Catapult Group International Ltd

CAT Details

Approved Wearable Tracking Devices by FIFA: Catapult Group International Ltd.’s (ASX: CAT) stock climbed up 3.2 per cent on June 13, 2018 as the group has received green signal by FIFA to provide wearable tracking devices during the matches. The objective of these devices is to improve the team and player performance. However, most of the football clubs do not use such monitoring devices during matches but if they use then it will help to improve the team performance. We expect that the rise in demand for monitoring devices will support topline growth of the company in long run. Recently, the group reported third-quarter gross cash receipt of $13.1 Mn, up by 23% as compared to the prior corresponding period (pcp). Net operating cash flow increased by $0.8 Mn in Q3 FY18 against prior corresponding period. Moreover, cashand cash equivalent at the end of the quarter was $ 34.9 Mn against $ 18.2 Mn of the previous quarter. This improved cash position will help to further business development events.


Historical Group Operating Cash Receipts (Source: Company Reports)

On the other hand, the group has successfully raised capital of $25 Mn through the placement of 22.7 Mn of new fully paid ordinary shares at the price of $1.10 per share. The raised fund would be used to capitalize the business operations, execute its significant growth opportunities in the elite and prosumer markets and deliver long-term growth to shareholders. Besides this, AustralianSuper Pty Ltd became the substantial holder of the Group since 18 May 2018 by holding 10,191,398 securities and 5.32 per cent of the voting power. Further, BNP Paribas Nominees Pty Ltd became the substantial holder of the Group since May 13, 2018 by holding 5.53 per cent of the voting power. Meanwhile, CAT stock was down by 34.90 per cent in the past one year and 4.58 per cent in the past three months as at June 12, 2018. Though the company has a good pipeline of products and approved wearable monitoring devices by FIFA will provide an opportunity to the company in long run, but it might be prudent to wait for further performance drivers. We maintain our “Hold” at the current price of $ 1.290.
 

CAT Daily Chart (Source: Thomson Reuters)
 

Costa Group Holdings Limited

CGC Details

Upgraded FY18 Guidance for NPAT-S:Food producer, Costa’s half year revenue was up 9.8% for the period ended December 31, 2017 and amounted to $489.3 Mn against $445.5 Mn of the prior corresponding period. Statutory profit was up by $51.2 million as compared to 1HFY17 that was majorly driven by the fair value gain of $40.1 million recognized on the deemed disposal of the existing 49% of interest in African Blue. RoE substantially increased from 4.4% to 16.3% while debt to equity ratio increased from 0.30x to 0.53x on pcp basis. Based on first half year performance, the group has upgraded its guidance for full-year NPAT-S (NPAT before SGARA and material items) growth of approximately 25%. We expect that the group will continue to be well positioned to execute further profitable organic growth alongside a disciplined value accretive M&A program.

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Half Year Performance Highlights (Source: Company Reports)

On the other hand, CGC disclosed to ASX that one of its directors, Janette Kendall had an indirect interest in the company and acquired 2,700 more ordinary shares via on-market Purchase at an issue price of $7.37 per share. Vinva Investment Management ceased to be a substantial holder of CGC since 14 May 2018. Moreover, National Australian Bank Limited and its associates entities also ceased to be a substantial holder of the group since 24 May 2018. Meanwhile, the stock was up by 77.49% in the past one year and 12.67% in the last one month as at June 12, 2018. Currently, the stock is trading close to 52-week high level ($8.425), hence we maintain our “Hold” recommendation on the stock at the current market price of $ 8.310.
 

CGC Daily Chart (Source: Thomson Reuters)
 

Qube Holdings Limited

QUB Details

Mixed First Half Year Performance: Industrial group, Qube Holdings Limited (ASX: QUB) released robust first half year performance with solid contributions from all divisions despite ongoing competitive pressures and recorded underlying revenue growth of 7.1% to $811.9 Mn as compared to the prior corresponding period (pcp). The sale surged up by the mix of volume and value growth during the same period. However, net profit after tax before amortization (NPATA) was down by 9% and amounted to $61.6 Mn. The overall decline in earnings compared to the prior corresponding period indicates the benefit of a $22.2 million pre-tax contribution from Qube’s Asciano shareholding that was realized in the prior corresponding period as part of the completion of the Patrick acquisition. Moreover, the group expects that the economic and operating environment for the second half to be similar to the first half with relatively stable volumes and limited capacity to secure rate rise. Based on that, the group focuses on to maximize its margins through its cost optimization strategy and leveraging its past investment in facilities, equipment, and technology to drive scale, operational efficiencies and delivering a superior customer service. In addition to the mixed financial performance, the group continued to strengthen its funding position ensuring it retained adequate liquidity by tapping into new funding markets and extending the tenor of its facilities whilst maintaining a conservative level of leverage to pursue further investment in growth opportunities.


Underlying Revenue and NPATA Performance (Source: Company Reports)

On the other hand, Perpetual Limited and its related bodies, a substantial holder of the Group changed its holding from 7.61 per cent of the voting power to 8.61 per cent of the voting power. Moreover, one of its director Ross Burney disposed 2,500 Subordinated Notes in the market.Meanwhile,the shares of QUB rallied about 3% in the last five days at June 12, 2018 while it trades at a higher P/E. Based on the foregoing, we maintain our “Expensive” recommendation on the stock at the currentprice of $2.360.
 

QUB Daily Chart (Source: Thomson Reuters)
 

Afterpay Touch Group Limited

APT Details

Addition to S&P/ASX200 Index: Afterpay Touch Group Limited (ASX: APT) is a technology-driven payment company who has huge potential to tap the Australian market. Along with this, the group has shown robust growth over the past one year and recorded a splendid growth in top line mainly due to a significant rise in the number of merchants who have recently adopted the late payment method. There has been a significant increase in the number of customers with over 90% of monthly transactions made by loyal customers. On the other hand, the group has recently commenced its online services in US market with the number of lifestyle retailers in due course thus, resulting into topline growth of the company in years to come. On balance sheet front, the current ratio stood at 5.97x in 1HF18, representing healthy liquidity position of the firm. Account receivable days substantially decreased from 735.7 days to 550.3 days in that past six months which is above the industry median (149.7days). We expect that the company will continue to decrease its receivables days at the back of strategic management policy.


Monthly Transaction Trend Since FY15-17 (Source: Company Reports)

Besides this, APT stock has been added to S&P/ASX200 Index, effective from June 18, 2018 as per June 2018 Quarterly Rebalance of the S&P/ASX Indices. Meanwhile, the stock climbed up 60.46 per cent in the past six months and 3.46 per cent in the past five days as at June 12, 2018. The stock is currently trading nearly 52-week high level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 8.430.
 

APT Daily Chart (Source: Thomson Reuters)

 
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