Stocks’ Details

Magellan Financial Group Limited

Magellan Financial Group Enjoys Strong Balance Sheet: In the annual report for FY 2018, the management of Magellan Financial Group Limited (ASX: MFG) stated that they possess enough capital when seen from the balance point of view and from the viewpoint of the new prospects. The management of the company had also stated that FY 2018 was the positive year for the overall company. In FY 2018, the company managed to wrap up Magellan Global Trust’s IPO or initial public offering. The management also highlighted the acquisitions made of Airlie Funds Management as well as Frontier Partners.

MFG’s AUM as at November 30, 2018 (Source: Company Reports)

Recently, the Magellan Financial Group also reported the FUM or funds under management figure as of November 30, 2018. As per the release issued, at the end of November 30, 2018, the company had total funds under management amounting to $72.1 billion. Of this amount, $19.5 billion related to the retail category while $52.6 billion is related to the institutional category.

Marketing Strategy, Robust Balance Sheet Might Act as Primary Tailwinds: Moving forward, the funds under management of Magellan Financial Group are expected to remain sensitive to the global macro factors as these factors affect the performance of the equity markets. As per the AGM presentation, the company has plans to change the approach of customer acquisition. This change might help the company moving forward. Apart from this, the company is expected to be supported by the robust balance sheet.

The management had earlier stated that there is a range of opportunities in terms of organic growth and it also possesses enough capital to tap those opportunities.

Stock Recommendation: In the monthly chart of Magellan Financial Group, Moving Average Convergence Divergence or MACD has been applied and default values have been considered. As per the observation, there is a possibility that MACD line might cross the signal line and, after the crossover, it might witness upward momentum. Based on decent outlook, we maintain our “Buy” rating on the stock at the current market price of A$25.220 per share.    


MFG Daily Chart (Source: Thomson Reuters)
 

Ramsay Health Care Limited

Revenue Grew 5.4% YoY, Industry Fundamentals to Support Demand: In FY 2018, Ramsay Health Care Limited (ASX: RHC) managed to generate revenues amounting to $9.2 billion which implies the YoY growth of 5.4%. In the presentation of the annual general meeting, the top management of the company stated that, in regard to the Australian hospitals, they would remain inclined towards the initiatives related to the cost optimization as well as innovation. However, they also stated that the healthcare demand is expected to be supported by the industry fundamentals. 


RHC’s Core NPAT and Core EPS (Source: Company Reports)

The management of the company had also stated that the operating environment has witnessed a favourable momentum with respect to France’s private hospitals.

Deployments, Growth Initiatives to Support RHC: In the presentation of the annual general meeting, the management of Ramsay Health Care Limited reflected favourable views about the expected performance of the company. The management stated that the key focus area of FY 2018 like deployments towards innovation, people are expected to be seen in FY 2019. However, initiatives related to the cost optimisation are also expected to be witnessed moving forward.

The programs related to the growth might help the earnings of the company moving forward. In the AGM presentation, the management also stated that, in FY 2019, the effect of the acquisition of Capio is expected to remain neutral. 

Stock Recommendation: On the daily chart of Ramsay Health Care Limited, Exponential Moving Average or EMA has been applied and default values have been considered. As per the observation, the stock price of the company is near the EMA and a crossover is expected. If the crossover occurs, the upward momentum is expected.

As a result, we maintain our “Buy” rating on Ramsay Health Care Limited at the current market price of A$54.430 per share. 


RHC Daily Chart (Source: Thomson Reuters)
 
 

G8 Education Limited

Revenues in FY 2018 Grew YoY: G8 Education Limited (ASX: GEM) ended 1H CY 2018 with total revenues amounting to $396.4 million while in 1H CY 2017 the company garnered revenues of $368.3 million which implies growth of 7.6% on the YoY basis.This growth in the revenues was witnessed on the back of the acquisitions, increases in the fees as well as opening of the new centres.

GEM’s Performance (Source: Company Reports)

In 1H CY 2018, the company’s net cash flows from the operations witnessed a rise of 23% as compared to the same period of the previous year. During the same period, the company incurred $17 million towards the payments with respect to the property, plant and equipment which was made towards new management system (child care). However, the $17 million which was incurred also relates to the IT infrastructure and deployments towards upgradation of the centres and resources.

GEM’s Strategy, Robust Financials to Act as Drivers: At the time of half year results presentation, the management of G8 Education Limited stated that the company’s strategy along with the robust position with respect to the financials places GEM to reap the benefits of the growth prospects which would be coming moving forward.

Additionally, as per investor day of November 2018, the management believes that G8 Education would be able to generate EBIT or earnings before interest and taxes between $136-$139 million in CY 2018.
Stock Analysis: On the monthly chart of GEM, Moving Average Convergence Divergence or MACD has been applied and default values have been used. As per the observation, the MACD line is about to cross the signal line and after the crossover, the stock might witness a rise. Therefore, GEM might encounter a bullish momentum after the crossover.

As a result, we maintain our “Hold” rating on the stock at the current market price of A$2.830 per share.  


GEM Daily Chart (Source: Thomson Reuters)
 

Emeco Holdings Limited

Strong Momentum Witnessed in FY 2018: As per the AGM, in FY 2018, the management of Emeco Holdings Limited (ASX: EHL) stated that the company has managed to work for the strategy it had outlined which revolved around benefiting the customers, remained focused towards the safety as well as the strategy of enhancing the market share.


EHL’s Operating EBITDA (Source: Company Reports)

The company witnessed strong growth momentum in FY 2018 as it had managed to garner operating revenues amounting to $381 million which implies the rise of 64% on the YoY basis. Let us look at the cash flows of the company. The favourable momentum was witnessed in the operating free cash flow in FY 2018 on the back of fall which was witnessed with respect to working capital. However, robust momentum in the operating EBITDA also supported operating free cash flow. The company generated operating free cash flow amounting to $178.2 million.

EHL Focuses on activities associated with operational excellence: In the AGM, the management of Emeco Holdings stated that they would remain inclined towards the activities related to the operational excellence so that the favourable momentum in the margins as well as management costs can be maintained.

Moreover, as per the management, the operating utilisation of the fleet of Emeco Holdings are expected to rise across FY 2019 with robust momentum in H2.

Stock Recommendation: On the daily chart of Emeco Holdings Limited, Moving Average Convergence Divergence or MACD has been applied by considering the default values. As per the observation, the MACD line is about to cross the signal line and there are anticipations that after the crossover occurs, the price would witness upward momentum.

As a result, we maintain our “Hold” rating on the stock at the current market price of A$2.170 per share.


 
EHL Daily Chart (Source: Thomson Reuters)
 
 

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