Best calls to action – Wednesday, 24 February

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
24 February 2021, 10:50 AM
Sectors Covered:
Equity Strategy and Quant

APA Group – Value support vs bond sentiment headwind

The 1H21 earnings result was broadly in-line with forecast, albeit sustaining capex has trended noticeably higher.

A broadened investment strategy and capital mgmt. review will pique interest.

12 month target price reduced, due to forecast downgrades.

ADD retained given valuation support, with potential 23% 12m TSR and c.10% pa 5 year investment IRR. A headwind is the uptick in bond yields.

Read our full reports and latest price targets on ASX:APA here.

HUB24 Ltd – Capturing the long-term

HUB24 (ASX:HUB) reported underlying 1H21 NPAT of A$7.5m, up 39% on the pcp. Platform division PBT was up 30% (in-line) and revenue margin compressed 2.8bps hoh (44.7bp vs 45bp expected).

HUB increased its FY22 FUA target by A$2bn at the top-end (ex-XPL).

Including XPL (A$15bn acquired), the FY22 FUA target is now A$43-bn (from A$28-32bn).

The outlook for continued strong flows is supported by:

  1. Ongoing growth in adviser numbers (+24% on the pcp);
  2. Clearview A$1.3bn FUA transition in 2H21; and
  3. The commencement of the IFL white label arrangement near-term.

Short/medium-term risks:

  • downside from pressure on pooled cash earnings;
  • upside from transition opportunities (including expansion of the IFL agreement).

HUB continues to deliver strong top-line growth, however executing on the scale achieved (margin improvement) is now vital.

We assume operating leverage is delivered and we continue to see the long-term structural backdrop as attractive.

Share price volatility is likely for HUB short-term - however we upgrade to an ADD recommendation taking a long-term view on the growth profile.

Read our full reports and latest price targets on ASX:HUB here.

Superloop Limited – Clear sailing but currency creates turbulence

Superloop's (ASX:SLC) 1H21 result was in line with our expectations.

EBITDA was up 99% yoy and will grow again in 2H20 despite non-core CMS finally hitting zero and currency negatively impacting SG & HK gross margin, on translation to AUD.

At their AGM in November SLC said they would invest an additional $3m in OPEX to stimulate enterprise and NBN sales and that non-core CMS would wind down quickly.

The 1H21 result showed an acceleration in BB sales and an acceleration in connectivity pipeline which should convert to higher ARR by Q4FY21.

Overall, the path to growth looks intact and we retain our ADD rating.

Read our full reports and latest price targets on ASX:SLC here.

Acrow Formwork – Just getting started

Acrow Formwork's (ASX:ACF) 1H21 result overall was comfortably above our expectations.

Key positives:

  • Strong performance from Formwork and Industrial Scaffold;
  • Outlook remains positive with the current pipeline at A$71.1m (+12% on pcp).

Key negative:

  • Commercial Scaffold market remains weak (particularly in NSW), although there are some early signs of recovery in VIC and SA.

We increase FY21F underlying EBITDA by 2% to A$22.9m while underlying NPAT falls by 8% to A$8.0m due to higher D&A and tax expense.

We maintain our ADD rating on a higher target price.

Read our full reports and latest price targets on ASX:ACF here.

Jumbo Interactive – Ramping up the SaaS business

Jumbo Interactive's (ASX:JIN) 1H21 result was in-line with expectations as the company reported a 25.6% jump in TTV driven by the SaaS business ramping up.

As is traditionally the case in a poor jackpot environment, JIN reported Lottery retailing TTV growth that was flat, underperforming Tabcorp's digital growth of ~21%.

We do suspect that a reasonable percentage of TAH's growth came from its existing retail channel as it incentivised newsagents to move clients online.

While we have tempered our expectations over the forecast period, we believe JIN is well placed to grow customers and TTV across all three of its new divisions.

We retain an ADD rating on JIN with a revised target price, offering a TSR of +10% for investors based on current levels.

Read our full reports and latest price targets on ASX:JIN here.

Mydeal.com.au – A strong maiden result

Mydeal.com.au's (ASX:MYD) 1H21 was largely pre-released, with all key line items growing by >200% yoy.

As expected, no FY21 guidance was provided, however MYD noted that January has seen a strong start to the 2H, with GTV +190% yoy (vs +165% in 2Q21).

In the 2H, MYD will continue focusing on its growth projects outlined as part of the IPO, namely: continued investment in marketing; growth in private label; and the roll-out of its iOS/Android apps.

We continue to believe MYD can deliver strong growth, while having the benefits of a capital light model and scalable platform.

Our ADD rating is maintained.

Read our full reports and latest price targets on ASX:MYD here.

Ramelius Resources – Ramelius reporting record results

Ramelius Resources (ASX:RMS) reported record NPAT of A$81.3m for 1H21, up 297% from FY20. RMS is on track for record annual production in FY21, currently exceeding its annualised guidance of 260-280koz of gold.

Increased production rates and the early approval of Penny West mine development support lower cost production into the future.

We refresh our price target with updated production assumptions following the study results at Edna May, stronger FX assumptions and revised D&A charges.

The net effect is a reduction in our target price.

See page 4 for further detail. We maintain our ADD recommendation.

Read our full reports and latest price targets on ASX:RMS here.

Garda Property Group – Portfolio continues to evolve

Garda Property Group's (ASX:GDF) result highlighted that the portfolio continues to evolve with several development projects recently completed or near completion (focused on industrial).

A highlight of the 1H was the leasing of around one-third of the Botanicca 9 property to Fuji Xerox on a 7-year lease from July 2021.

Leasing remains a key focus for the balance of Botanicca 9 as well as new industrial projects rolling out. GDF has also flagged the sale of three non-core assets for A$27.1m.

We expect proceeds will be used fund the existing development pipeline (FY22/23 delivery).

FY21 DPS guidance is reaffirmed at 7.2c which equates to a distribution yield of 6.2%. NTA stands at A$1.20 (vs A$1.19 at June 2020).

We retain an ADD rating with a revised price target.

Read our full reports and latest price targets on ASX:GDF here.

Access Innovation – Purposefully focused and likely to beat

Access Innovation's (ASX:AIM) 1H21 result was largely as expected given quarterly updates have been provided.

The company reiterated Prospectus forecasts and that net cash from operating activities will continue to reduce in 2H21 as they approach breakeven.

We make no short-term changes but upgrade FY22 meaningfully.

The current trajectory should see AIM materially beat its Prospectus forecasts (and ours).

Highlights were: 37% yoy increase in minutes captioned leading to 29% growth in services revenue and Live Enterprise at 60% of services revenue.

Read our full reports and latest price targets on ASX:AIM here.

SomnoMed Limited – Growth mode re-engaged

SomnoMed (ASX:SOM) reported positive 1H21 results and is tracking well in-line with our FY21 forecasts.

Sales remain choppy by region but margins and operating cashflow were maintained or improved, driven by a number of cost initiatives.

Moving out of business stabilisation mode, SOM expects to re-commence a drive for greater market share to capitalise on a weakened competitive environment as COVID-19 is likely to prove costly for a number of smaller operators.

We remain positive and take comfort in the quarter on quarter growth since the initial lockdown with significant upside as North America conditions improve and heading into a seasonally strong half.

Our price target remains unchanged and we retain an ADD recommendation.

Read our full reports and latest price targets on ASX:SOM here.

Find out more

You can find further detailed analysis of company results this reporting season by browsing our reporting season tag, and view a full list of upcoming results on our Reporting Season Calendar.

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Disclaimer: Analyst may own shares. 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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