Morgans QLD Conference 2014 key picks
About the author:
- Author name:
- By Fiona Buchanan
- Job title:
- Co-Head of Research, Senior Analyst
- Date posted:
- 16 October 2014, 11:19 AM
- Sectors Covered:
- Property, AREITS
Morgans was pleased to host its 24th Annual Queensland Conference in October this year. The Conference featured 39 companies across a variety of sectors.
Key picks
Themes driving our key picks from the 2014 conference are the falling A$, a focus on revenue growth over cost-out, and ongoing strength in the housing recovery:
- Ardent Leisure (AAD): Offers strong, long dated earnings growth underpinned by Main Event, solid exposure to a falling AUD, and has an attractive yield
- Cedar Woods (CWP): Best-in-class benefiting from the strong residential conditions that are being experienced across the board and geographic expansion
- Corporate Travel (CTD): A growth story with strong leverage to improved corporate travel, a falling AUD, and ongoing bolt-on acquisitions
- GBST (GBT): Operating leverage from overseas contract wins
- National Storage (NSR): Earnings upside from higher utilisation and the potential for ongoing EPS and dividend accretive acquisitions
- Shine Lawyers (SHJ): We believe SHJ will deliver double digit organic growth and continue to benefit from a fragmented market and its ability to undertake value enhancing acquisitions
Themes
Queensland: Asset leases on the agenda
Qld Treasurer, The Hon. Tim Nicholls MP, discussed the State Government's
plan to offer selected assets to the private sector for lease for up to 99 years,
with the proceeds used to substantially reduce the State’s debt and fund a
number of programs aimed at meeting the needs of Qld’s growing population.
The plan will be put to Qld voters at the 2015 election. It will be interesting to
see if any of the assets end up on the ASX (we are hopeful), given appetite for
such assets from pension funds and unlisted infrastructure investors, as well as
competition from similar programs proposed by other Governments.
Benefitting from a lower AUD
The AUD is nearing four year lows and we expect it to weaken further. The A$
earnings of two of our key conference picks will benefit from this thematic.
The focus of growth for Ardent Leisure (AAD) is the roll-out of Main Event in
the USA. Corporate Travel Management (CTD) now generates more than 50%
of its revenue from overseas.
Focusing on revenue growth over cost reductions
Each of our picks has an emphasis on growth over cost-outs and efficiency
gains. Of interest is GBST (GBT) which will benefit from stronger overseas
revenue growth and margin expansion. Shine Lawyers (SHJ) continues to grow
revenue organically with supplementary acquisitions which should accelerate
revenue growth to in excess of 25% this financial year.
Housing recovery continues
While the housing recovery thematic isn’t new it continues to play out. Key
picks National Storage REIT (NSR) and Cedar Woods (CWP) are both exposed
to this theme. NSR offers upside from increased occupancy and ongoing
acquisitions in the fragmented storage market. CWP offers exposure to
improving residential markets but is not fully reliant on it.
More information
Morgans clients can login to view presentation summaries from our key picks at the conference, as well as highlights from all companies that presented. If you are interested in finding out more, please contact your nearest Morgans office.
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.