Lifehealthcare Group Ltd


LHC Details

Strong market presence: LifeHealthcare Group Ltd (ASX: LHC) enjoys top three market positions in core channels. The business model is focused on global sourcing and offering local solutions with emphasis on specialty clinical channels and products like spine, neurosurgery, orthopedics, ultrasound and coronary intervention. Meanwhile, the group’s revenues have grown at a CAGR of 10.3% since the last five years while EBITDA grew 14.3% during the same period. Moreover, the demand outlook remains positive with rising aging population, emerging technology and rising rate of chronic disease.
 

Financial performance (Source: Company Reports)
 
The group expects full year of 2016 revenues in the range of $113-$116 million while EBITDA margins are expected to be consistent. However, the stock has fallen over 46.8% during this year to date (as on July 29, 2016) as investors were disappointed with the relatively flat EBITDA margins of the group during the first half of 2016. But given the positive outlook, we believe investor’s need to leverage the low levels of the stock. Trading at a solid dividend yield, we give a “Speculative Buy” recommendation on the stock at the current price of $1.845
 

LHCDaily Chart (Source: Thomson Reuters)
 
Asia Pacific Data Centre Holdings Ltd


AJD Details

Increase in property valuations: Asia Pacific Data Centre Holdings Ltd (ASX: AJD) revalued its three properties to $187million, which is given to NEXTDC on lease for 15 years. The average life of lease assets is 11.9 years and net tangible assets are $1.43 per share as on 30^th June 2015, up from $1.25 per share as on 31^st December 2015. Meanwhile, the group reported a profit of $5.4 million for the first half of FY16 and paid a dividend of 4.65 cents as interim dividend while confirmed a dividend of 2.4 cents per security for March and June quarter. Accordingly, the stock has generated over 23.1% return in last six months (as of July 29, 2016) placing the stock at higher levels. We give an “Expensive” recommendation on this dividend yield stock at the current price of $1.615
 

AJDDaily Chart (Source: Thomson Reuters)
 
FSA Group Ltd


FSA Details

Efforts to boost capital position: FSA Group Ltd (ASX: FSA) sold its factoring business under its subsidiary (180 Group Holdings Pty Ltd) to CML and intends to divert these funds to boost its capital position. This deal would grow its finance division and loan book to more than $68.0 million. The acquisition would be earnings accretive wherein CML estimates over $1.0m of net cost synergies. The group’s loan book at the end of H1FY16 was at $291.2 million, up 14% from H1FY15. Going forward, the company intends to grow its loan book to $500 million.  Meanwhile, the stock is trading at an attractive dividend yield and at reasonable valuations with a very low P/E. We give a “Speculative Buy” recommendation on the stock at the current price of $1.06
 

FSA Daily Chart (Source: Thomson Reuters)
 
Integrated Research Ltd


IRI Details

Positive outlook:Integrated Research Ltd (ASX: IRI) reported an 18% growth in revenues to $39.4 million for the first half of FY16 while profit reached $6.2 million. The group’s new acquired Testing Solutions Ltd reported revenues of $2.9 million.
 

First half revenues in respective years (Source: Company Reports)
 

 
Meanwhile, the revenue from Unified Communications and contact centres increased 25% to $21.3 million, while the payment segment increased by 21% to $3 million. For full year, the management expects revenues of $81-$85 million, up 15%-20% and profit is estimated to be in the range of $15.3 - $16 million, up 7%-12%. Trading at a decent dividend yield, we recommend the stock a “Speculative Buy” at the current price of $2.25

IRI Daily Chart (Source: Thomson Reuters)
 
Programmed Maintenance Services Ltd


PRGDetails

Skilled group acquisition expanded the scale of the group’s business:Programmed Maintenance Services Ltd (ASX: PRG) acquired Skilled Group in October 2015, which has transformed its business, increasing the scale and diversification. It also opened new opportunities across the combined customer base. The company accounted $102.4 million towards impairment and $34 million towards integration expenses of Skilled Group, and reported loss of $98 million for FY16. However, PRG has guided EBITA of $100 - $110 million for FY17. The integration of Skilled Group has led to savings of $30 million per annum in FY16 and there would be further benefits apart from expanded network. The rise in income and cost savings would expand profit margins in coming years, which is clearly indicated in its FY17 profit guidance. PRG stock rose over 40.6% in the last three months (as of July 29, 2016) and we believe the stock has more potential to grow. Trading at a good dividend yield, we give a “Hold” recommendation on the stock at the current price of $2.04
 

PRG Daily Chart (Source: Thomson Reuters)

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