The following were the highlights of the company's results for FY 2015.Total transactional value (TTV) grew by 31% year over year to $1.26 billion. Revenue jumped 21% higher at $119 million. Profit before tax of $23.5 million was up 10% on the previous period. EBITDA grew by 20% while the underlying EBITDA grew by 41%. A final dividend of 7.25 cents per share was declared and the company's effective tax rate increased to 24.5% from just 9.3% last year resulting in profit after tax declining by 8.5%. There has been diversification of the earnings streams for FY 2015 wherein B2B accounted for 23% against nil in the previous year and the balance being accounted for by B2C. Managing Director, John Guscic, said that the company was delighted to have achieved EBITDA growth objectives for both the B2C and B2B divisions. He further added that the outstanding result has been due to the strong performances by all of the businesses during the year. So far in FY 2016, the company has experienced double-digit TTV growth across SunHotels, Webjet, Zuji and Lots of Hotels. Full year updated guidance will be provided at its AGM in early November.
EBITDA (Source: Company Reports)
The balance sheet continues to remain strong with the generation of cash and equivalents of $ 37.7 million and cash balances of $ 76.5 million which include client funds of $ 18.3 million. The stock is trading at a relatively cheap P/E ratio of 21.82x. The annual dividend yield is also modest at 2.82%. We would rate this stock as a Buy at the current price of $4.82.
WEB Daily Chart (Source: Thomson Reuters)
Super Retail Group Ltd (ASX: SUL)
The group released its 16 week performance for year-to-date in its 2015/2016 trading update. There has been an increase of 5%, 6% and 7% in total sales with regards to its Auto, Leisure and Sports divisions, respectively. The full year expectations entail openings of new stores in each of the aforementioned division with efforts towards a good number of refurbishments, extensions and relocations.
The results for FY 2015 show a 7.1% increase in total revenues to $ 2.23 billion, a 3.9% decline in total segment EBITDA to $ 231 million, 8.7% decline in EBIT to $ 170.2 million and a 5.3% decline in normalised NPAT to $ 106.3 million. Operating cash flow grew by $ 14.8 million to $ 182 million and net external debt dropped by $ 3.7 million to $ 378.9 million.
Goals (Source: Company Reports)
New store and like-for-like sales growth have been good in both the Auto and the Sports division and the Leisure division showed business capabilities second-half growth after a soft first half but gross margin performance has been lower than the expectation. The decrease in total segment EBITDA can be attributed to the performance of the Leisure division and higher group costs. Operating cash flow has been strong because of better working capital management and $ 90 million have been invested in future growth on new and refurbished stores and the development of multi channel business capabilities.
Trading Update (Source: Company Reports)
Though the retailing industry as a whole faces headwinds, this company has produced results which meet expectations and should continue to do so in the future. The shares are trading at a discount to the 52-week high and offer an attractive fully franked dividend (annual dividend yield being 4.17%). We would see this as a buying opportunity at the current price of $9.69.
SUL Daily Chart (Source: Thomson Reuters)
M2 Group Ltd (ASX: MTU)
The company has announced a merger with Vocus to create a full-service vertically integrated telecom company valued at more than $ 3 billion and this market capitalisation will place it well within the S&P/ASX 100. The merger is expected to produce cost synergies of around $ 40 million yearly which will be fully realised by the end of FY 2018. This would be an all scrip transaction and implemented via a M2 scheme of arrangement (M2 shareholders to receive 1.625 Vocus shares for each M2 share). The merged company becomes the fourth largest integrated telecoms company in Australia and the third largest in New Zealand. The product portfolio will be diverse and include retail Internet, retail electricity and gas, corporate Internet and voice IP, datacentre and cloud services and so on. The command revenues are expected to be around $ 1.8 billion with an EBITDA of around $ 370 million in FY 2016 before synergies.
Brands (Source: Company Reports)
The combined balance sheet will be strong with leverage of around 1.8 X net debt to FY 2016 EBITDA. We believe that the two companies are an excellent fit for each other resulting in an entity that combines the expertise of this company in the consumer and SME segments with the telecommunication infrastructure and corporate customer base of Vocus. The combined entity has a great growth potential and we would rate the stock as a Buy at the current price of $9.84.
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