Pty Ltd will be a substantial holder of the company, holding 30,631,544 ordinary shares with a voting power of 5.51%.
 
Key Financial Results for the Year Ended 30 June 2019: In FY2019, the company reported revenue of $161.3 million, up 19.2% on the previous year. Skydiving volumes jumped from 189,784 in FY2018 to 192,179 jumps in FY2019, representing an increase of 1.3% on pcp. Underlying EBITDA for the period came in at $27.2 million as compared to $30.2 million in FY2020. Gross profit for the period came in $63.2 million, up 13.6% year over year. Net loss for the year came in at $48.3 million.

Financial Highlights (Source: Company Reports)
 
What to Expect: The company will focus on strategic review of the business and enhance capital discipline. Skydiving business of the company will continue to be a key growth driver.
 
Valuation Methodology:Enterprise Value to Sales Based Approach
 

Enterprise Value to SalesMultiple Based Valuation (Source: Thomson Reuters) 
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, *NTM-Next Twelve Months
Stock Recommendation: As per ASX, the company’s stock is trading below the average of its 52-week trading range of $0.155 - $0.355. As on 16 December 2019, the company’s market capitalisation stands at ~$113.94 million, with 555.81 million outstanding shares.  The company’s increased focus on core business activities, organic growth, enhancing operational efficiency and strong revenue base along with its core skydive product enhancement are key positives of the business. Considering the aforesaid facts, we have valued the stock using Enterprise Value to Salesbased relative valuation method and arrived at a target price of lower double-digit upside (in % terms). Hence, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.210, up 2.439% on 16 December 2019. 
 
 
EXP Daily Technical Chart (Source: Thomson Reuters)

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