iSentia Group Ltd

ISD Details
· Downward Guidance given out in AGM: iSentia Group Ltd (ASX: ISD) stock fell 26.7% on November 17, 2016 after the company gave a weak guidance. ISD’s revenue grew 23% to $156.0 million and the underlying NPATA increased 19% to $32.6 million on year on year (yoy) basis in FY 16. The full year proforma revenues from the King Content acquisition enhanced by 68% year on year, and are well ahead of the expectations set at the time of acquisition. But, ISD expects EBITDA to be below the prior corresponding period in first half of FY17, while the full year FY17 revenue and EBITDA growth is in the high single digit range. The FY 17 guidance, is still, below the previous guidance of revenue and EBITDA growth which was low to mid-teens. Core SaaS and VAS businesses in ANZ and Asia are performing in line with expected growth rates for full year FY17. However, Content marketing, (that represents approximately 7% of FY16 EBITDA), lost revenue momentum due to decisions made in terms of strategy in FY17.

· Recommendation: Trading at a higher P/E, we give an “Expensive” recommendation on the stock at the current price of – $ 2.38
 

FY 16 Financial Performance (Source: Company Reports) 

McMillan Shakespeare Limited

MMS Details
· Initiatives for value creation: McMillan Shakespeare Limited (ASX: MMS) stock fell 4.6% on November 17, 2016 leading to a total fall of over 29% in the last three months with some market volatility. MMS has reported a 29.9% growth in the segment revenue to $503.2m, and a 25.3% growth of underlying NPATA to $87.2 million. Free cash flow $93.5m, grew 42.1%. Moreover, MMS has implemented 3 specific initiatives to drive long term value creation (Maxxia Plus, enhanced technology and selective acquisitions) in FY 17. MMS is successful at winning new opportunities in the salary packaging and novated leasing business including two organizations in the health sector covering 9,000 employees. In the retail financial services, MMS has taken a range of initiatives centered around completing the integration of Presidian and UFS, coupled with strengthening the leadership team and organically growing volumes. The group even expanded the geographic coverage and distribution, while enhanced the volumes and supplemented the successful acquisition of Anglo Scottish made during FY 16. In addition, MMS has a track record of reporting the earnings growth, of more than 26.5% CAGR over last 11 years.

· Recommendation: Trading at a lucrative dividend yield, we give a “Hold” recommendation on the stock at the current price of – $ 10.11
 

FY 16 Key Financial Metrics (Source: Company Reports)

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