While All Ordinaries Index (ASX: XAO) is marginally down, two stocks are defiantly marching ahead.
SG Fleet Group Limited(ASX: SGF)
SG Fleet delivered an outstanding performance in the 2024 financial year, with underlying profit after tax growing nearly 20%. Orders and deliveries reached record highs, driven by strong results across both Corporate and Novated funding segments. While a decline in used vehicle values was anticipated as supply chain constraints eased, the decrease was more gradual than expected. This was offset by robust delivery revenue, and the company now anticipates a return to a more normalized revenue profile in FY25 as used vehicle prices continue to adjust. The integration of LeasePlan remains on track, with $20 million in pre-tax synergies expected post-SAP migration, in addition to the $5 million already realized. Reflecting its confidence in future growth, SG Fleet declared a special dividend of 15 cents per share, bringing the total FY24 dividend to 33.93 cents per share, more than doubling the prior year’s payout.
The Corporate segment in Australia benefited from structural demand as more businesses adopted outsourced fleet management solutions, with improving vehicle availability driving a surge in delivery volumes. Product penetration also increased significantly, with 85% of customers using multiple SG Fleet offerings, compared to just 42% in FY20. The SAP migration of the LeasePlan platform is expected to unlock further cross-sell opportunities. In the Novated channel, demand remained strong, fueled by heightened awareness among employees and employers. EV incentives boosted interest in low- and zero-emission vehicles, although demand for internal combustion engine vehicles also remained robust. New employer signings and leads contributed to significant growth in orders, with Novated leasing solidifying its position as a key employee benefit. In New Zealand, mixed economic conditions and slowing vehicle registrations had minimal impact on SG Fleet’s performance. The company retained existing clients and won new trans-Tasman contracts, with the government sector continuing to drive growth through sale-and-leaseback solutions. In the UK, improving economic sentiment bolstered car registrations and investment activity. SG Fleet secured new accounts, extended sole-supply arrangements, and experienced steady demand for short-term hire solutions.
Looking ahead to FY25, SG Fleet has maintained momentum, with high delivery volumes supported by improving vehicle supply. However, order backlogs remain elevated at 3.2x normal levels in Corporate and 2.5x in Novated, indicating a sustained period of catch-up. Used vehicle values have softened slightly but remain above pre-COVID levels, supporting healthy disposal profits. The successful completion of LeasePlan’s SAP migration in New Zealand sets the stage for similar progress in Australia, keeping synergy targets firmly on track. Management has reaffirmed its confidence in FY25 UNPATA guidance.
PointsBet Holdings Limited (ASX: PBH
In FY24, PointsBet Holdings Limited (ASX: PBH) successfully completed the sale of its US business to Fanatics Betting and Gaming for US$225 million, marking a significant strategic move. While the company built a valuable US asset, operating in a state-by-state environment with the need for large-scale investments proved challenging. The decision to sell allowed the company to deliver the most favorable risk-adjusted value for shareholders. The sale process involved a complex migration and restructuring of the business over 10 months, but despite this, PointsBet continued to achieve strong performance in its Australian and Canadian markets. The sale proceeds, along with surplus corporate cash reserves, were returned to shareholders, totaling $442.4 million, or $1.39 per share, with tax clarity confirming these returns would not be taxable as dividends for Australian residents.
Financially, PointsBet posted impressive results for the year, exceeding guidance in several areas. The group reported a 16% increase in total net win, reaching $267.1 million. Gross profit margins improved to 52.8%, up from 50.3% in FY23. The company also significantly reduced its marketing expenses, lowering them by 21% to $71.0 million. Operating expenses excluding marketing were kept at the lower end of guidance, totaling $60.4 million. Although the company recorded a normalised EBITDA loss of $1.8 million, it represented a $47.2 million improvement compared to FY23’s $49 million loss, demonstrating a positive trend towards profitability.
PointsBet also emphasized its commitment to responsible gambling and consumer protection across its markets. The company has implemented a variety of initiatives in Australia, including Zero Day KYC (Know Your Customer), integration with the National Self Exclusion Register, and a ban on credit card deposits. These measures aim to provide a safer betting environment for consumers. PointsBet advocates for sensible advertising reforms and believes that regulated, licensed operators should be able to distinguish themselves from unregulated offshore competitors. Looking forward, the company is focused on continuing its growth strategy through investment in marketing, technology, and product development, setting the stage for increased operating leverage and improved profitability in the future.
Source: Company’s Report
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