Stocks’ Details
 

Domino's Pizza Enterprises Ltd

Reaffirmed underlying NPAT growth for FY18: Domino's Pizza Enterprises Ltd (ASX: DMP) has got its Master Franchise Agreement’s (Australia and New Zealand) term renewed for 10 years till 2028, and this is a positive news for the group. Further, DMP’s confidence in achieving underlying NPAT growth to be in the region of 20% for FY18 through guidance reaffirmation directs to an emanating positive performance. DMP has also reaffirmed its intension to open between 180 and 200 new organic stores in FY18, in addition to the 170 stores added with the Hallo Pizza acquisition.  For the first 17 weeks of trading of FY18, the Group’s Same Store Sales (GSS) grew 5.03% on the previous corresponding period (pcp) due to the high-quality food and reduction of customer friction at every point. The Australia/New Zealand region has posted 4.45% SSS growth, Japan has posted 0.12% SSS growth and the Europe has posted 848% SSS growth on the pcp in the first 17 weeks of trading of FY18. Moreover, DMP for FY18 has upgraded the Same Store Sales growth guidance for Europe to +6-8% (up from +5-7%) as the company has rectified some issues in Europe that impacted growth in the past Financial Year. For FY18, in Australia/New Zealand, DMP is projecting Same Store Sales growth of +7-9%, and expects growth in the second half to be approximately twice that recorded in the first half. In Japan, 0-2% Same Store Sales Growth is expected for the FY18, and this is to be predominantly reflected in the second half. In addition, DMP has updated shareholders that the Court of Appeal in France had upheld a decision in favour of Domino’s Pizza France, in legal action with Speed Rabbit. Meanwhile, DMP stock still seems to be trading at a high price to earnings ratio. While we keep an eye on any potential dip in the stock price for an investment, we give an “Expensive” recommendation at the current price of $46.22
 

Retail Food Group Ltd

Extended its three-year debt facilities:Embattled group, Retail Food Group Ltd (ASX: RFG) expects 1H18 statutory NPAT to be c.$22.0m, below 1H17 NPAT of $33.5m at the back of challenges in retail landscape. On the other hand, the company has successfully completed negotiations to extend its three-year debt facilities of $150 million, due to mature in December 2018, into longer dated maturities. RFG has also reduced the existing five-year debt facilities maturing in December 2020 by $25 million, and RFG’s total senior debt facilities are now around $319 million. Meanwhile, RFG stock has fallen 44.84% in three months as on January 4, 2018 owing to the investors thrashing the group post the profit downgrade. The stock fell like a stone after the company gave the trading update entailing the expected impact of continuous challenging domestic retail conditions and other factors on its 1H18 statutory business performance. We believe that RFG would find it a bit difficult to revive the momentum in the near term and any improvement in the second half of FY18 would need numerous levers to get back in place. Recently, Invesco Australia Ltd was seen to increase the share in the group from 7.86% to 8.96% apparently aiming to benefit from short-term gains. We give a “Hold” recommendation on the stock at the current price of $2.49
 

Aveo Group

Sold its Gasworks Plaza complex:Trading on a low price to earnings level, Aveo Group (ASX: AOG) seems to be better placed than most of its peers in the retirement home sector. The group lately sold its Gasworks Plaza complex in Newstead, Brisbane, to AMP Capital for an effective price of $248.4 million, after a competitive process. The transaction is expected to settle in February 2018 for Gasworks 1 & 2, and in September 2018 for Gasworks 3 on its completion. The company has sold this complex on the eve of the completion of Aveo Newstead, which is a 19-storey world class retirement living tower, that will reach practical completion in May 2018 and will see the entire AOG component of the Gasworks precinct, a massive urban renewal project, completed. Additionally, AOG has reaffirmed financial guidance for FY18 and expects the FY18 EPS of 20.4cps (7.9% growth on 18.9 cps reported in FY17). With forecast earnings per share rise and low price to earnings ratio, there is a potential for an upside momentum. Further, the company is targeting full year distribution amount based on 40%-60% of underlying profit payout range. While the group has been smitten by legacy issues, fundamentals stay healthy and the stock has risen 19.57% in three months as on January 4, 2018. AOG is still a “Buy” at the current price of $2.81
 

FY18 and FY19 Development Deliveries on Track (Source: Company Reports)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.