Seven Group Holdings Limited
SVW Details
Change in Substantial Shareholding: Seven Group Holdings Limited (ASX: SVW) is an operating and investment company based in Australia, working with businesses and investments in industrial services, oil and gas, and media. SGH functions through six segments: WesTrac, Coates Hire, Energy, Media investments, AllightSykes, and other investments.
- Recently, SVW decreased its substantial shareholding from ~14.76% to ~13.00% in Agrimin Limited. Also, it became a substantial shareholder by gaining a voting power of ~6.618% in Raiz Invest Limited.
- During the half year period ending December 31, 2021, the company experienced decent results, evident by strong revenue, earnings and profit growth. The company has declared a full franked interim dividend at 23 cents per share (fully franked).
Half Yearly Key Metrics; (Analysis by Kalkine Group)
Key Risks: The company faces the COVID-19 impact of lockdowns and restrictions in New Zealand and Australia. The supply chain and labour challenges persist due to increasing the strain of the new virus variant across all geographies.
Outlook: With the positive outlook on commodity prices, increased infrastructure project activity and broader rebound in economics post-lockdown, and despite supply chain pressures WesTrac is likely to deliver ‘low single-digit’ EBIT growth in FY22 on FY21. With Boral focusing on improving margins and shareholder returns, Beach anticipates production of 21.0 to 23.0 MMboe, SGH overall offers Group guidance for its EBIT to be up 8-10% in FY22 on FY21.
Valuation Methodology: Price to Earnings 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 SVW gave a negative return of ~10.63% in the past three months and a negative return of ~9.04% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $19.240 - $24.550. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median P/E multiple, considering the impact of lockdowns during COVID-19, and supply chain disruptions. For this purpose of valuation, a few peers like Monadelphous Group Ltd (ASX: MND), Downer EDI Ltd (ASX: DOW) and Coventry Group Ltd (ASX: CYG) have been considered. Considering the current trading levels, rising net margins, growth in sales & ROE, improved liquidity, given positive guidance despite supply chain disruptions, indicative upside in valuation, and associated key business risks, we give a ‘Buy’ rating on the stock at the closing market price of $19.940, up by ~1.734%, as of 5th May 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.
SVW Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.
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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