Ainsworth Game Technology Ltd

AGI Dividend Details
 
Acquisitions and strengthening core capabilities to further boost performance: Ainsworth Game Technology Ltd (ASX: AGI) stock has declined by nearly 18.05% as of (January 07, 2016) in the past three months post the announcement of acquisition of Nova Technologies. This might be due to temporary nervousness of the investors on account of Ainsworth adding on to its debt. As a result, the company’s stock prices have declined by 7.23% in the last one year (as of January 07, 2016) on the back of weak performance in the local markets. On the other hand, the group registered a 46.4% year on year (yoy) growth in its overseas revenues. Moreover, in 2015, for the first time, the company’s overseas revenue has topped the revenue from local market. Nova acquisition would further boost the group’s overseas expansion plan and consequently improve company’s revenues. With Nova acquisition, the group’s overall number of units on participation in North America would reach over 2,600, as Nova comprised over 1,300 units. The proposed inauguration of North American Headquarters in Las Vegas would boost its footprint in the American market significantly. In addition, the company has improved its online and social gaming portfolio. Its new gaming platform A600™ has also been received well in Australia and has already gained approval in NSW and QLD markets. Ainsworth intends to exercise its option to acquire 40% of the equity in Digital 616 LLC, to further boost its online gaming market presence.
 


Historical Performance with improvement in overseas business (Source: Company reports)
 
AGI estimates to buy the rest of the 60% stake at 616 Digital LLC during 2016 at a capped price. The group got a license to operate in Alderney while the initial games and Remote Game Server also got approval. Meanwhile, the recent correction in the stock placed Ainsworth Game Technology at a very attractive valuation with a cheaper P/E. Ainsworth Game has a decent dividend yield. Accordingly, we give a “BUY” recommendation on AGI at the current price of $2.15
 
 
AGI Daily Chart (Source: Thomson Reuters)
 

Simavita Ltd

 
Promising performance in the domestic and US market: Simavita Ltd (ASX: SVA) delivered promising business results wherein the group announced a robust revenue growth from its Australian operations in fiscal year of 2015. Over the last year, the company’s cash position has also improved significantly. Meanwhile, SVA improved its North American Sites to 36 resulting to a total of 3,859 beds as of second quarter of 2016. The group continues to build a strong base in North America with potential engagement reaching over 33,000 beds. As per Australian market highlights, the total number of aged care sites contracted in the regions reached 62, leading to a total of 5,383 beds for second quarter of 2016. SVA has built further 46 sites with 3,414 beds, whose performance would reflect in the coming periods. On the other side, the group has integrated its flagship smart incontinence device with a number of third-party software expanding its market base. The company also recently published a strategic reporting indicating positive business development measures in the US and Australian markets. The company has a unique product offering whose demand is expected to grow considering the increasing percentage of aged people in the developed markets. The group’s customers reported positive clinical benefits by using the Smart Incontinence Management Solution (SIM™) technology. For instance, Castlemaine Health performed a SIM pilot in 16 residents at its sites, and as a result Castlemaine was in talks in 4 sites to deploy SIM. Castlemaine Health study (based on 116 responses at  6 sites in New South Wales, Queensland and Western Australia) also indicated a 19% cost benefits in the cost of consumables for those who implemented the SIM Plan.
 


Strategy to increase traction (Source: Company Reports)
 
With regards to the stock performance highlights, the Canada based medical device company debuted on ASX in 2014 while its stock prices declined by 68.63% last year (as of January 07, 2016). Based on the improving business scenario and growing acceptance for the company’s flagship device by the patients, we expect the company’s stock price to improve in future. Hence we assign a “BUY” recommendation on SVA at the current price of  $0.16
 
 
SVA Daily Chart (Source: Thomson Reuters)
 

NEXTDC Ltd

NXT Details
 
Ongoing contract wins: NEXTDC Ltd (ASX: NXT) stock has performed well over the last year and generated returns of over 28.74% (as of January 08, 2016) in the last fifty two weeks. The company has reported a positive revenue growth of 26% in the year while annualized contracted recurring revenue surged over 67% to $69.6 million. The group’s customers and interconnection (number of cross connects) increased 58% yoy and 94% yoy, respectively, as of June 2015. The company is also boosting its capital position via successful capital raising of $120 million. NXT intends to use these funds to establish two new data centers. The company also has entered into an agreement with StorageCraft in addition to gaining a major contract worth $1.4 million from the Australian Electoral Commission. This indicates a growing demand for the company’s data center and related services. NEXTDC has been making efforts towards growing its hybrid cloud capabilities. The group’s first four months of FY16 performance is also on track and NXT management reiterated their FY16 revenue guidance in the range of $85 million to $90 million while EBITDA guidance is estimated to be over $25 million to $28 million.
 


FY16 Forecasts (Source: Company Reports)
 
NXT’s S1 and M1 construction are ongoing and the construction is expected to finish by second half of fiscal year of 2016. Management is in talks with several potential clients, promising more pipeline in the coming periods. Meanwhile, NXT stock price has improved by 4.35% over the last four weeks (as at January 08, 2016) and we estimate the rally to continue in the coming months. Based on positive business developments and the company’s ambitious growth plan backed by ever-growing demand for data centers, we provide a “BUY” recommendation on NXT at the current price of  $2.40
 
 
NXT Daily Chart (Source: Thomson Reuters)
 

Shine Corporate Ltd

SHJ Dividend Details
 
Mix of organic and inorganic growth strategies: Legal service provider Shine Corporate Ltd (ASX: SHJ) has witnessed a decline in its stock prices by 33.33% in the last one year (as of January 08, 2016) and fell over 17.36% in the past six months. The major reason for this decline is the negative investor sentiment created in the market on the back of the downfall of Slater & Gordon Limited in the UK. However, Shine has attempted towards pacifying its investors by announcing its limited exposure to the UK markets. On the other hand, the company has registered a strong business performance in 2015. Its revenue has grown to $150 million registering a 30.4% increase as compared to the prior corresponding period. Similarly, NPAT for the year 2015 has also improved by 33.3%.
 


Diversifying revenue base (Source: Company Reports)
 
The company’s acquisition of Bradley Bayly Legal is expected to further improve its revenues during this year. As a result, Shine’s footprint would further grow in the lucrative Personal Injury market. The company’s mix of organic and inorganic growth strategies is expected to help it retain its momentum during this year. Moreover, Shine Corporate is trading at attractive valuations with a reasonable P/E even though the dividend yield is low. We believe that investors can enter this stock to leverage the current low prices. Based on the company’s efforts to revamp growth coupled with promising business outlook, we put a “BUY” recommendation on SHJ at the current price of  $2.00
 
 
SHJ Daily Chart (Source: Thomson Reuters)

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