WorleyParsons Ltd


WOR Details

·       Rejected Acquisition proposal from Dar Group: WorleyParsons Ltd (ASX: WOR) stock surged over 31.97% on February 28, 2017 as the group reported that the acquisition proposal from Dar AI-Handasah Consultants Shair and Partners Ltd (Dar Group) has undervalued the company. On 14 November 2016, Dar Group made an offer to the group to acquire A$11.80 per share. Despite tough market conditions, the group reported that their customer sentiment and activity levels is improving, leading to an outstanding order backlog to $4.7 billion. Moreover, the group is also focusing on cost control leading to a cost reduction targets to a total of $450 million.

·       Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $10.65
 
Catapult Group International Ltd


CAT Details

·       Strong first half of 2017:Catapult Group International Ltd (ASX: CAT) stock surged over 9.04% on February 28, 2017 driven by the group’s better than estimated first half of 2017 results. The group’s elite wearables revenue surged 51% year on year (yoy) to $10.7 million during the first half of 2017 while subscription fleet enhanced 93% to 11,125 units. Overall revenue rallied 250% yoy to $24.8 million in 1H17 as compared to the prior corresponding period (pcp). The group’s annualized recurring revenue (ARR) was also outstanding which generated a growth of 375% to A$44.7 million on a yoy basis. Meanwhile, the group’s Prosumer solution got orders of 1,146 units.

·       Recommendation: The group reiterated their FY17 revenue in the range of $61.0 million - $65.5 million, which is a statutory growth of 226%-250% with an increase of 21%-30% on a pro-forma basis. The group’s elite wearable segment typically contributes over 60% of the group’s revenue in the second of the financial year. The second half of the current financial year will include a full six months of XOS revenue for the first time. Moreover, ARR of $44.7 million as at December 31 2016, indicated for a long-term potential. Management reported their ongoing focus on elite category, both across wearables and XOS video analytics as it’s a high margin business and incremental business. CAT stock declined over 48.2% in the last six months (as at February 27, 2017) placing them at reasonable levels. We give a “Speculative Buy” on the stock at the current price of $2.29


First half of FY17 performance (Source: Company Reports)

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