One ASX stock that jumped up –Transurban Group; and One that fell hard - Mobile Embrace Ltd

Transurban Group

TCL Details
· Better FY17 guidance: Transurban Group (ASX: TCL) stock rose over 6.4% on February 07, 2017 driven by better FY17 guidance and decent first half results. The group enhanced their FY17 distribution guidance to 51.5 cents per security (cps), representing a 13.2% increase as compared to the FY16 distribution. Overall Proportional toll revenue enhanced 10.9% to $1,065 million while average daily traffic (ADT) rose 4.8%. The group’s proportional earnings before interest, tax, depreciation and amortization (EBITDA) also rose by 12.1% to $817 million and accordingly their free cash surged 47.5% to $680 million. The group holds $9 billion of development projects at Melbourne, Sydney, Brisbane and Greater Washington Area. Domestic performance of TCL was decent with Proportional toll revenue rising 8.8% to $434 million. ADT rose 3.4% to 648,000 trips driven by solid traffic across the network. The region’s EBITDA rose 10.4% during the period. The group’s construction of the NorthConnex (NCX) project is on track with 15 road headers currently in operation. On the other hand, the region’s M2 traffic was impacted by construction of NorthConnex while large vehicle toll multipliers are now at three times cars on the Lane Cove Tunnel (LCT), M5 and Westlink M7.

· Recommendation: TCL stock is trading at an unreasonable P/E and we believe that the stock is “Expensive” at the current price of – $ 11.04

 

Free Cash Flow (Source: Company Reports) 

Mobile Embrace Ltd

MBE Details
· Weak market guidance dragged the stock lower: Mobile Embrace Ltd (ASX: MBE) stock crashed over 46.7% on February 07, 2017 at the back of weak market update. The group’s first half of 2017 earnings results met expectations, with first half of 2017 EBITDA reaching $2.1M but revenue of $27.1 million was lower than the guidance of more than $28 million. On the other hand, the group expects a revenue of $52 million and EBITDA in the range of $5 million and $6 million for fiscal year of 2017. Falling Direct Carrier Billing (DCB) marketing spend impacted 13 million in FY17. On the other hand, the group continues to focus on their core strategy of enabling the acquisition of high quality customers at scale on mobile devices through Performance Marketing and DCB. International DCB performance was decent with revenues reaching $4.24M in the first half of 2017 as compared to $1.9M of 1H 2016. However, DCB expansion rollout to international mobile carrier’s activities are slower than expected.

· Recommendation: MBE stock fell over 63.5% in the last three months (as of February 06, 2017). Given some level of uncertainty prevailing, we give a “hold” recommendation on the stock at the current price of – $ 0.072

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