Super Retail Group Limited

SUL Details

Highlights of Annual General Meeting: Super Retail Group Limited (ASX: SUL) is engaged in the operation of speciality retail stores in the automotive, tools, leisure and sports categories. The company has a market capitalisation of $1.88 billion as on 1^st November 2019.

The company reported a decent set of numbers for the financial year despite relatively subdued economic conditions. The company reported a growth of 5.4% in total sales and delivered like-for-like sales growth across all four divisions.This top-line growth translated into a 7.0% increase in Segment EBITDA, a 3.9% increase in Segment EBIT and a 5.0% increase in normalised NPAT. The company delivered another period of strong operating cashflows. Normalised EBITDA cash conversion of 94% reflected an ongoing focus on working capital together with a strategic decision to invest in inventory levels to increase in-store availability of products.

The company has announced a fully franked dividend of 50 cents per share for 2019. In the past ten years, the company has witnessed a CAGR growth of 11% in its reported dividend per share and this can be seen in the following picture:


Dividend per Share (Source: Company Reports)
What to Expect from SUL Moving Forward: In the coming year, the company will leverage its strong position with a specific focus on building brands which are as powerful as the products the company sells, greater digitisation, supply chain integration and a seamless omni-retail experience.
 
Stock Recommendation: SUL has shown a decent CAGR growth of 4.9% over the period of FY15 - FY19 in its total revenues. The company’s EBITDA marginstood at 11.5% in FY19, which is above the industry median of 6.9%. The stock has a price to earnings multiple of 13.470x on TTM basis, which is lower than the industry average of 16.9x. Therefore, considering the decent CAGR growth in revenues, respectable EBITDA margin and trend of the dividend per share in the past 10 years, we are optimistic for the further growth of the business, moving forward. Thus, we give a “Hold” recommendation on the stock at the current market price of $9.420 per share, down 0.946%, as on 1^st November 2019.

 
SUL Daily Technical Chart (Source: Thomson Reuters)
 

WAM Capital Limited

WAM Details

Portfolio Update of WAM in September 2019: WAM Capital Limited (ASX: WAM) is one of Australia’s leading Listed Investment Companies, managed by Wilson Asset Management which provides investors with exposure to an actively managed diversified portfolio of undervalued growth companies. The company has a market capitalisation of $1.59 billion as on 1^st November 2019. WAM Capital investment portfolio increased by 3.3% in September as compared to S&P/ASX All Ordinaries Accumulation Index, which increased by 2.1% in September and the portfolio outperformed the S&P/ASX All Ordinaries Accumulation Index by 1.2%. The following table provides an idea of the company’s performance:


Performance of WAM’s Portfolio (Source: Company Reports)

What to Expect: WAM enters FY20 with a conservative balance sheet, a high cash weighting, no debt and a flexible and proven investment approach. The company remains cautious about the direction of the Australian market, as the record low interest rates have driven up valuations and increased speculation.
 
Stock Recommendation: The company has declared a fully franked final dividend of 7.75 cents per share, which brings fully franked, full-year 2019 dividend to 15.5 cents per share. The stock has an annual dividend yield of 7.05%, which is high as compared to the industry average of 4.3% on TTM basis. The stock has a price to book value of 1.2x on TTM basis, which is much lower as compared to the industry average of 3.8x on TTM basis. The stock has given a return of 1.85% and 8.37% in the time period of three months and six months, respectively, and is currently trading at a price to earnings multiple of 105.770x. Therefore, considering the decent dividend-related parameters, attractive valuations, decent returns and conservative balance sheet, etc., we maintain a “Buy” recommendation on the stock at the current market price of $2.200 per share.

 
WAM Daily Technical Chart (Source: Thomson Reuters)

 

WAM Research Limited

WAX Details
Annual General Meeting to be held on 19^th November 2019: WAM Research Limited (ASX: WAX) is a listed investment company that provides investors with exposure to a diversified portfolio of undervalued growth companies. The company has a market capitalisation of $271.86 million as on 1^st November 2019. The company has decided to keep its Annual General Meeting on 19^th November 2019.
Portfolio Update of WAX in September 2019: WAM Research investment portfolio increased by 3.6% in September as compared to S&P/ASX All Ordinaries Accumulation Index, which increased by 2.1% in September and the portfolio outperformed the S&P/ASX All Ordinaries Accumulation Index by 1.5%.

Performance of Portfolio (Source: Company Reports)
What to Expect from WAX Moving Forward: The company will continue to pursue investment activities, which is primarily investing in equities on the ASX to achieve its objectives. The company's performance is dependent on the performance of the company's investments.
 
Stock Recommendation: The company has declared a final dividend of 4.85 cents per share, fully franked, which brings 2019 fully franked full-year dividend to 9.7 cents per share. The stock has an annual dividend yield of 6.86%, which is high as compared to the median of investment banking and investment services industry of 4.2% on TTM basis. The stock has a price to book value of 1.2x on TTM basis, lower as compared to the industry median 1.4x. Therefore, considering its relative performance with index, decent dividend-related parameters and comfortable valuations, we maintain a “Buy” rating on the stock at the current market price of $1.430 per share, up 1.06% on 1^st November 2019.

 
WAX Daily Technical Chart (Source: Thomson Reuters)

 

Collins Foods Limited

CKF Details

Refinancing Its Debt Facilities: Collins Foods Limited (ASX: CKF) is engaged in operation, management and administration of restaurants in Australia, Europe and Asia. The company has a market capitalisation of $1.19 billion as on 1^st November 2019.

Collins Foods Limited has announced that the company has entered in a binding documentation to refinance its existing syndicated debt facilities. The existing facilities of $270 million and €60 million will be refinanced under a new syndicated facility agreement, comprising $265 million and €80 million revolving facilities. Of the new facilities, $210 million and €52 million will be drawn on financial close, with enough funding headroom provided by the undrawn amounts. The tenor of the new facilities is a blend of 3 years and 5 years, with $180 million and €50 million maturing on 31^st October 2022 and the remaining $85 million and €30 million maturing on 31^st October 2024.

Highlights of Annual General Meetings: The company reported decent earnings growth in FY19, particularly in the core KFC Australia business, stemming from successful initiatives in the areas of delivery, digital and operations. In the core domestic business, the company reported positive Same Store Sales growth in all states. In Europe, the company is continuing its focus on driving improved sales bythe introduction of a brand refresh in Germany and a renewed focus on value in the Netherlands. These initiatives are expected to have positive impacts on these respective regions in 2020 financial year.

The company has declared a fully franked final dividend of 10.5 cents per share for FY19, with the total dividend for FY19 being 19.5 cents per share fully franked, up from 17 cents per share in FY18.


Total Revenue (Source: Company Reports)

Stock Recommendation: As per ASX, the stock is trading close to its 52-week high of $10.800. The stock has a price to earnings multiple of 30.500x, which is higher as compared to the industry average of 11.8x on TTM basis. CKF has shown a decent CAGR growth of 12.06% in the time period between FY15 to FY19 in total revenues. However, if we look at the EBITDA margin of the company, it stood at 12.7% for FY19, which is low as compared to the industry median of 25.2%. Based on the aforesaid facts, current trading levels and higher valuation, we suggest investors to book profit at the current juncture and give a “Sell” recommendation on the stock at the current market price of $10.180 per share, down by 0.586% on 1^st November 2019.

 
CKF Daily Technical Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.