OFX Group Limited

OFX Details
· Brexit impacting the performance for FY17: OFX Group Limited (ASX: OFX) stock fell over 23.9% on February 01, 2017 due to their weak trading update. OFX expects more fall in their average transaction values (ATV’s) from individual customer transactions for the December 2016 quarter, After the Brexit, pound devaluation by more than 20% led to decrease in large value discretionary transactions. As a result, the revenues per transaction fell 35% while overall fee and commission income for FY2017 are $3 million lower than expected. Even the domestic performance was weak wherein the client additions in Australia during third quarter were below expectations, impacted by continuous roll-out and refinement of its performance-based marketing program. The group expects a statutory EBTDA in the range of $27.5 million and $28.5 million in fiscal year of 2017 with statutory NPAT of at least $19.0 million. Meanwhile, the group appointed John Alexander Malcolm (Skander Malcolm) as Chief Executive Officer and Managing Director of OFX.

· Recommendation: OFX stock fell over 31.8% in the last six months (as of January 31, 2017) and still trading at a higher P/E. We believe the weakness in the stock might continue while we maintain an “Expensive” recommendation on the stock at the current price of - $ 1.27
 

Transactions Scenario (Source: Company Reports) 

GBST Holdings Limited

GBT Details
· Weak trading update dragged the stock lower: GBST Holdings Limited (ASX: GBT) fell over 16.8% on February 01, 2017 due to their lower FY17 expectations. GBST now forecasts net earnings before interest, tax, depreciation and amortization (EBITDA) to be over $8.0m for the first half of FY17. The group forecasts EBITDA of $12.0m for the full year owing to an impact from slip in service revenue against EBITDA of $17.2m in the same period last year. Management reported that they faced project delays and deferred spending for major projects in the UK, which is their core international market. Moreover, falling British pound against the Australian dollar also hurt their performance. GBT reported a cash balance of over $12.0 million as at December 31, 2016 with no debt.

· Recommendation: GBT lost over 7.2% in the last six months (as of January 31, 2017). Trading at a higher P/E, we give an “Expensive” recommendation on the stock at the current price of - $ 3.20

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