Results Road Map: Tuesday, 25 August
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 25 August 2020, 5:07 PM
- Sectors Covered:
- Equity Strategy and Quant
Super Retail Group
Mass-market retailer with solid trends in its favour
Super Retail Group's (ASX:SUL) FY20 result was in line with recent guidance, with NPAT flat yoy but up 12.8% in the 2H.
Like most other retailers, strong year-end trading has continued into early FY21 with group LFL sales growth +32% and with a positive GM trajectory (which was a headwind in 4Q20).
SUL exited FY20 in a A$30m net cash position. While the bulk of the positive working capital benefit will normalise in the new year, we forecast the group to be in a negligible net debt position in FY21 (after A$90m capex + 60% dividend payout + A$44m in Retail Entitlement proceeds).
As a mass-market retailer with direct leverage to a couple of strong COVID trends, we think demand for SUL's products can remain robust.
This, coupled with an undemanding valuation and strong BS equate to our maintained Add rating. View target price and full analysis (Morgans clients only).
Tale of two halves
Aventus Group's (ASX:AVN) result highlighted the resilience of the underlying portfolio despite a challenging environment in 2H20. Portfolio metrics remain stable.
No FY21 guidance has been provided given the ongoing uncertainty due to COVID-19 and the impacts from extended lockdowns in VIC.
We retain an Add rating with a revised target price. View target price and full analysis (Morgans clients only).
Growing case for capital management
A clean result from Senex Energy (ASX:SXY), who also provided solid granular detail on its medium-term outlook as earnings continues to accelerate.
Having significantly ramped up its Surat operations, SXY provides an attractive (and de-risked) earnings growth profile that is not reliant on an oil price recovery.
Expects balance sheet to move to a net cash position in FY22.
Capex set to fall off a cliff from here, with FCF growth and de-leveraging the focus.
The midpoint of SXY's FY22 target would leave SXY on an FCF yield of c.40%.
Offering compelling value upside and earnings growth we maintain our Add rating. View target price and full analysis (Morgans clients only).
Exiting 20 at around 20
Superloop (ASX:SLC) reported an FY20 result that was in-line with guidance and, albeit under a different composition, almost in-line with August 2019 pre COVID-19 guidance.
Despite a challenging last six months the team did well to flex the cost base, win new business, grow EBITDA for the year and exit FY20 with ~$20m underlying EBITDA, on our estimates.
SLC finally has a largely recurring revenue and EBITDA base.
However overall market uncertainty combined with new CEO, Paul Tyler, commencing in October meant that no guidance was provided.
The exit rate EBITDA combined with strong new fibre sales in the year, some of which are not yet billing, gives us confidence that FY21 will be a good year.
View target price and full analysis (Morgans clients only).
Monash IVF Group
Positive momentum continues
Monash IVF (ASX:MVF) result was pre-released with the highlights being a solid balance sheet, market share growth in NSW, QLD, and SA which were offset by a weaker result in VIC and Malaysia.
Pent up demand from the suspension of services in April and May is likely to result in record cycle numbers in July/ August and September.
These are key data points for investors.
We have made minor upgrades to forecasts which results in our TP increasing. Thus, we maintain our Add recommendation. View target price and full analysis (Morgans clients only).
Turboprops looking to be resilient
We have increased our forecast FY21 revenue significantly on the assumption that reduced customer flight hours will be mostly limited to TMA.
If US earnings remain resilient PTB Group (ASX:PTB) could implement its growth plans more quickly.
We also lift our FY21F DPS to 5cps because of higher forecast earnings and an assumption that 50% of the dividends will be funded by the DRP.
We upgrade our rating to ADD. View target price and full analysis (Morgans clients only).
Getting tech fit
Isentia's (ASX:ISD) FY20 EBITDA was as expected given this was pre-released.
Revenue declined $12m yoy to $110m and EBITDA declined $2m yoy to $21m. In our view, this shows the company has effectively flexed the cost base.
No FY21 guidance was provided, given the current uncertainties created by COVID-19 and the upcoming Copyright Tribunal proceedings.
While we expect the current competitive environment to remain, we believe ISD will be well-placed as new products are released and costs are further optimised.
We continue to believe ISD looks too cheap – ADD maintained. View target price and full analysis (Morgans clients only).
Backing a recovery over the medium term
SomnoMed (ASX:SOM) posted an impressive result considering the impact COVID was forecast to have on the business, aided by strict cost containment and government assistance.
A pick-up in revenues into July were flagged in the recent quarterly report compared to recent lows and gives us further confidence in a sharp(ish) recovery, but risk remains as revenues, while higher than expected, remain below pcp.
How long it will take to get back to normalised operations both from a sales and operational perspective remains the risk – but we are willing to back a recovery over the medium term with revenues returning to pre-COVID levels by FY22.
We have rolled forward our model and made minor changes to our margin inputs, backing a recovery in 2H21 to pre-COVID levels and margins.
Our target price increases and we upgrade to an Add recommendation. View target price and full analysis (Morgans clients only).
Kelly Partners Group
Building towards the five-year targets
Kelly Partners Group (ASX:KPG) reported underlying FY20 NPATA of A$4m, up 25% on the pcp and with 2H20 flat on 1H.
Total dividends for the year were 5.39cps (including a 0.55ps special).
Three acquisitions were executed for the year, which in combination are expected to deliver ~A$3.2-3.9m annualised group revenue and ~A$0.8m EBITDA to the parent entity.
FY21 will benefit from a full year contribution.
Dividend guidance was provided, with KPG expecting to pay 5.32cps in ordinary dividends in FY21 (+10%). Add maintained.
KPG trades on a relatively undemanding ~11x FY21F PE and is paying a solid dividend yield (~4.5%) which is targeted to grow at 10% pa.
We expect the base business to be defensive, with strong upside potential if management successfully executes on its five-year plan to double profitability. View target price and full analysis (Morgans clients only).
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