Reporting Season Road Map: 26 August 2019

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
26 August 2019, 8:50 AM
Sectors Covered:
Equity Strategy and Quant

Kina Securities (KSL) – Momentum growing into 2H19

KSL's 1H19 NPAT (~PGK24m) was up 14% on pcp and largely in-line with MorgansE. The 1H19 dividend (PGK10 toea per share) was also in-line with our estimates.

Overall, the key result theme was weaker loan growth than expected (2% in 1H19) offset by a strong FX performance (+33% growth on pcp). Outside of this, costs were well contained and credit quality remains sound, helping KSL to deliver a credible ~18% 1H19 ROE.

Integration of the ANZ acquisition remains on track to complete by the end of September. We estimate this acquisition will be >20% earnings accretive. Trading on ~6x FY20F earnings and a ~10% FY20F dividend yield, we see KSL as undervalued.

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

Accent Group (AX1) – A strong runner

AX1's FY19 result was one of the strongest across the retail sector, reporting 22.5% EBITDA growth for the year (revenue +14%; GM +130bps; CODB (%) -50bps). Looking into FY20, we forecast c15% top-line growth and 9% EBITDA growth (despite flat GMs and CODB; with EBITDA impacted by lower franchisee income).

AX1 continues to go after under-represented areas of the domestic footwear market, with Trybe (kids concept) now in full rollout and the trialling of a new concept called PIVOT (value sporting/street inspired footwear not currently available locally).

A best in class digital offering, new store concept optionality, upside from the TAF corporatisation strategy and increased vertical brand/product penetration means AX1's growth profile could be larger and longer duration that what the market is currently pricing in.

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

Iress Limited (IRE) – Pulls like a V12 Merlin

IRESS's UK powerhouse continues to be the main driver of earnings growth. While the company's earnings growth rate remains modest, the quality of new client wins means that future revenue and earnings growth are bankable.

We incorporate the impact of the QuantHouse acquisition for the first time. The impact on valuation is positive longer term. 

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 Kina Securities, Accent Group and Iress. 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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