Pro Medicus Limited

PME Details

Building contracts base: Pro Medicus Limited’s (ASX: PME) US subsidiary Visage Imaging Inc., recently signed an AUD $18 million, six-year contract based on a transaction licensing model, with Mayo Clinic. The project planning has begun and the implementation would take 18 months, with the first phase starting in the second quarter of fiscal year of 2017 while the project is expected to be completed in the fourth quarter of FY2018. Meanwhile, PME has signed A$7 million, seven-year deal with US based Franciscan Missionaries of Our Lady Health System (FMOLHS) for the implementation of PME’s Visage 7 technology at FMOLHS’s five acute care and specialty hospitals which can be seen through new electronic health record (EHR). This would be the second deal completed under the Visage/ROi agreement announced in April 2016. On the other side, PME had won four large enterprise system contracts in the past one year which includes University of Florida Health in April 2015, Allegheny Health Network in September 2015, a large government run hospital in Germany in November 2015 and Mercy Health announced in April 2016. As a result, PME stock has risen 66.67% in the six months (as of July 22, 2016) placing it at unreasonable P/E. We give an “Expensive” recommendation on the stock at the current price of $5.34, and would review the stock at a later date.

 
PME Daily Chart (Source: Thomson Reuters)
 
Helloworld Ltd

HLO Details

New commercial agreements: Helloworld Ltd (ASX: HLO) has announced two new commercial agreements with Qantas and Jetstar and these are expected to create new business benefits and opportunities. Qantas is a two-year deal which would see the continuation of Helloworld’s successful commercial arrangement with the airline and was said to be effective from 1^st July 2016. On the other hand, the Jetstar deal is a one-year agreement and said to be effective from 1^st August 2016. HLO has enhanced the forecast TTV for the FY17, which would be in the range of $5.3 billion and $5.4 billion. Accordingly, HLO stock has already risen 37.50% in the six months (as of July 22, 2016) and is trading at its 52-week high price. The stock is “Expensive” at the current price of $3.38
 

HLO Daily Chart (Source: Thomson Reuters)
 
Onthehouse Holdings Ltd


OTH Details

Weak performance despite short term relief: Onthehouse Holdings Ltd (ASX: OTH) has entered into a scheme implementation deed with a consortium of investors comprising PIQ1 Pty Ltd and Macquarie Corporate Holdings Pty Limited (both are wholly owned subsidiaries of Macquarie Group Limited) and 77 Victoria Street Trust and Sandrift Pte Limited (entities of which Michael Dempsey and Daniel Dempsey are each affiliated). According to this deed, the Consortium would acquire all the equity in OTH that are not owned by the Consortium members for a cash consideration of $0.85 per OTH share.

Financial Performance for 1H 2016 (Source: Company Reports)
 
The deed process is expected to start by September 2016 and is expected to be implemented in October 2016. OTH has $1.7 million of cash reserves as at May 31, 2016 and is on track to deliver Real Estate Solutions SaaS project in FY17. On the other hand, OTH delivered a weak performance for the first half of 2016, and we believe the stock pressure would continue in the coming months. With the recent scheme implementation, the stock has risen 15.49% in the last six months (as of July 22, 2016). We give an “Expensive” recommendation on the stock at the current price of  $0.8175
 

OTH Daily Chart (Source: Thomson Reuters)
 
Afterpay Holdings Ltd


AFY Details

Successfully completed the IPO: Afterpay Holdings Ltd (ASX: AFY) has successfully finished the initial public offer (IPO) in May 2016 and is diverting the proceeds to launch an “in store, point of sale” version. Meanwhile, the number of AFY retail merchants has grown by more than 140% to over 300 since March 31, 2016. Moreover, AFY has partnered with NETO for the “buy now, pay later” service on its e-commerce platform which would be launched later 2016.

Financial Performance for first half of 2016 (source: Company Reports)
 
Consequently, AFY stock has already risen 65.5% in the last four weeks (as of July 22, 2016). AFY reported a weak bottom line performance despite a solid revenue growth. We give an “Expensive” recommendation on the stock at the current price of $2.15, and would review the stock at a later date.
 

AFY Daily Chart (Source: Thomson Reuters)
 
Reliance Worldwide Corporation

RWC Details

Few product and market related risks: Reliance Worldwide Corporation (ASX: RWC) will be replacing Asciano Ltd in S&P/ASX 200 after the close of trading on July 29, 2016 as per S&P Dow Jones Indices Update. RWC listed on ASX with the issue price of $2.50 per share. Since then, RWC stock has risen 15.59% (as of July 22, 2016). On the other hand, the group’s core plumbing supplies and water flow products could be challenging on the back of risks relating to customer concentration with 35% of FY15 sales generated by a largest customer, and a prolonged downturn in repair and renovation and new construction end markets. We give an “Expensive” recommendation on the stock at the current price of $3.39 , and would review the stock at a later date.
 

RWC Daily Chart (Source: Thomson Reuters)
 
1300 Smiles Limited

ONT Details

Acquisition of Dentalplus: 1300 Smiles Limited (ASX: ONT) has acquired Dentalplus, a 15-year established, multi-dentist practice in the northern Brisbane suburb of Brendale, Queensland. Meanwhile, ONT aims to achieve the combination of organic growth in its existing locations with the addition of new practice management facilities. However, the group’s performance is primarily driven by acquisitions, while ONT management reported that they would be cautious while making the acquisitions. ONT stock has seen some volatility this year and has fallen 1.4% in the last six months (as of July 22, 2016). Still the stock is trading at a higher P/E. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $7.15
 

ONT Daily Chart (Source: Thomson Reuters)

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