InvoCare Limited (ASX: IVC)

Low Single Digit EPS for Full Year:Based on positive market sentiments, the stock price was up by 5.143 per cent on May 16, 2018. The recent release of a presentation made at Macquarie Conference has revealed that IVC total compound annual shareholder return has exceeded 18% since listing in 2003 at the back of company wide effort. Moreover, the group announced its three years $200 Mn Protect and Grow plan in February 2018 which aims to deliver sustainable double-digit EPS growth. To accomplish this, the plan incorporates both defensive spends to protect existing market position and growth capex to drive market share increases. We expect that second half performance will be stronger than previous corresponding period due to increased case average, the impact of COGS saving, Singapore trading for full six-month vs partial trading in Q4 FY17, and increased footprints across the regions. Based on these factors and the impact of changing customer needs, the group has revised its guidance for full year wherein operating EBITDA will be in-line with 2017 and operating EPS will be recorded at low single digit.


Capital Management (Source: Company Reports)

Besides this, Macquarie Group Limited ('MQG') and its controlled bodiesbecame a substantial holder of InvoCare Limited on May 11, 2018 by holding 5,598,287 securities with 5.08 per cent of the voting power. Meanwhile, the stock has fallen by 31.80 per cent in past six months as on May 15, 2018. On the other hand, high depreciation expenses and cost of debt may be aspects to look at while short selling interest is high on the stock. Looking at the trading conditions, we give an “Expensive” recommendation on the stock at the current market price of $ 12.470.

 
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