Covata Ltd


CVT Details

Entered into an agreement with FCOS: Covata Ltd (ASX: CVT) entered into a reseller agreement with Foreign & Commonwealth Office Services (FCOS) to deliver Safe Share to facilitate sales into other Government Departments and Agencies. FCOS is the largest government related service and IT supplier across the UK Government. Moreover, the overall Covata UK Government pipeline is for more than 250,000 potential end users while CVT expects this deal to rapidly accelerate the signing of government contracts over the coming two quarters and beyond. CVT would be sharing revenue with FCOS and since it records its top line in AUD, they are likely to benefit from the currency conversion of GBP. On the other hand, the recent rally seem to have placed the stock at higher valuations. Moreover, uncertainties revolving the Brexit outcome coupled with challenging market conditions in UK might hurt its performance in the coming months. Hence, we believe that the stock is “Expensive” at the current price of $0.275
 

CVT Daily Chart (Source: Thomson Reuters)
 
Adacel Technologies Limited


ADA Details

Higher valuations: Adacel Technologies Limited (ASX: ADA) expects its profit before tax to be around 70% higher for fiscal year of 2016 than the prior year on the back of its new customer wins, contract upgrades, and the falling Australian dollar. Highlights for the six months ended December 31, 2015 included revenue rise of 42% over prior corresponding period while the profit before tax surged 300%. As a result the stock surged over 37.97% (as of May 23, 2016) in the last six months alone. Moreover, ADA automation system was reported to have begun live operational trials in French Guiana in March 2016.
 

Systems sales driving services revenue (Source: Company Reports)
 
The group already operates in airspace controlled by Fiji, France, Iceland, New Zealand, Norway, Portugal, and the United States. The company’s stock is also added to the S&P/ ASX300 after the close of trading on 18 March 2016. On the other hand, recent rally in the stock placed it at higher valuations. We believe that the stock is “Expensive” at the current price of $2.37
 

ADA Daily Chart (Source: Thomson Reuters)
 
Mayne Pharma Group Ltd


MYX Details

Building pipeline: Mayne Pharma Group Ltd (ASX: MYX) recently received US FDA approval for Doryx MPC Tablets in 60 mg and 120 mg dose strengths. MYX is having 35+ products of over US$7 billion in pipeline and about 18 products pending for approval by USFDA with an estimated potential sales of US$2 billion. There are also more than 10 products in pipeline targeting Australian market of value A$100m. The group is also investing in US and Australian manufacturing sites which will be completed in FY18.
 

First half of 2016 performance (Source: Company Reports)
 
MYX has registered a revenue of A$127.3m, an increase of 114% during the first half of 2016 as compared to the corresponding period of 2015. As a result, the stock has generated returns of 8.76% return (as of May 23, 2016). Moreover, the company is trading at a higher P/E. We give an “Expensive” recommendation on the stock at the current price of $1.47
 

MYX Daily Chart (Source: Thomson Reuters)
 
Steadfast Group Ltd


SDF Details

Boosting growth via acquisitions: Steadfast Group Ltd (ASX: SDF) reported an acquisition-driven revenue growth of 102% in the first half of 2016 to $226.1 million as compared to the first half 2015 (driven by its Calliden and QBE agencies acquisitions). The EBITA growth for the first half 2016 is 72% as compared to first half 2015 due to acquisitions. Accordingly, Steadfast Gross Written Premium (GWP) is up 273% in first half of 2016.
 

Underwriting Agencies (Source: Company Reports)
 
The company has generated cash earning per share growing at the CAGR of 20% and posted 5.1 cents, which is an increase of 26% over the corresponding period 2015. SDF is forecasting cash EPS growth in the range of 10-14% while NPATA is expected in the range of $80-$83m, up 41-46%. SDF also updated that the MD and CEO has agreed not to terminate the employment contract before 2020. We give a “Hold” recommendation on the stock at the current price of $1.91
 

SDF Daily Chart (Source: Thomson Reuters)

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