National Australia Bank Limited

NAB Details
 
NAB Completes A$3 Billion Institutional Placement: National Australia Bank Limited (ASX: NAB) provides banking services, access card services, international banking, fund management etc. As on 30 April 2020, the market capitalization of the bank stood at $48.61 billion. The bank has recently announced that Ann Caroline SHERRY has acquired 3,500 Ordinary Shares for a consideration of $56,594.98. The bank has recently completed an underwritten institutional placement of $3 billion wherein it issued 212 million new fully paid ordinary shares.

Quarterly Pillar III Report: NAB has recently released pillar III report for the quarter ended 31 March 2020 wherein it reported total risk weighted assets (RWA) of $432,666 million and a leverage ratio of 5.24%. In the same time span, Level 1 Common Equity Tier 1 capital ratio of the bank stood at 10.41% on the total capital of $63,203 million.


Capital Structure (Source: Company Reports)

What to Expect: The bank has a continued focus on cost and is positioning itself for return to growth post COVID-19. NAB is maximizing organic capital generation and is improving outcomes for customers, colleagues and shareholders, with strong capital and liquidity.

Valuation Methodology: Price to Book Value Multiple Based Approach (Illustrative)

Price to Book Value Multiple Based Approach (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTN: Next Twelve Months

Stock Recommendation: As per ASX, the stock of NAB is inclined towards its 52-weeks’ low level, proffering a decent opportunity for accumulation. During 1H20, efficiency ratio of the company stood at 76.5%, higher than the industry median of 66.7%. Considering the current trading levels, decent capital structure and modest outlook, we have valued the stock using Price to Book illustrative relative valuation method and have arrived at a target upside with lower double-digit growth (in percentage terms). For the said purposes, we have considered Macquarie Group Ltd (ASX: MQG), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) as peers. Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $16.960, up by 4.113% on 30 April 2020.


NAB Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

BHP Group Limited

BHP Details
 
Strong Financial Position: BHP Group Limited (ASX: BHP) is engaged in the exploration, production and processing of minerals and hydrocarbon. As on 30 April 2020, the market capitalization of the company stood at A$91.67 billion. The company has recently released its quarterly report for the period ended 31 March 2020, wherein it reported strong financial position, underpinned by low-cost operations. On the YTD basis, the company produced 82 mmboe of petroleum and 1,310 kt of copper. At the end of March 2020, the company had six major projects under development with the combined budget of US$11.4 billion.  


Operational Performance (Source: Company Reports)

Outlook: The major projects of the company under development in petroleum and iron ore are tracking to plan. It has provided guidance for FY20 wherein it expects to produce 110 – 116 mmboe of petroleum and 242 – 253 mt of Iron copper. Despite the outspread of COVID, the operations of the company are running well.

Valuation Methodology: EV/Sales Multiple Based Approach (Illustrative)

EV/Sales Multiple Based Approach (Source: Refinitiv, Thomson Reuters)
 
Note: All the forecasted figures are taken from Thomson Reuters, NTN: Next Twelve Months

Stock Recommendation: As per ASX, the stock of BHP gave a return of 3.05% in the last one month. During 1H20, EBITDA margin of the company stood at 50.6%, higher than the industry median of 36.6%. In the same time span, ROE of the company was 10.2% as compared to the industry median of 5.9%. Considering the decent returns in the past one-month, higher margins and decent growth opportunities, we have valued the stock using EV/Sales based illustrative relative valuation method and have arrived at a target upside of lower double-digit (in percentage terms). For the said purposes, we have considered Rio Tinto Ltd (ASX: RIO), Fortescue Metals Group Ltd (ASX: FMG) and South32 Ltd (ASX: S32) as peers. Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $32.350, up by 3.952% on 30 April 2020.

 
BHP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
 

Nearmap Ltd

NEA Details
 
Uniquely Positioned for a Global Market Opportunity: Nearmap Ltd (ASX: NEA) provides geospatial map technology for business, enterprises and government customers. As on 30 April 2020, the market capitalization of the company stood at $583.67 million. During 1H20,global subscriptions of the company witnessed an increase of 8% to $10,081, with average group revenue per subscription increasing by 14% to $9,580. In the same time span, the company reported an increase of 31% in statutory revenue to $46.3 million, which was mainly driven by an increase in ACV (Annual Contract Value) by 23% to $96.6 million.

