Smartgroup Corporation Ltd
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SIQ Details
Autopia and Selectus acquisitions to drive growth: Smartgroup Corporation Ltd (ASX: SIQ) jumped up 13.13% on July 26, 2016 as the company completed the institutional placement to raise $54 million through issue of 7.65 million new shares. The proceeds will be used for SIQ’s recent acquisition of Selectus for $119 million in upfront consideration plus a further consideration of up to $50 million in August 2017. The group also acquired Autopia to grow SIQ’s leasing portfolio and expand client base in corporate segment. Autopia is expected to contribute ~$2.6 million EBITDA and ~$1.2 million NPATA in 2H CY2016. The group expects to report 1H CY16 revenue of over $60.5 million, which is a 35% rise as compared to the first half of 2015 and EBITDA rise of $25.5 million during the period, which is 42% rise from the same period of last year. Meanwhile, SIQ has a contract with Queensland government starting from 1st April 2016 and is for three years, with an extension option of two years even though the contract is not expected to materially contribute to SIQ's 2016 earnings. Moreover, SIQ has acquired the selected assets of Trinity management group for the initial payment of $1.7 million and further payment is to be made in 36 months.
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Building solid expertise for salary packaging (Source: Company Reports)
The acquisition will be funded from cash and existing facilities. Additionally, SIQ has renewed the contract with department of defense to continue receiving salary packaging services till 30th June, 2021. We give a “Hold” recommendation on the stock at the current price of $7.40
SIQ Daily Chart (Source: Thomson Reuters)
Healthscope Ltd
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HSO Details
Contract to Primary Health Care: Healthscope Ltd (ASX: HSO) has entered into a long term partnership with NSW Government and has awarded a contract to Primary Health Care Limited for the provision of diagnostic imaging services at the Northern Beaches Hospital. Northern Beaches Hospital is due for opening in 2018, and would have 488 beds offering public and private patient services at the hospital. On the other hand, in the 1H 2016 HSO Hospital expansion program is on track with the inclusion of Hunter Valley and LaTrobe private hospitals and integration of new Wellington pathology contract in New Zealand. Overall, there are 11 projects in the pipeline which would deliver further 804 beds and 43 operating theatres by the end of 2018. The company also has settled US$300 million of private placement issue. HSO has transferred Queensland Pathology operations to Primary Health Care and cooperated with ACCC review. HSO stock has risen by 31.86% in the last six months (as of July 25, 2016) while we give a “Hold” recommendation on the stock at the current price of $2.97
HSO Daily Chart (Source: Thomson Reuters)
Navitas Limited
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NVT Details
Renewed Agreement with ECU: Navitas Limited (ASX: NVT) has renewed a University Programs agreement with Edith Cowan University (ECU) and has also signed a six-month extension of its agreement with Edith Cowan University for its pathway college. Moreover, NVT has been granted leave to appeal the decision of the Upper Tribunal (Tax and Chancery Chamber) regarding the SAE’s UK VAT exemption status. The appeal is expected to be taken by the Court of Appeal in about eight to 12 months. Meanwhile, NVT stock has risen 31.22% in the last six months (as of July 25, 2016) and we believe there is more potential to be witnessed. Accordingly, we give a “Hold” recommendation on this dividend yield stock at the current price of $5.95
NVT Daily Chart (Source: Thomson Reuters)
Retail Food Group Limited
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RFG Details
Strong performance despite challenges: Retail Food Group Limited (ASX: RFG) has exceeded targets for its first half of 2016 performance, with regard to EBITDA contribution from International (16.8%) & Commercial (37.8%) operations. Coffee & Allied Beverage is expected to contribute 40% to the group EBITDA by FY18 and 25% of the Group EBITDA is expected to come from International operations. Moreover, RFC forecasts earnings growth of 20% to $66 million for FY16.
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RFG’s position and global opportunity (Source: Company Reports)
Additionally, RFG is expanding via acquiring brands and in FY16, the company’s revenue has increased due to first full year contribution from the brands Gloria Jeans Coffee (purchased for $163 million), coffee wholesaler Coffee Di Bella ($30m), as well as New Zealand-based mobile coffee business Café2U acquired in FY15. The coffee wholesale and franchise network opportunities would lead to business expectation of about $16million over three years to 2016-17. This would add about 1000 outlets across 40 countries (500-plus international outlets) to the previous base of about 1500 outlets concentrated in Australia. But, the group recently ended on the speculation of their Eagle Boys Brand acquisition with the announcement that no discussions are underway with said entity. Meanwhile, RFG stock has already risen 29.6% in the last six months (as of July 25, 2016), and we still maintain our “Hold” recommendation on this dividend yield stock at the current price of $5.68
RFG Daily Chart (Source: Thomson Reuters)
Sealink Travel Group Ltd
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SLK Details
Expansion of Fleet: Sealink Travel Group Ltd (ASX: SLK) has finished the acquisition of Captain Cook Cruises, Western Australia business via the current debt facilities to expand business and fleet. SLK has expanded its fleet to 72 vessels and carries over 7 million passengers per year. Sealink Travel has spent over $2 million in the first half of 2016 while for second half of 2016, they are planning a major capex for tug, custom designed barge, excavator of $2.9 million. The group is also planning expansion of vessel build for Darwin/Gladstone of $2.6 million which would be split in between 2016-2017. We give a “Hold” recommendation on the stock at the current price of $4.27
SLK Daily Chart (Source: Thomson Reuters)
The a2 Milk Company Ltd
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A2M Details
Enhanced fiscal year of 2016 guidance: The a2 Milk Company Ltd (ASX: A2M) had recently announced for issue of additional securities of about 350,000 ordinary shares. A2M also upgraded its financials and now expects the group’s revenue to be in the range of $350 million to $360 million while the group’s operating EBITDA is forecasted to be in the range of $52 million to $54 million for FY 16. This update from the group has revamped sentiments on infant formula makers’ performance in China. Moreover, A2M is positioning itself based the regulatory environment in China and adjusting its manufacturing and distribution model in response to such changes. A2M is also building businesses in USA & UK and targeting growth across multiple markets. We maintain a “Hold” recommendation on the stock at the current price of $1.84
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A2M Daily Chart (Source: Thomson Reuters)
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