OFX Group Ltd

OFX Details
·         Fall in profit in FY 16: OFX Group Ltd (ASX: OFX) stock fell 7.9% on October 12, 2016 at the back of low market sentiments given the recent result and rising competition. OFX reported an 11.4% growth in the net operating income to $28.9 million in the first quarter of FY 17, while the transactions were up 9.3% to 210,700 and the active clients grew 2.4% to 151,400 as compared to the corresponding period of FY 16. On the other hand, for FY 16, OFX reported a 2% fall in the underlying NPAT to $23.9 million. Moreover, there are some changes at the management level. OFX global brand roll-out is expected to be completed prior to Christmas. The brand transition had impacted the client acquisition through 3Q16 and into early 4Q16. The shares of OFX have fallen 21.16% in the last three months as on October 11, 2016, and still trading at a slightly higher P/E.

·         Recommendation: We give an “Expensive” recommendation on the stock at the current price of $ 1.75
 

FY16 Financial Performance (Source: Company Reports)
 

Vocus Communications Limited

VOC Details
·         Resignation of the Key Personnel from the board: Vocus Communications Limited (ASX: VOC) stock fell 2.5% on October 12, 2016 after the company announced the resignation of James Spenceley and Tony Grist as two of its board members. The resignations are after a difference of opinion between the Departing Directors and the Board on an alternative leadership framework whereby the CEO would change in early 2017. On the other hand, VOC is completing the integration of the Amcom business with the synergies target of $13-15 million, expected to be achieved by the end of FY17. The merger with the M2 business is also proceeding with all integration milestones being met and the $40 million synergy target is on track to be completed by the end of FY18. Additionally, the acquisition of Nextgen is expected to be completed this month and the integration planning is on track. Despite these drivers, the difference in the management team could impact the group going forward. Moreover, VOC stock has fallen 33.53% in the last three months as on October 11, 2016, and still trading at a high P/E.

·         Recommendation: We give an “Expensive” recommendation on the stock at the current price of $ 5.49

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