Perpetual Limited

PPT’s share expensive at the current levels:Financial Sector company, Perpetual Limited (ASX: PPT) has its focus on protecting and growing its clients’ wealth through its three businesses i.e. Perpetual Investments, Perpetual Private, and Perpetual Corporate Trust. The company recently announced a change in its substantial holding in Elanor Investor Group where voting power of Perpetual Limited and its related bodies corporate reduced from 14.79% to 10.52%.

In another update, it announced decrease in funds under management (FUM) of Perpetual Investments by $0.3 Bn to $27.4 Bn in March quarter of 2019 over the prior quarter, which can be attributed to $1.9 Bn of net outflows primarily from the institutional channel, including a single Australian Equities Mandate of $1.3 billion, and offset bymarket appreciation of $1.6 billion.Its total average FUM for the three months ended on March 31, 2019 was reported at $28.2 Bn.

In its H1FY19 result, its revenue decreased by 5% pcp to $252.3 Mn and its NPAT decreased by 12% pcp to $60.2 million, predominantly due to lower performance fees, net outflows, and change in accounting treatment of unrealised gains and losses.


FUM Metrics (Source: Company Reports)

What To Expect From The Company:The company aims to expand its focus beyond value investing.  It expects to manage its investment teams in a boutique-like manner and will consider adding new investment styles and asset classes to this structure over time.Under Perpetual Private, it expects that its strategy remains on track with the philanthropic business also playing a key role with $2.5 billion in FUA for charitable trusts and endowment funds at the end of the first half.

Under Perpetual Corporate Trust, it remains committed on delivering digital solutions to the banking and financial services sector for comprehensive reporting and analytics which PCT’s clients utilise for risk, compliance and strategic needs.

Stock Recommendation: Perpetual’s share generated positive YTD return of 38.12%. Its net margin for H1FY19 stood at 23.6% better than the industry median of 21.7%, implying better capabilities to convert its top line into the bottom line ascompared to its peer group.

On the valuation front, its P/B ratio for TTM stands at 2.9x higher than the industry median (Financials) of 1.1x, which implies over-valued position at the current juncture. Hence, considering the aforesaid facts and current trading level, we recommend an “Expensive” rating on the stock at the current market price of $40.310 per share (down 2.041% on 16 April 2019).
 

Beach Energy Limited

Decent Performance in H1FY19:Energy sector company, Beach Energy Limited (ASX: BPT) recently announced that 414,547 fully paid ordinary shares currently held under voluntary escrow will be released on 3 May 2019.Recently, the company had received approval of a suspension and extension to the work commitments for the WA-359-P years 3 and 5 for 24 months until 25 April 2021. A corresponding extension to the permit term has been approved to 25 April 2021.The grant of this extension fulfils the final material condition of Cue’s agreements with BP, Beach and New Zealand Oil & Gas.

In its H1FY19 result, it reported an increase in its sales volume by 181% pcp to 16.0 MMboe predominantly due to Lattice acquisition, strong customer demand, and improved facility reliability.Its underlying NPAT increased by 199% pcp to $279 Mn, which was mainly driven by 3% increase in average USD oil and liquids price, lower FX, and unwinding of contract liabilities from the acquisition.


H1FY19 Financial Metrics (Source: Company Reports)

What To Expect From The Company:The company has increased the production guidance from 25-27 MMboe to 28-29 MMboe for FY2019. Its capex guidance for FY19 has been narrowed to $450 - 500 Mn.

Its FY19 Underlying EBITDA guidance has been increased to $1.25 - 1.35 Bn. Its FY19 DD&A guidance has been increased to $450 - 500 Mn.

Stock Recommendation: Beach Energy’s share generated positive YTD return of 66.67%. Its EBITDA margin and net margin for H1FY19 stood at 68.1% and 26.8% better than the industry median of 35.9% and 19.1% respectively, which implies a decent financial position than its peer group. In the past one month, the stock posted a 2.87% return, and, in the past three months, the return was 31.90%. Currently, the stock is trading slightly towards its 52-week higher level of $2.260 which might be correct in the near term. Hence considering the mix of scenario, we have a wait and watch view on the stock at the current market price of $2.120 per share (down 1.395% on 16 April 2019).
  

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.