SMS Management & Technology Limited


SMX Details

·       Weakness in 2016 performance: SMS Management & Technology Limited (ASX: SMX) stock lost over 14.2% on November 14, 2016 due to their lower than estimated results update. The group reported a weak revenue from operating activities which fell over 8% year on year (yoy) to $328.7 million as compared to the same period of last year. SMS Consulting lost 14% as compared to the same period of last year even though M&T Resources offset this decline by reporting a 11% rise. The group’s EBITDA lost over 45% on a year over year basis to $15.7 million during the year hurt by several factors like the internal change to a national operating structure. Net profit after tax of $9.7 million lost 43% on a year over year basis. SMX paid $7.3 million of net debt during the period while $19.4 million was paid out during the year to finalise previous acquisition earn-out arrangements. SMX organizational restructure in July 2015 led to contract wins and revenue pressure within core Advisory & Solutions business. First half 2017 outlook included revenue of $150 million - $155 million and EBITDA of $4.5 million to $5.0 million as forecasts.
·       Recommendation: SMX lost over 26.9% in the last three months (as of November 11, 2016), and looking at the limited prospects, we give an “Expensive” recommendation on the stock at the current price of $1.385
 

SMS consulting performance (Source: Company Reports)
 
Treasury Wine Estates Ltd


TWE Details

·       Higher levels: Treasury Wine Estates Ltd (ASX: TWE) stock corrected over 2.5% on November 14, 2016 after rising in the last two days, while BlackRock Group ceases to be a substantial holder. The group reported solid 2016 results, wherein their net profit after tax more than doubled to $179.4 million while Earnings per Share (EPS) reached 25.1 cents per share. Reported EBITS rose 52% yoy to $342.0 million while the group’s base business EBITS (excluding Diageo Wine) surged 37% to $308.8 million. The group reported a cash conversion at 123% and declared an annual dividend of 20 cents per share, which is a rise of 6 cents per share against the prior corresponding period. On the other hand, TWE stock is trading at a high P/E and has a low dividend yield.
·       Recommendation: We give an “Expensive” recommendation on the stock at the current price of $10.65

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