Perpetual Equity Investment Company Limited  

PIC Details

Completion of Share Purchase Plan (SPP): Perpetual Equity Investment Company Limited (ASX: PIC) is an investment company, established to invest in the Australian listed securities. The investment objective of the company is to provide investors with growing income stream and long-term capital growth. PIC has announced regarding completion of its share purchase plan (SPP) on 21 June 2021. PIC is issuing ~23.6mn shares to the successful applicants on 23 June 2021 at an issue price of $1.28 per share raising just over $30mn. The company has reported the latest Net Tangible Asset (NTA) after tax value at $1.28 per share. 

1HFY21 Updates: PIC has registered an increase in NPAT to $55.0mn in 1HFY21 against $10.5mn in 1HFY20. The company has outperformed the benchmark by 8.0% during 1HFY21. PIC has announced a fully franked interim dividend of 2.8cps with an annual dividend yield of 4.8%.

NPAT trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to COVID-19 uncertainties. In addition, the company is exposed to performance risks. Therefore, subdued performance against benchmark may impact the business of the company.

Outlook: PIC is focused on providing income to shareholders by maintaining its profit reserves to pay dividends in the future. PIC expects volatility in the market. Hence, the company is likely to maintain a portfolio of good quality stocks. The company’s approach to invest locally and globally provides an opportunity to take advantage of all market cycles in the future. 

Stock Recommendation: The stock of PIC gave a return of ~-0.39% in the last one month and a return of ~4.47% in the last three months. The current market capitalisation of PIC stands at ~$456.81mn as of 23 June 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.90-~$1.325. On a TTM basis, the stock of PIC is trading at an EV/Sales multiple of 6.5x higher than the industry (Investment Banking & Investment Services) median of 6.4x. Considering the company has witnessed higher tax rates, decent stock price movement in the past few months, current trading levels, and valuation on TTM basis, we suggest investors to book profit and recommend a “Sell” rating on the stock at the current market price of $1.290, as on Jun 23, 2021, 10.37 AM (GMT+10), Sydney, Eastern Australia.

PIC Daily Technical Chart, Data Source: REFINITIV

References:  

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

Note 2: Investment decision 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 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.

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