Accent Group Limited (ASX: AX1)

Update on Restricted Shares from Escrow: Accent Group Limited’s (ASX: AX1) stock tumbled 12.422 per cent on July 16, 2018 with the intra-day trading volume of more than 7 Mn shares after the announcement of issuance of 36,842,105 fully ordinary shares to the shareholders of Hype DC Pty was made, which are currently held under voluntary escrow account and will be released on August 04, 2018. The share price declined as some investors were concerned about these escrowed shares and presumed a quick sell -off which looks to be an adverse reaction.

Lately, the group responded to ASX price query relating to the issued trading scenario and stated that the company has already informed about the escrow arrangements at the time of its acquisition with Hype DC. The Company confirms that it follows the Listing Rules and in particular Listing Rule 3.1. Besides this, the group reported a decent set of first half-year result wherein topline grew by 17 percent on year-on-year basis and amounted to $350.3 Mn in 1HFY18 and underlying EBITDA was up by 16.5 per cent and amounted to $50.0 Mn during the same period. Based on this solid performance, the group declared a fully franked interim dividend of 3.0 cents per share and expects its dividend payout ratio to be between 75% to 80% of underlying earnings per share for the full year. The second half also seems to have started at a positive note with like for like retail sales for the first 7 weeks of the second-half up 4%. At large, 2018 is expected to be another year of profit growth. Meanwhile, the stock prices were up by 77.90 per cent in the past six months and by 3.87 per cent in the past one month as at July 13, 2018. Hence, we maintain our “Hold” recommendation at the current market price of $ 1.410, considering trading volatility related to escrowed shares.

 

First Half Year Financial Highlights (Source: Company Reports)

 
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