 
Growth in ACV (Source: Company Reports)

Future Expectations: Despite the challenging economic conditions midst the pandemic, NEA has not seen a material impact on its trading conditions. The company is prudently deployed to preserve cash and maintain a strong balance sheet. It is likely to invest in growth initiatives such as commercialization of Artificial Intelligence. The company is well-prepared to navigate the uncertain times because of its diverse customer base. 
             
Valuation Methodology: Price to Sales Based Market Multiple Based Approach (Illustrative)

Price to Sales Market Multiple Based Approach (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTN: Next Twelve Months

Stock Recommendation: As per ASX, the stock of NEA gave a return of 20% in the last one month and is trading close to its 52-weeks’ low level of $0.830. Despite the global pandemic, the company continues to provide its services and is on track to deliver new content types and additional customer utility during the second half. Considering the decent returns in the past one month, attractive trading levels and positive outlook, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.525, up by 18.217% on 30 April 2020.


NEA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
 

PWR Holdings Limited

PWH Details
 
Significant Increase in EBITDA: PWR Holdings Limited (ASX: PWH) is engaged in the design and production of customized cooling solutions for elite international motorsports and high-performance automotive applications around the world. As on 30 April 2020, the market capitalization of the company stood at $373.33 million. During 1H20, revenue of the company witnessed an increase of 20% and stood at $29.8 million, and statutory EBITDA went up by 51% to $ 7.6 million. Higher volumes, efficiencies of scale and exchange rate movements resulted in an increase of 12% in EBITDA margin to 22.7%.


1H20 Financial Highlights (Source: Company Reports)

Future Expectations: The company is well navigating through the challenges and uncertainty posed by COVID-19. PWH retains strong forward orders with no cancellations and has a strong balance sheet and a solid working capital position.

Valuation Methodology: Price to Sales Based Market Multiple Based Approach (Illustrative)


Price to Sales Market Multiple Based Approach (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTN: Next Twelve Months

Stock Recommendation: As per ASX, the stock of PWH gave a return of 11.68% in the past one month. During 1H20, gross margin of the company stood at 79.9%, higher than the industry median of 39.5%. Considering the decent returns and financial position, positive outlook and improving margins, we have valued the stock using the price to sales market multiple based valuation approach and have arrived at a target upside of lower double-digit (in percentage terms). Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $3.89, up by 4.29% on 30 April 2020. 

 
PWH Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
 

LendLease Group

LLC Details
 
Successful Completion of Institutional Placement: LendLease Group (ASX: LLC) operates in the areas of Asia Pacific, Europe and the Americas regions and is engaged in the retail property management and asset management and development. As on 30 April 2020, the market capitalization of the company stood at $6.56 billion. The company has successfully completed the institutional placement of stapled securities and has raised $950 million. This will strengthen the company’s balance sheet and will support the delivery of the company’s development pipeline.

During 1H20, revenue of the company stood at $5,743 million with total operating EBITDA of $628 million. In the same time span, PAT of the company was $308 million.


1H20 Financial Performance (Source: Company Reports)

Growth Opportunities: The company is well placed for long term growth and continues to implement its strategy of delivering urban precincts with a strong focus on environmental and social outcomes. It is focusing on delivering sustainable and profitable portfolio. The group is flexible in in managing through market cycles and is comprised of a diversified portfolio. 

Valuation Methodology: Price to Earnings Multiple Based Approach (Illustrative)

Price to Earnings Multiple Based Approach (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTN: Next Twelve Months

Stock Recommendation: As per ASX, the stock of LLC gave a return of 13.26% in the past one month and is trading close to its 52-weeks’ low level of $9.340. During 1H20, net margin of the company stood at 5.4%, and ROE of the company was 4.8%. Considering the returns, trading levels and decent outlook, we have valued the stock using the price to earnings multiple based valuation approach and have arrived at a target upside of lower double-digit (in percentage terms). Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $12.360, up by 6.368% on 30 April 2020. 

 
LLC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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