CountPlus Ltd 

Appointment of key personnel: Countplus Ltd.’s (ASX: CUP) stock surged 7.9% on May 28, 2018 with many positive sentiments gearing up. The company has recently appointed Mr. Mark Chapman as Chief Operating Officer of CUP, effective 4^th June 2018. CUP has also appointed corporate adviser Genesis Advisory to support the Board in future merger and acquisition (M&A) opportunities. Moreover, CUP’s member firm, NSW-based Robson Partners has finalized terms to acquire 100% of local regional accounting practice Walker & Andrews. Robson Partners have completed an equity buy-back program by its Principals, under the CUP ‘owner-driver, partner’ model.
 
On the other hand, CUP expects to resume dividends at the full year FY 18 while initially the dividends were not resumed due to impairment impact on NPAT. The company has set a dividend policy at a range between 40% and 70% of NPAT. The company now has a dividend yield of 4.76%. Further, CUP is almost half way point of a two year program to turnaround the underlying business and improve profitability. The group has achieved a lot while being at nine months into the 24-month turnaround strategy from an underperforming company. Meanwhile, the stock has risen 14.55% in three months as on May 25, 2018. The market is now expecting Royal Commission to help realise the underlying value in CUP while many big players have come under the claws of the investigation. This might also lead to CUP becoming a takeover target. The group’s adjusted profit has been up 22% on prior corresponding period from $3,597,000 to $4,383,000, while $25,443,000 debt has been repaid in last 12 months. The group is leveraging its relationships with partners having selective accounting and advice experience to amplify their success without loss of ownership, drive, identity or control.
 
CUP is trading at a lower earnings multiple compared to its peers, and can generate better cash flows. Based on the foregoing, we give a “Speculative Buy” recommendation on the stock at the current price of $ 0.68.

 
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