carsales.com Limited

CAR Details

1HFY22 Financial and Operational Summary: carsales.com Limited (ASX: CAR) operates a digital automotive and non-automotive vehicle marketplace in Australia, with a growing global presence in Asia, Latin America and North America. During 1HFY22, the company delivered an excellent set of results, indicating the strength and resilience of its global business as well as the ongoing growth potential from new products and services. CAR cemented its competitive position in all key markets, with elevated consumer engagement against pre-pandemic levels and strong new product growth.

Financial Highlights (Source: Analysis by Kalkine Group)

Key Risks: The company’s operational and financial performance could be affected by the rising market share of its peers in the industry. In addition, the business could also be impacted by the adverse movement in foreign currency.

Outlook: For FY22, the company is optimistic about solid growth in adjusted revenue, adjusted EBITDA and adjusted NPAT. In addition, the company anticipates strong growth in revenue and good growth in EBITDA in FY22 from Korea and Brazil segment.

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 CAR is trading below its 52-week low-high average of $16.720 - $26.670, respectively. The stock has been corrected by ~9.24% and ~24.79% in the past one and three months, respectively. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a some discount to its peers’ average P/E multiple, considering the COVID-19 disruptions and higher debt to equity ratio as compared to industry median, etc. For the purpose of valuation, peers such as REA Group Ltd (ASX: REA), Domain Holdings Australia Ltd (ASX: DHG), and Seek Ltd (ASX: SEK) have been considered. Considering the expected upside in valuation, rising sales and earnings, decent outlook, and current trading levels, we recommend a ‘Buy’ rating on the stock at the current market price of $19.680, as of 9 March 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia.

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.

CAR Daily Technical Chart, Data Source: REFINITIV 

Codan Limited

CDA Details

Change in Leadership: Codan Limited (ASX: CDA) is engaged in designing, manufacturing, and marketing several high value-added electronics products for global government, business, aid and humanitarian, and sophisticated consumer markets. As announced on 1 March 2022, Donald McGurk has retired from the role of Managing Director and Chief Executive Officer as part of the transition plan, and Mr Alf Ianniello has been appointed to the role, effective from 4 January 2022.

Insights of 1HFY22: During 1HFY22, the company witnessed decent growth in financials, evident by rising revenue and earnings. The company’s total revenue was comprised of 53% from metal detection and 46% from communications. CDA declared an interim dividend of 13.0 cents per share, reflecting a rise of 24% over pcp.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: CDA’s business could be impacted by the shift in new technology within the industry. In addition, the company is exposed to risks arising from failure in maintaining cyber security.

Outlook: For FY22, the company would be focused on the successful uptake of GPX6000® gold detectors into the developing world. In addition, the strategic focus of the company revolves around the expansion of geographic footprint and acquisition opportunities.

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 CDA is trading below its 52-week low-high average of $6.900 - $19.430, respectively. The stock has been corrected by ~18.99% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average P/E multiple, considering the COVID-19 disruptions and lower liquidity. For the purpose of valuation, peers such as Senetas Corp Ltd (ASX: SEN), Elsight Ltd (ASX: ELS), and Ava Risk Group Ltd (ASX: AVA) have been considered. Considering the expected upside in valuation, rising sales and earnings, decent outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $7.080, as on 9 March 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia.

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.

CDA Daily Technical Chart, Data Source: REFINITIV 

Bravura Solutions Limited

BVS Details

Change in Substantial Holdings: Bravura Solutions Limited (ASX: BVS) provides software products and services to clients operating in the wealth management and funds administration industries. Recently, the company announced that Invesco Australia Limited had made a change in holdings with a voting power of 7.418% as compared to the previous voting power of 8.532%.

Insights of 1HFY22:  During 1HFY22, the company’s key markets have witnessed several developments, which include superannuation fund consolidation, vertical integration leading to value chain disruption, rising desire for lower operational costs and greater need for improvement in end customers’ digital experiences.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: BVS operates in a very competitive environment, and the rising market share of peers could impact its financial health. In addition, the business is exposed to foreign exchange risk as it operates in multiple geographies.

Outlook: The company is optimistic about continuous revenue growth in 2HFY22, which may result resulting in a full-year revenue growth of over 10% against FY21.

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 BVS is trading near to its 52-week low level of $1.495, offering a decent opportunity for accumulation. The stock of BVS has been corrected by ~23.18% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ median P/E multiple, considering the lower net margin and higher debt to equity ratio as compared to industry median. For the purpose of valuation, peers such as Hansen Technologies Ltd (ASX: HSN), TechnologyOne Ltd (ASX: TNE), Reckon Ltd (ASX: RKN), and others have been considered. Considering the expected upside in valuation, rising topline, optimistic outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.560, as on 9 March 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia.

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.

BVS 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

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