5 ASX Stocks to look for in Mar’19Team Veye | 01 Mar 2019 ASX - BOQ, GXY, DMP, PPS, CPU
Premium Ltd (ASX: PPS)
The company released its H1 FY2019 results on 11th Feb’19. The key financial highlights for the period were:
- • Record underlying EBITDA of $5.1 million, a 19% increase on H1 FY18;
- • 7% increase in revenue and other income to $22.9 million; and
- • 14% increase in platform FUA to $8.4 billion.
- • However, the Net Profit After Tax Decreased 13% to $633,647
- • Debt free with $11.3m cash on hand (Data Source – Company Reports).
The stock price of the company after touching an all-time high of $1.185 on 24th Sep’19 slipped down to $0.58 on 12th Feb’19 following weak results post which it has started recovering. We see this slip as a buying opportunity as there is only dip in profits; the company has not run into losses and it has expanded its platform capabilities and has already launched a campaign to promote it on a larger scale that would drive benefits for the company in the longer run. We maintain a “Buy” recommendation on “Praemium Ltd” at the current price of $0.600
Computershare Ltd (ASX: CPU)
On 13h Feb’19, the company released its H1 FY2019 results delivering a strong performance across key metrics. The Financial highlights were as follows:
- • Revenue for the half-year was $1,146.5 million, up 1.7% over the corresponding period.
- • Net statutory profit after tax attributable to members was $259.4 million, an increase of 51.5%
- • EBITDA stood at $334.5m, up 14.3%
- • Statutory EPS stood at 47.77 cents, up 52%
Given the 1H results, the company upgraded its earnings guidance. In FY19, they now expected to deliver around 12.5% growth in Management EPS against the previous guidance of 10%. With their growth, profitability and capital management strategies serving them well, and the optionality inherent in Computershare continuing to convert into profitability, their commitment to deliver multi year earnings growth was intact (Data Source – Company Reports).
The stock price of the company after touching an all-time high of $20.80 on 5th Oct’18 slipped to $16.36 before Christmas but started recovering when the markets picked up and has strengthened its position further with positive results and a Guidance Upgrade. We reckon that the stock still has substantial upside potential to set new records and fetch a higher return on your investment. We are Bullish on “Computershare Ltd” and give it a “Buy” recommendation at the current price of $17.250
Bank of Queensland Ltd (ASX: BOQ)
On 18th Feb’19, the bank released a trading and earnings update highlighting that based on January year-to-date performance, 1H19 cash earnings after tax was expected to be in the range of $165-170m, compared to the 1H18 cash earnings after tax result of $182m. A reduction in income from 1H18 was primarily contributed by Non Interest Income which was expected to be $8-10m lower than the 1H18 level of $75m. This was due to continued downward pressure across fee, trading, insurance and other income lines. The bank highlighted that the market conditions are expected to remain challenging and regulatory costs were likely to increase (Data Source – Company Reports).
The stock price of the bank slipped 28% during the last 1 year and the major contributors have been the Interim Banking Royal Commission Report, market slump and weak results especially lower non-interest income. We reckon that the banks will be bearing regulatory costs which may have impact on their stock prices as highlighted by Bank of Queensland but we see the current slip in price as a buying opportunity especially on the back of consistent dividend pay-out coupled with slow but steady growth for mid to long-term. We give a “Buy” recommendation on “Bank of Queensland Ltd” at the current price of $9.010
Galaxy Resources Ltd (ASX: GXY)
The company released its H1 FY2019 results yesterday, 28th Feb’19 delivering a solid performance. The key highlights for the period were:
- Group EBITDA of US$281.2 million (which includes a gain on sale of US$223.0 million (pre-tax) arising from the POSCO transaction), an increase of 818% compared to FY2017
- Group EBITDA of US$58.1 million from operations, an increase of 90% compared to FY2017
- Group net profit after tax of US$150.2 million (which includes a gain on sale of US$146.8 million (post-tax) arising from the POSCO transaction)
- Group net profit after tax from operations of US$3.5 million, compared to US$0.1 million in FY2017
- Earnings per share (undiluted) of ~US$0.37 for FY2018
- • Total lithium concentrate production and sales volumes of 156,689 (growth of 1%) and 159,255 (growth of 4%), respectively
- • After the reporting date Galaxy announced the final settlement of the POSCO transaction with resulting increase in the Company’s cash balance of US$271.6 million
- • Nil borrowings as at 31 Dec’18
As part of its outlook, the company is bullish about the global lithium demand outlook and was aiming to become a major producer of lithium products (Data Source – Company Reports).
The stock price of the company after touching an all-time high closing price of $4.46 on10th Jan’18 slipped 57% until 19th Feb’19 post which it has started picking up. We reckon that the stock has substantial upside potential to recover and head north on the back of very strong fundamentals and strong revenue and profit generation from its existing operations. We are Bullish on “Galaxy Resources Ltd” and give it a “Buy” recommendation at the current price of $2.190
Domino’s Pizza Enterprises Ltd (ASX: DMP)
The company released its H1 FY2019 results on 20th Feb’19 delivering a solid performance. The key highlights for the period were:
- Global food sales lifted +14.6% to $1.43 billion, driving a +12.1% lift in EBIT to $108.3m.
- Overseas markets contributed more than half of the Company’s EBITDA with $71m EBITDA contribution from Europe and Japan.
- Online sales increased +16.5%, +$132.2 million higher than PCP.
- Online platforms processed 32.4 million orders in the Half, more than two orders every second.
- Global Network Sales growth, +3.3% higher on a Same Store Sales basis, reflected strong performances from Japan, Germany, Benelux and New Zealand, with softer performance in Australia, and lower than expected performance in France.
- Significant store milestones achieved in the Half Year – surpassing 1,000 Domino’s branded stores in Europe, 700 stores in Australia and 300 Domino’s branded stores in Germany, opening 77 organic new stores and converting 72 Hallo Pizza stores.
As part of its outlook, the company highlighted that its sales have been positive in the first seven trading weeks of H2 19. Management expected same Store Sales for the Full Year to be within guidance, at the mid-to-lower end of the +3- 6% range; EBIT was expected to be at the lower end of guidance of $227m-$247m. And, as a result of renewed confidence in Japan and updated modelling in Belgium, Domino’s upgraded its Group future store outlook to 4,900 (+250 stores) by 2025-2028 (Data Source – Company Reports).
The stock price of the Group slipped 33% between end of Aug’18 until 21st Dec’18 post which it started recovering along with the Christmas rally only to slip again during mid-Feb’19. But looking at the growth of the company in terms of number of stores globally and strong sales from Japan and Germany, we reckon that the stock has substantial upside potential and is currently under-valued. We give a “Buy” recommendation on “Domino’s Pizza Enterprises Ltd” at the current price of $41.250.
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