Aristocrat Leisure Limited
ALL Details
Resignation of CFO: Aristocrat Leisure Limited (ASX: ALL) is engaged in designing, developing, manufacturing and marketing a diverse range of products and services, including electronic gaming machines, casino management systems, and digital social games. Recently, the company notified that Ms Cameron-Doe’s last day with ALL will be 15 April 2022, which follows her resignation tendered in December 2021. ALL has commenced a global search for Ms Cameron-Doe’s replacement.
Insights of FY21: During FY21, ALL reported decent operational and financial performance. ALL’s established growth strategy and sustained investment in outstanding products, people and capability provided greater diversification, resilience, and profitable growth in FY21.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: The company’s performance could be affected by global supply chain challenges, mainly materials shortages, freight constraints and increasing freight prices. The company is exposed to risks arising from failure in maintaining cybersecurity.
Outlook: For FY22, the company would be focused on sustainable growth in floor share across key Gaming Outright Sales markets globally. In addition, ALL would seek further growth in Pixel United bookings, with UA spending expected to be within the range of 26% and 29% of overall Pixel United revenues.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of ALL is trading below its 52-week low-high average of $32.600 - $49.650, respectively. The stock has been corrected by ~7.52% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the high leverage and supply chain issues, etc. For the purpose of valuation, a few peers like Star Entertainment Group Ltd (ASX: SGR), Tabcorp Holdings Ltd (ASX: TAH), Skycity Entertainment Group Ltd (ASX: SKC), and others have been considered. Considering the expected upside in valuation, rising revenue and NPAT, decent outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $32.690, down by ~0.366% as on 13 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
ALL Daily Technical Chart, Data Source: REFINITIV
The A2 Milk Company Limited
A2M Details
Ceasing to Become Substantial Holder: The A2 Milk Company Limited (ASX: A2M) is a premium branded dairy nutritional company which is focused on products containing the A2 beta-casein protein type. Recently, the Goldman Sachs Group, Inc., on behalf of itself and its subsidiaries, has ceased to become a substantial holder in the company.
1HFY22 Financial Summary: The 1HFY22 result was in line with its expectations and positioned A2M in a strong position to execute its strategy and deliver revenue growth in FY22 in a challenging and volatile market.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: The company is exposed to risks arising from rising distribution costs due to higher freight rates in the USA. In addition, the business could also be impacted by the rising market share of its peers.
Outlook: A2M is optimistic about revenue growth in 2HFY22 and anticipates revenue to be higher than 2HFY21. In addition, China label IMF sales are expected to be higher in FY22 and now expected to be significantly up in 2H22 against 1H22.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of A2M is trading near its 52-week low level of $4.570, offering a decent opportunity for accumulation. The stock has been corrected by ~10.78% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the falling margins and COVID-19 uncertainties, etc. For the purpose of valuation, a few peers like Synlait Milk Ltd (ASX: SM1), Bega Cheese Ltd (ASX: BGA), United Malt Group Ltd (ASX: UMG), and others have been considered. Considering the expected upside in valuation, strategy for revenue growth, decent outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $4.620, up by ~0.653% as on 13 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
A2M Daily Technical Chart, Data Source: REFINITIV
City Chic Collective Limited
CCX Details
1HFY22 Financial Summary: City Chic Collective Limited (ASX: CCX) is engaged in the retailing of women's apparel. During the half-year, the company experienced revenue growth despite global supply chain volatility. The company recorded online comparable sales growth of 52.5%, with 83% online penetration. The global customer base rose by 64% YoY to 1.32 million active customers, with growth in all regions.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: The company’s performance could be affected by the loss of customers as there is no guarantee that the customer would continue with the company. In addition, the business could also be affected by forex headwinds, regulatory risk etc.
Outlook: The company would continue to develop new programs and launch new ranges with its existing partners, as well as onboarding new partnerships during 2HFY22 and into FY23. The company is optimistic that it is well-positioned to continue to grow its business.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of CCX is trading near its 52-week low level of $2.860, offering a decent opportunity for accumulation. The stock has been corrected by ~3.97% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the COVID-19 uncertainties and declining earnings, etc. For the purpose of valuation, a few peers like Lovisa Holdings Ltd (ASX: LOV), Baby Bunting Group Ltd (ASX: BBN), and KMD Brands Ltd (ASX: KMD) have been considered. Considering the expected upside in valuation, rising revenue, growing online sales, decent outlook, and current trading levels, we recommend a ‘Buy’ rating on the stock at the closing price of $2.900, up by ~0.346% as on 13 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
CCX Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.