Wesfarmers Limited
WES Details
Business Updates: Wesfarmers Limited (ASX: WES) is engaged in retail operations covering home improvement and office supplies, general merchandise, and specialty departments store.
Business Updates (Source: Analysis by Kalkine Group)
Insights of 1HFY22: During the half-year ending December 31, 2021, the company’s financial performance was backed by pleasing results from Bunnings and Wesfarmers Chemicals, Energy and Fertiliser business.
Financial Performance (Source: Analysis by Kalkine Group)
Key Risks: The company’s operational and financial performance could be impacted by uncertainties in relation to the COVID-19 pandemic. In addition, the business could be affected by the loss of customers.
Outlook: Looking forward, the company is focused on strategic investments to support long-term growth. WES would continue to expand Bunnings’ commercial offer and expand the addressable market.
Valuation Methodology: P/E 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 of WES has a 52-week low-high range of $47.445-$67.200, respectively. The stock has been corrected by ~9.45% in the past three months. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the COVID-19 led disruptions and declining earnings, etc. For the purpose of valuation, a few peers like JB Hi-Fi Ltd (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN), City Chic Collective Ltd (ASX: CCX), and others have been considered. Considering the expected upside in valuation, decent performance in some segments, synergies from the recent acquisition, optimistic outlook, and current trading levels, we recommend a ‘Buy’ rating on the stock at the closing market price of $49.330, up by ~1.690% as on 20 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
WES Daily Technical Chart, Data Source: REFINITIV
Kogan.Com Ltd
KGN Details
Change in Substantial Holdings: Kogan.Com Ltd (ASX: KGN) operates a portfolio of retail and services businesses which mainly includes Kogan Retail, Kogan Marketplace, Kogan Mobile, and Kogan Internet, etc. Recently, Hosking Partners LLP has made a change to substantial holdings in the company with a voting power of 6.01% against the previous voting power of 5.99%.
Insights of 1HFY22: The below picture gives a broader overview of the financial performance of the business:
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: The company’s business growth is exposed to risks arising from the instability in demand and supply. In addition, KGN’s operational and financial performance could be affected by the rising market share of peers in the industry in which it operates.
Outlook: Looking forward, the company is optimistic about its outlook. KGN is likely to generate further growth in Kogan First subscriptions in 2HFY22, which may help in moving toward the FY26 goal of 1,000,000 subscribers.
Valuation Methodology: P/E 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 of KGN is currently trading below its 52-week low-high average of $4.500 - $13.545, respectively. The stock has been corrected by ~7.22% in the past one month. The stock has been valued using a P/E multiple based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 disruptions and losses in business, etc. For this purpose of valuation, few peers like Booktopia Group Limited (ASX: BKG), Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY) and others have been considered. Considering the expected upside in valuation, rising sales, net cash position, record gross sales, decent outlook, current trading level and key risks associated with the business, we give a ‘Speculative Buy’ rating on the stock at the closing price of $4.950, down by ~3.132% as on 20 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
KGN Daily Technical Chart, Data Source: REFINITIV
Carbon Revolution Limited
CBR Details
1HFY22 Highlights: Carbon Revolution Limited (ASX: CBR) is involved in designing, manufacturing and marketing single-piece carbon fibre wheels. During the half-year period, revenue rose by 2.3% over 1HFY21, and the pull-forward of sales by Ford for the GT500 generated a stronger first half of FY22 sales than anticipated.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: The company’s operational and financial performance could be impacted by COVID-19 pandemic and supply chain disruptions.
Outlook: CBR would be focused on improving sales from new programs in production, delivering operational efficiencies & COGS reduction, progressing the Phase 1 Mega-line project and cash management in the remaining FY22.
Valuation Methodology: EV/Sales 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 of CBR is trading near its 52-week low level of $0.565, offering a decent opportunity for accumulation. The stock has been corrected by ~34.92% in the past three months. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the falling cash and negative margins, etc. For the purpose of valuation, peers such as GUD Holdings Ltd (ASX: GUD), ARB Corp Ltd (ASX: ARB) and Apollo Tourism & Leisure Ltd (ASX: ATL) have been considered. Considering the expected upside in valuation, new programs with General Motors, growing wheel sales, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.610, down by ~1.613% as on 20 April 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
CBR Daily Technical Chart, Data Source: REFINITIV
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 on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
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
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