Seymour Whyte Ltd

 

        SWL Dividend Details
 
Focusing on operational efficiency and order book: Seymour Whyte Ltd (ASX: SWL) shares plunged over 36.65% (as of December 11, 2015) during this year to date as challenging market conditions hurt the group’s fiscal year of 2015 performance, with the revenues falling to $269.8 million from $311.0 million in FY14. The group’s target industry, especially within Queensland remained subdued during the period, while sentiment at New South Wales had recovered. On the other hand, to offset the industry pressure, SWL improved its EBITDA margin to 6.4% from 5.7% in FY14, driven by better project margins. SWL enhanced its total forward order book by 69% to $389 million as compared to the prior corresponding period (pcp) while transport order book almost doubled to $358 million. The group won over $149 million worth of new projects during this year to date while the fiscal year of 2016 contracted revenues reached $334 million. The management has given conservative guidance for 1H16 NPAT (breakeven to $1 million) owing to two loss making projects but new contract wins (such as contract to upgrade the Pacific Highway etc.) will act as the growth catalyst in the long run.
 

Order book by Sector and Delivery (Source: Company Reports)
 
We believe that Seymour Whyte is well positioned to leverage the improving infrastructure opportunity for the coming years driven by Federal Government and Victorian as well as New South Wales Governments. Moreover, the correction placed SWL at attractive valuations with a lower P/E of 9x and the company has a solid annual dividend yield of 8%. We reiterate our “BUY” recommendation on the stock at the current price of  $1.02
 
 
SWL Daily Chart (Source: Thomson Reuters)
 

Contango Microcap Ltd

           CTN Dividend Details
 
Strong Investment Performance: Contango Microcap Ltd (ASX: CTN) recently reported that its net tangible assets after tax improved to $1.042 in November 2015, as compared to $1.032 in October 2015. The group is among the best performing portfolios in Australia, and delivered 3% annual returns to October 2015, as compared to 2.4% annual returns of S&P/ASX small ordinaries Accumulation Index. CTN generated 7.6% and 11.4% returns respectively in the last three years and ten years pa (as of Oct 2015) as compared to 0.6% and 1.5% returns of S&P/ASX small ordinaries Accumulation Index. Moreover, Contango Microcap has a dividend reserve of $18.09 million which is sufficient to fund its planned dividends in FY17.
 

Asset Composition as of Nov 2015 (Source: Company Reports)
 
Meanwhile, CTN maintains diversified portfolio and chooses mid cap firms which has potential to become a large cap. Accordingly, the group is focusing on innovative new products and recently launched Contango Income Generator Limited (CIE), for investors looking for yield stocks in the equity market, for retirees, high net worth investors as well as investors who are over exposed to large cap stocks. We remain positive on the stock and place a “BUY” recommendation at the current price of  $0.935
 
 
CTN Daily Chart (Source: Thomson Reuters)
 

Vitaco Holdings Ltd

                  VIT Details
 
Targeting China to deliver growth: Vitaco Holdings Ltd (ASX: VIT) is targeting China and Brazil markets beyond its domestic Australia and New Zealand business to generate further growth in the coming months. VIT delivered a revenue growth of 8.6% during fiscal year of 2015 driven by its strong client base in Australia and New Zealand including Coles, Woolworths, Chemist Warehouse and Progressive Enterprises and Foodstuffs. Moreover, Vitaco Holdings is focusing on operating efficiency, and consequently enhanced its EBITDA by 9.1% on a year over year basis in FY15. The group forecasts its EBITDA to increase by 15% yoy to $23.7 million in fiscal year of 2016. On the other hand, Vitaco Holdings shares have corrected about 19.48% in the last four weeks (as of December 11, 2015), but we believe  this correction offers an attractive investment opportunity as VIT stock has the potential to deliver outstanding performance like Blackmores, based on its capacity to penetrate into China. We remain bullish on VIT and reiterate “BUY” at the current stock price of  $2.48
 
 
VIT Daily Chart (Source: Thomson Reuters)
 

Peet Ltd

                  PPC Dividend Details
 
Balance sheet improvement and well positioned to deliver further growth: Peet Ltd (ASX: PPC) reported a decent performance despite tough market conditions with a revenue increase of 22% yoy to $360.9 million in fiscal year of 2015 as well as increase in EBITDA by 25% yoy to $92.4 million. The group is enhancing its projects base and bought over seven new projects during the period with >4,000 lots/dwellings having gross development value of around $1 billion. The average acquisition price per lot was over $30,000. Peet Ltd sold Greenvale for $93.1 million in August 2015. PPC has a pipeline of about 1,700 units/apartments across its national portfolio while a pipeline of over 47,000 lots has been built geographically spread and balanced among its development, funds Management business as well as joint ventures.
 

