Vocus Group Limited

Decent Performance in FY18: Vocus Group Limited’s (ASX: VOC) stock climbed up 7.422 per cent on August 22, 2018 following the release of FY18 results which was in line with the guidance. The result has been achieved during a period of significant internal change and challenging market conditions. As per the release, Statutory Revenue and other income recorded $1898.2 m in FY18 which relate to rendering of services, commission income, long-term customer contract revenue, interest revenue, deferred revenue, and other revenue. During the period, the Enterprise, Government, and Wholesale business have performed strongly, with revenue growth driven by a disciplined and structured approach to sales. Increasing sales on its long-haul network is changing the product mix and helping to drive margin expansion across the product portfolio. Resultantly, Statutory EBITDA increased by 7 per cent to $360.4 Mn in FY18 as compared to the prior year. However, underlying net profit contracted to 16 per cent to $127.1 million in FY18 over the prior year. It was mainly impacted by higher depreciation and amortization cost incurred during the year. According to the management, the group’s priority is to leverage its assets to maximize profitable growth within its core Australian and New Zealand infrastructure focused businesses and expects double revenue from these businesses over the next five years. Additionally, for FY 19, the company expects Underlying EBITDA in the range of $350 Mn to $370 Mn.


FY18 Financial Highlights (Source:  Company Reports)

On the other hand, the company announced the appointment of two new Non-Executive Directors to the Board, Mr. Bruce Akhurst and Mr. Matthew Hanning. Both appointments will be effective September 01, 2018. Meanwhile, VOC stock has risen 8.94% in the past one month as on August 21, 2018. We maintain a “Hold” on the stock at the current price of $ 2.750, considering decent outlook ahead.

Carsales.Com Limited

Robust FY18 Performance: Carsales.Com Limited’s (ASX: CAR) stock surged 10.922 per cent on August 22, 2018 after the company for FY18 reported 10% growth in adjusted Net Profit After Tax to $131 million.  During FY18, the company has reinforced its leadership position in its core domestic market by continuing to invest in key product and technology innovations and driving improved customer outcomes. The company’s reported revenue grew 19% to $444 million in FY18 and the group EBITDA rose 16% to $205 Mn. It was mainly supported by its international growth strategy with the acquisition of the remaining stakes in SK Encar, its South Korean business, and soloautos, and its Mexican businesses, where long-term growth potential exists. However, the company’s Reported Leverage Ratio substantially increased from 0.9x to 1.9x in FY18 over the prior year. Based on robust performance, the Board of Directors declared a fully franked final dividend of 23.7 cents per share, up 10 per cent as compared to the prior corresponding period. It will be paid on 10 October 2018 with the record date of 25 September 2018. The management expects revenue, EBITDA and NPAT growth to remain strong at the back of higher demand of its core products in the domestic market.


FY18 Key Highlights (Source: Company Reports)

Meanwhile, CAR stock has risen 2.66 per cent in the past six months as at August 21, 2018 and it is trading close to its 52-week high price that is $16.450. Based on foregoing, we maintain our “Expensive” recommendation on the stock at the current market price of $16.250 and it is better if one can wait and watch for further correction from the current price level.

 
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