IPH Limited
IPH Details
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Cullens acquisition supported the stock: IPH Ltd (ASX: IPH) stock surged over 1.9% on May 31, 2016 as the group reported that their subsidiary, Spruson and Fergusan commenced practice in Bangkok. The rise is also attributed to their acquisition of Cullen Services No. 1 Pty Ltd and Cullens Pty Ltd., involved in the business of Cullens Patent and Trade Mark Attorneys. Cullens has over 18 IP legal professionals and has branches in Townsville and the Gold Coast. The group is acquiring Cullens for $35.6 million and has a potential to earn further payment as per the FY16 earnings growth, which is capped at $7.1 million. On the other hand, the stock has been correcting over 23.8% during this year to date after delivering a rally of over 37.4% in the last one year (as of May 30, 2016) as the group’s Asia pacific expansion efforts are not as expected given the challenging market conditions. Despite the fall, IPH stock is still trading at a higher P/E.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $7.035
TPG Telecom Ltd
TPM Details
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Higher levels: TPG Telecom Ltd (ASX: TPM) surged over 0.6% on May 31, 2016 even though there is no specific update from the group. But, the stock has been rallying since last one year and delivered over 35.5% returns driven by favorable regulations and performance. We believe that the rally has placed the stock at expensive valuation.
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Recommendation: TPM is trading at unreasonable P/E and we give an “Expensive” recommendation on this low dividend yield stock at the current price of $12.14
1H16 Underlying EBITDA and NPAT (Source: Company Reports)
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