National Storage REIT


NSR Details

Strong Acquisition of the Centres:National Storage REIT (ASX: NSR) has reported profit after tax of $44.0 million in FY 16 against $48.7 million in FY15, on the back of lower portfolio revaluation uplift in line with the movement in capitalization rates. On the other hand, overall revenue for FY 16 increased by 25% to $81.9 million, due to the integration of acquisitions and organic portfolio growth. Additionally, FY16 has been a transformational year for NSR, as the company acquired 23 centers at $145 million and the pending acquisition of the 26 center Southern Cross storage portfolio is strengthening the position as Australasia’s largest storage owner-operator with almost doubling centers under ownership. Moreover, NSR has affirmed the FY17 underlying earnings guidance of $45.5 million to $46.5 million and EPS guidance of 9.2-9.4 cents per stapled security, assuming no material changes in market conditions. Meanwhile, NSR stock has risen 7.18% in the last six months (as of August 29, 2016). Based on the foregoing, we give a “Speculative Buy” recommendation on the stock at the current price of $1.64
 
 
Sirtex Medical Limited


SRXDetails

Double digit global dose sales growth in FY 16:Sirtex Medical Limited (ASX: SRX) has reported the growth of 32.8% in Net Profit After Tax (NPAT) to $53.6 million in FY 16 as compared to the previous corresponding period (pcp). This is due to the strong double digit global dose sales growth of 16.4% to 11,931 units, measured operating expenditure growth necessary to expand the business globally, and the transactional benefit of a lower Australian Dollar versus the US Dollar and Euro over the period.
 

FY 16 Financial Performance (Source: Company Reports)
 
The revenue from sale of goods enhanced 32.0% (up 16.9% constant currency) to $232.5 million and the earnings per share increased by 31.2% to 93.7 cents. Moreover, the group is targeting an under-penetrated market opportunity wherein they captured just 2 per cent penetration as of FY16 dose sales. SRX expects the double digit dose sales growth to continue in FY17 while the company is waiting for the results of the three major clinical studies due to report findings in the first half of calendar year 2017. We give a “Hold” recommendation on the stock at the current price of $33.39
 
 
Smartgroup Corporation Ltd


SIQDetails

Acquisition of Autopia and Selectus:Smartgroup Corporation Ltd (ASX: SIQ) reported a 45% growth in Profit after tax (NPATA) to $18.1 million during the first half of 2016 while the revenue grew by 36% to $60.9 million. Moreover, the recent acquisitions of Autopia and Selectus strengthened the core business, enabling the company to service all segments of the salary packaging market.
 

1H 2016 Financial Performance (Source: Company Reports)
 
Meanwhile, SIQ stock has risen 65.3% in the last six months (as of August 29, 2016), and we believe that the stock has more potential left. Accordingly, we give a “Hold” recommendation on the stock at the current price of $7.04
 
 
iSentia Group Ltd


ISDDetails

Strong growth in revenue and earnings: iSentia Group Ltd (ASX: ISD) has reported a growth of 23% in revenue to $156.0 million in FY 16 and the underlying NPATA increased 19% to $32.6 million on yoy basis. The full year pro forma revenues from the King Content acquisition increased 68% year on year, well ahead of the expectations at the time of acquisition.
 

FY 16 Financial Performance (Source: Company Reports)
 
Moreover, ISD expects to report the revenue and EBITDA growth in the low to mid-teens in FY17, and for the three years beyond FY17, ISD’s 2020 strategy is expected to deliver strong revenue and earnings per share growth. Meanwhile, ISD stock is trading at a relatively higher P/E. We give an “Expensive” recommendation on the stock at the current price of $3.69
 

 
SpeedCast International Ltd


SDA Details

Margins pressure:SpeedCast International Ltd (ASX: SDA) reported a 41% growth in the revenue to USD101.5 million in 1H 2016. The underlying NPATA, excluding non-recurring costs grew 21% to USD 8.2 million against the corresponding period 2015. In addition, SDA has raised over AUD 61.2 million through the First Placement Tranche by issuing 17.3 million of new shares at an issue price of AUD 3.54 per share, representing a 3.5% discount to the last closing share price of AUD 3.67 on 5^th August 2016. The funds would be partially used for the acquisition of WINS Limited from Eutelsat Communications and Maltasat for all cash consideration of EUR 60.0 million (USD 66.9 million). Additionally, the second placement tranche of AUD 1.7 million in new fully paid ordinary shares would be issued after getting the shareholder approval.
 

1H 2016 Financial Performance (Source: Company Reports)
 
Moreover, SDA is awarded a new sizeable multi-year service agreement to provide managed satellite communications services by a leading global energy service company. Under the service agreement, SDA would provide fully managed VSAT network services to 18 wellsite locations throughout China. On the other hand, the group is facing margins pressure, wherein the EBITDA margin fell to 16.8% during the period against 17.7% in pcp. Meanwhile, SDA stock has fallen 8.18% in the six months (as of August 29, 2016). Given the ongoing volatility in the Oil & Gas sectors coupled with low VSAT market penetration, we give an “Expensive” recommendation on the stock at the current price of $4.00
 

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