TPG Telecom Ltd

TPM Details
Acquired mobile spectrum to enhance penetration: TPG Telecom Ltd (ASX: TPM) is now set to emerge as Australia’s fourth mobile network with the recent grab of the spectrum (2x10MHz of mobile spectrum in the 700MHz band) in an auction conducted by the Australian Communications and Media Authority (ACMA). TPM has spent $1.26 billion for the same and will further spend $600 million to deploy the network to 80% of the population. With this move, the group is set to compete with players including Telstra and Optus.
TPG’s Milestones (Source: Company Reports)
 
TPM stock has risen 7.1% on April 19, 2017 after witnessing a fall this week and past one month (15% in last one month as at April 18, 2017). The fall in stock price seem to be partly owing to the recent move on capital raising for catering to the costs associated with the above acquisition and mounting concerns over the profit margins as NBN services profit margins are typically lower than the ADSL services. TPM has issued shares to institutional shareholders at $5.25 and successfully completed its institutional entitlement offer to cover the cost associated with the above acquisition. On the other hand, factors such as the group’s growth strategies coupled with higher margin Corporate Division and FTTB sales seem to be favourable. TPM is available at a reasonable level and has a decent dividend yield.We maintain a “Buy” on the stock at the current price of $ 5.89
 

TPM Daily Chart (Source: Thomson Reuters) 

Arena REIT No 1

ARF Details
FY17 Distribution Upgrade: Arena REIT No. 1 (ASX: ARF)witnessed a stock fall of about 2.7% in last one month (as at April 18, 2017) and also saw a dip in late 2016. The group had otherwise reported a growth of 43.81% in statutory net profit to $59.6 million for the half-year ended 31 December 2016. This was supported by a contribution from revaluation uplift worth $43.5 million. In fact, revenue from ordinary activities were of the order of $64.03 million, which is an increase of 39.8% over prior corresponding period. There was also a growth in diluted Earnings per Share to 25.60 cents against the figure of 18.08 cents of last year, while the interim dividend declared was 5.85 cents, compared to 5.35 cents of last year. On the other hand, net operating cash flow of $12.84 million was almost flat ($12.93 million of prior corresponding period). ARF has upgraded its FY17 DPS guidance to 12.0 cents per share, and this indicates a growth of 10% on FY16. ARF’s average rent review also surged 4.9% in the first half owing to early renegotiation of 12 leases. The company’s growing development pipeline (with Early Learning Centre having 12 projects), funding growth with additional $30 million borrowing capacity secured, and market outlook supported by growing demand, we believe there is value in the stock.
 

Portfolio Revaluation (Source: Company Reports)
 
Given the prospects and momentum seen in last three months, we give a “Hold” recommendation at the current price of $ 2.14
 

ARF Daily Chart (Source: Thomson Reuters) 

Mantra Group Ltd

MTR Details
Boost from growth in the tourism sector: Mantra Group Ltd (ASX: MTR) had come-out with an outstanding half year results for the period ended 31 December 2016 with underlying Net Profit After Tax (NPAT) of $31.8 million, up $4.2 million and 15.1% on H1 FY2016; and underlying revenue growth, excluding new properties, of $20.9 million. The statutory total revenue of $356.2 million, was up 15.9% on H1 FY2016. The underlying EBITDAI of $58.7 million was up 10.3%. The group’s revenue was buoyed by acquisition of four new properties during the six-month period. The financial position with total assets of $829 million, net assets of $482 million and a strong cash flow, look to be an improved one. MTR’s Resorts delivered revenue and EBITDAI growth of 30.1% and 29.5%, over H1FY2016 owing to strengthening leisure market. The CBD segment is performing as expected while Central Revenue and Distribution delivered revenue and EBITDAI growth of 22.5% and 12.1%. MTR’s development pipeline with Mantra Club Croc, Airlie Beach and TRIBE West Perth due to open in H2 FY2017, look to be strong. Drivers including growth and development opportunities, efforts including optimisation of distribution channels, brand appeal and growth in the tourism sector at the back of rise of international visitors, are expected to support performance going forward. The stock price has fallen 15.6% in last six months (as at April 18, 2017) and provide an investment opportunity looking at the growth catalysts.We give a “Buy” recommendation at the current price of $ 2.85
 

MTR Daily Chart (Source: Thomson Reuters)

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