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Shares Technology Stocks

Despite a rise in earnings, the share price of Nine Entertainment has dropped.

20025825 - closeup image of businessman drawing 3d graphics

Investment Thesis

  • Upside potential to NEC’s share price from investors ascribing a higher value for Stan, NEC’s subscription video of demand (SVOD). Stan is now cash flow positive and profitable, with margins having the potential to surprise on the upside. 
  • Relatively attractive dividend yield of ~4%. 
  • NEC is a now a much more diversified business, with revenue not dominated by traditional FTA TV but also attractive digital platforms and assets. 
  • Cost out strategy – looking to remove $230m in structural costs.  
  • Corporate activity given NEC’s strategic assets.
  • Trading below our valuation.

Key Risks

We see the following key risks to our investment thesis:

  • Competitive pressure in Free to Air (FTA) TV and SVOD. 
  • Stan growth (subscriber numbers or breakeven point) disappoints market expectations. 
  • Structural decline in TV audiences continues to impact sentiment towards the stock. 
  • Deterioration in advertising markets.
  • Cost blowouts in obtaining new programming/content.
  • Increased competition from Netflix and Disney.

FY21 Results Highlights. Relative to the pcp: 

  • Revenue of $2,331.5, up +8%. 
  • Group EBITDA of $564.7m, was up +43%. 
  • NPAT of $277.5m, was up +76%, which translates to fully diluted EPS of 15.3%, up +83%.
  • The Board declared a final dividend per share of 5.5cps which brings full year total dividends to 10.5cps, up +50%, and equates to a payout ratio of ~69% (in line with management’s policy of paying ~60-80% through the cycle).

Current trading environment and outlook

NEC did not provide specific quantitative FY22 earnings guidance but did provide significant colour: 

  • “Nine started the new financial year strongly, well supported across our platforms by advertisers from all categories. In the current quarter, Nine’s metro FTA ad revenue is expected to be up almost 20% on the same quarter last year. Forward bookings remain ahead of same day last year, with positive market momentum continuing into Q2, notwithstanding more difficult comparables, including timing of the NRL. The FTA ad market has recovered more quickly and convincingly than previously expected. FY22 will see the return of some cyclical costs – Nine currently expects FTA costs in FY22 to be ~3% higher than FY21”. 
  • 9Now: “continues its strong growth trajectory, with around 70% revenue growth in July (on pcp). Nine expects positive momentum to continue through the rest of FY22, as 9Now establishes its place in the broader digital video market”.
  • Nine Radio: “Notwithstanding the short-term impact of the lockdown on the radio market, Nine Radio’s Q1 ad revenues are expected to grow in the double-digits (%), with further share improvement across both agency and local ad sales. Coupled with Nine Radio’s restructured cost base, this is expected to underpin strong profit leverage as the ad market recovers”. 
  • Stan: “Total costs for Stan Sport in FY22 are now expected to be at the lower end of the $70-90m range previously cited. Whilst this investment will reduce Stan’s overall EBITDA in the short term (in FY22 combined EBITDA for Stan Entertainment and Stan Sport is expected to be in the low double-digit millions of dollars), over the medium and longer term, it is expected to significantly grow earnings”. 
  • Publishing: “As previously announced, Nine expects growth of $30-40m in Publishing EBITDA in FY22 on FY21”.

Company Description  

Nine Entertainment Co (NEC), through its subsidiaries, broadcast news and current affairs, sporting events, comedy, entertainment and lifestyle programs. Nine Entertainment serves customers throughout Australia. NEC has repositioned itself from a linear free-to-air broadcaster, to a creator and distributor of cross-platform, premium content. While the channel Nine Network remains core, it is now complemented by subscription video on demand (SVOD) provider Stan, a live streaming and catch-up service 9Now, digital network nine.com.au and array of digital content.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

The share price of Pointsbet has dropped as a result of the FY21 performance.

Investment Thesis

  • U.S. growth opportunity – the U.S. online sports betting market continues to open following the 2018 supreme court ruling which legalise the industry. Market growth estimates forecast the industry to grow to US$51bn by 2033.  
  • Strong management team with a solid track record – the ability to grow market share in a competitive and mature market of Australia gives us some confidence the management team have the right strategy in place to build share in the U.S. 
  • Proprietary technology stack – The speed and useability are key differentiating factors. PBH operates proprietary technology, which it developed inhouse. This means new modifications and updates are easier to implement (i.e., more control) with inhouse tech versus outsourced (i.e., having to go to an external provider each time with an update). 
  • Cross sell opportunities with iGaming – PBH’s recently launched iGaming product (online casino) is already highlighting cross-sell opportunities to its customers.

Key Risks

We see the following key risks to our investment thesis:

  • Rising competitive pressures.
  • Adverse regulatory change in key operating jurisdictions (Australia / U.S.). 
  • Loss of market share in key regions or growth rate fails to meet market expectations. 
  • Higher than expected costs – especially around investment in sales & marketing to drive market share. 
  • Trading on high PE-multiples / valuations means the Company is more prone to share price volatility. 
  • Cyber-attack on PBH’s platform. 

FY21 headline results. 

  • PBH group revenue of $194.7m was up +159% YoY. 
  • Gross profit of $87.6m was up +129% YoY. 
  • PBH made heavy investment in sales and marketing over the year, with S&M expense of $170.7m significantly above the $38.2m in pcp. The Australian segment accounted for $51.4m (higher due to brand campaign with Shaquille O’Neal). However, the U.S. accounted for most of the uplift in marketing spend (total $119.2m) given the increased number of operating jurisdictions. As the footprint in the U.S. continues to expand, management noted the market spend will continue to increase. 
  • At the end of the period, Australia has 196,585 cash active clients (vs. 90,422 in pcp) and the U.S had 159.321 cash active clients (vs 20,939 in pcp). 
  • Group normalised EBITDA for the year was a loss of $156.1m vs loss of $37.6m in the pcp, as PBH continues to invest in the business to scale the U.S. business and invests in its technology stack.
  • Australian Trading segment reported revenue of $150.7m (vs $68.2m in pcp) and EBITDA of $9.2m (vs $6.9m in the pcp). A solid result given the significant increase in marketing spend over the year. 
  • USA segment reported revenue of $42.3m (vs $7.0m in pcp) and EBITDA loss of $149.6m (vs loss of $38.2m in pcp). During the year, PBH operational in six U.S. states: New Jersey, Iowa, Indiana, Illinois, Colorado, and Michigan. 
  • Balance sheet is in a good position to support investment in growth, with pro forma cash balance of $665.2m (post the July 21 capital raising).

Company Description  

PointsBet Holdings Ltd (PBH), founded in 2015, is a corporate bookmaker with operations in Australia and the United States (New Jersey, Iowa, