Following our assessment of results and market announcements, here are our four top picks for today (Friday 24 August 2018):
Afterpay Touch (APT) – First Australia then the world
APT's FY18 result was in-line with guidance from the 4Q18 quarterly. Initial signs from US expansion are, in our view, highly encouraging. APT's US sales and merchant numbers in July both doubled on the strong June number. An announced expansion into the UK adds to APT's potentially strong growth profile over numerous years. We upgrade FY19F and FY20F cash earnings per share forecasts by 8% and 34% respectively.
We have been too cautious on the upside from overseas expansion, and upgrade our recommendation to Add. Morgans clients can login to view the upgraded share price target and detailed research note.
Viva Energy REIT (VVR) – 1H focus on capital management
VVR's 1H18 result was in line with expectations with FY18 guidance reiterated. VVR's portfolio is currently valued at +A$2.3bn with +75% of properties located in metro areas. The weighted average lease expiry is around 13 years. During the 1H18, VVR also extended, increased and restructured its debt.
We maintain our Add rating. Morgans clients can login to view our share price target and detailed research note.
CML Group (CGR) – further product potential
CGR reported FY18 EBITDA of A$17.6m, up 34% on the previous corresponding period, driven by approximately 23% organic growth and 11% acquisition contribution (TDF in 2H18). FY19 EBITDA guidance was upgraded by approx. 5% (now 15-20% growth expected). We see upside achievable through the year from solid volume momentum continuing (traction from technology improvement), operating leverage, and incremental earnings from the Equipment Finance division.
In our view CGR has the potential to deliver strong earnings growth over FY19/20, along with a valuation re-rating if management executes on organic growth plans. We maintain our Add recommendation. Morgans clients can login to view our share price target and detailed research note.
Lindsay Australia (LAU) – Strong growth delivered and more to come
In FY18, LAU delivered 25.4% NPAT growth that was 3.1% ahead of our forecast. The announcement of a new greenfield cold storage project in Perth was a positive surprise and rounded out a year of solid progress for the company. Our forecasts remain largely unchanged and our FY19F NPAT of A$9.0m is in line with management's guidance for 10-12% profit growth.
We maintain our Add recommendation. Morgans clients can login to view our share price target and detailed research note.
Morgans clients can access our further analysis in our latest reports on Afterpay Touch, Viva Energy REIT, CML Group and Lindsay Australia. 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.