Contracts on hand by geography (Source: Company Reports)
 
Meanwhile, the group’s net operating cash flow reached $113.3 million with a cash interest cover rising to four times. The group intends to achieve a gearing at lower end of target range of 20% to 30%, and accordingly, cut its net debt by 31% yoy to $177 million during FY15. Peet reported a cash of $127.4 million as at 30 June 2015 and improved its ROCE to 13.8% in FY15 from 11.0% in pcp. The group is trading at attractive valuations, with a relatively cheaper P/E of about 12x and has a decent annual dividend yield of about 4%. Accordingly, we reiterate a “BUY” recommendation at the current price of  $1.03
 
 
PPC Daily Chart (Source: Thomson Reuters)
 

AUB Group Ltd

           AUB Dividend Details
 
Diversifying Portfolio: AUB Group Ltd (ASX: AUB) enhanced its revenues by 9.4% driven by better corporate cost ratio while its adjusted NPAT rose by 2.5% yoy during FY15. The group’s diversification efforts paid off as the percentage of non-broking profit rose from 12% in FY12 to 23% in FY15, protecting the group from insurance market volatility to a certain extent. Meanwhile, AUB is targeting to be a major risk solutions provider and hence established the division during 2014 by acquiring 50% of the Procare Group. AUB expanded the division by acquiring a 60% interest in Altius Group, 50% interest in Risk Strategies and 60% interest in Allied Health Australia. On the other side, the group built more than 450k clients, mainly in SME and midmarket businesses. AUB developed its Underwriting Agency operations to more than $300 million GWP driven by its strategy efforts and intends to be among the top three positions in the related market segments.
 

Diversified Group (Source: Company Reports)
 
The group estimates a better adjusted NPAT during fiscal year of 2016, representing a 5% increase against FY2015 boosted by its owner: driver business model and optimization efforts, in spite of challenging insurance market. AUB Group’s shares surged over 1.92% in the last three months (as of December 11, 2015). Based on the above, we place a “BUY” on this 4.4% dividend yield stock at the current price of  $8.51
 
 
AUB Daily Chart (Source: Thomson Reuters)
 

Arena REIT No 1

       ARF Dividend Details
 
Cheaper valuations: The shares of Arena REIT No 1 (ASX: ARF) delivered a year to date returns of over 8.33% (as of December 11, 2015) with the group reporting a decent FY15 performance by generating a 37% yoy increase in its statutory profit to $61 million during fiscal year of 2015, while the operating profit rose 19% yoy to $22 million during the period. Arena’s strong operating results generated an overall total return of 36.3% for shareholders during fiscal year of 2015 (including share price growth and distributions), which is far better than the benchmark ASX 300 A-REIT Accumulation Index performance of 20.2% during the same period. Meanwhile, ARF annual Management expense ratio decreased by 31 basis points indicating its savings efforts in net management costs post internalization. Arena also generated a decent organic growth with overall like-for-like annual rent growth improving by 3.4% yoy while medical centers and childcare centers like-for-like rent rising by 2.7% and 3.5% respectively.
 

Potential NTA upside from asset valuations (Source: Company Reports)
 
ARF portfolio value rose to $420 million in FY15, as compared to $356 million in prior corresponding period, and extended 45 leases boosting its WALE to 8.9 years. The stock is trading at very cheap valuations with a lower P/E of 6.8x while delivered an outstanding dividend yield of about 4%. Based on the foregoing, we give a “BUY” recommendation for ARF at the current price of  $1.69
 
 
ARF Daily Chart (Source: Thomson Reuters)

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2014 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.