Reporting Season Road Map: 28 August 2019

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
28 August 2019, 11:29 AM
Sectors Covered:
Equity Strategy and Quant

Motorcycle Holdings (MTO) – Signs of a bottom emerging 

MTO's FY19 result came in above the top-end of guidance and 7% above our forecast.

That said, FY19 was a tough year, particularly for the dealerships. Management budgets in the annual report for the purposes of goodwill impairment testing provided a decent insight into FY20 expectations -cA$19.7m EBITDA.

New bike volume reductions appear to be dissipating while contributions from used sales in MCA, acquisitions and the cost-out program should provide some earnings growth in FY20.

We note our dealership EBITDA forecast is still less than half that earned at the peak.

We make material upgrades to our previously bearish forecast assumptions, as is the case when coming out of a prolonged and deep cycle.

With 20% upside to our new PT we upgrade our recommendation to an ADD.

Morgans clients can view our share price target and detailed research note.

Noni B (NBL) – All the pieces in place for a strong year

NBL's FY19 result was in line with recent guidance - a solid period for the group in which it integrated a material acquisition of the Specialty brands and released significant cost synergies/efficiencies.

NBL reiterated its FY20 EBITDA guidance of A$75m. We continue to forecast A$79m, 5% ahead of guidance, and believe there is upside to even our higher forecast (via further cost efficiencies and potential for LFL sales growth).

NBL went a step further, stating that it is well placed to achieve further earnings growth post FY20 (when the Specialty cost-out finalises).

This will be achieved by increasing online sales (via NBL and third-parties), footprint and LFL/GP $ growth.

Trading on 6.7x PE/9% yield; we maintain an Add recommendation.

Morgans clients can view our share price target and detailed research note.

Ooh!Media (OML) – Guidance reaffirmed

oOH!media's outlook for the balance of FY19 has not changed since the recent downgrade.

Fourth quarter bookings are, so far, up 6% yoy. The company has begun tightening controls on operational spending and capex in anticipation of leaner times.

OML says its balance sheet remains strong and it remains well inside banking covenants.

Our DCF valuation has increased. We maintain an ADD recommendation.

Morgans clients can view our share price target and detailed research note.

Redhill Education (RDH) – Greener outlook in FY20

RDH's FY19 result was slightly above the top-end of recently provided guidance, although reflected a year of investment with EBITDA -6% yoy.

In response to limited capacity/strong demand for Greenwich, RDH will expand its Sydney Greenwich operations by 16 classrooms.

While associated upfront costs are expected (~A$0.4m), the expansion is set to benefit FY20 overall.

We leave our FY20 forecasts unchanged, while our FY21/22 EBITDA lifts by c3%. Pleasing to see a slight beat following a tougher year for RDH.

Trading on 17x, a A$13m net cash position and offering a 3-yr 20% EBITDA CAGR.

We maintain an Add recommendation. Morgans clients can view our share price target and detailed research note.

More information

Morgans clients can access further analysis in our latest reports on Motorcycle Holdings, Noni B, oOh!Media and Redhill Education. Alternatively, please contact your nearest Morgans office for access.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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