IVE Group Limited (ASX: IGL)

IGL is involved in providing printing and distribution of catalogues, magazines, communication materials, and stationery. It caters to financial services, retail, communications, property, and several other industries. The company was listed in ASX on December 16, 2015.

Financial and Operational Updates: As announced on November 24, 2021, IGL provided a trading update where EBITDA and NPAT surged 32% and 75% respectively for four months ending to October 31, 2021. The company continues to benefit from increased onshoring projects from clients given the pandemic. The company established a long-term supply contract with international paper suppliers to stay behind the upward moving paper prices. However, IGL is expecting paper pricing to continue throughout 2022. Its web offset printing division to face downward pressure on rising paper prices. The management is optimistic about improved financials for the rest of the period in FY21 led by post lockdown economic recovery. It had closed the period with a cash balance of $42 million. The company is targeting a full-year dividend payout ratio of 65%-75% of NPAT in FY21.

On November 02, 2021, IGL completed the acquisition of Active Display Group and AFI Branding Solutions. The company is mulling strategies to make it earnings accretive. It is anticipating full-year capex to reach $10 million without the Lasoo phase 1 investment for $3.5 million.

Technical Analysis: IGL prices broke the downward sloping trend line by upside and the prices are sustaining above the same from the past three months. RSI (14-period) is hovering at ~54 which indicates prices are trading in bullish momentum. Immediate support levels are AUD 1.63 and AUD 1.535 while immediate resistance levels are AUD 1.835 and AUD 1.953.

Valuation Methodology: EV/EBITDA 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 delivered six months gains of ~9.74%. It is trading above to the average of the 52-week low price of $1.165 and the 52-week high price of $1.850. The stock has been valued using the EV/Sales 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 premium as compared to its peers, considering the accretive merger benefits and long-term supply contract to mitigate an upsurge in paper prices. For the purpose of valuation, peers such as Enero Group Ltd. (ASX: EGG), GTN Ltd. (ASX: GTN), Seven West Media Ltd. (ASX: SWM), and others have been considered. Given the positive movement in EBITDA and NPAT for four months ending October 31, 2021, optimistic outlook, adequate cash, indicative upside in the valuation, and key risk associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $1.690, down by ~3.152%, as on 21st January 2022.

Daily Technical Chart – NDT

Source: REFINITIV

Note:  The purple color line in the chart depicts RSI (14-period), while the green color line shows 50-Period SMA.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for 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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.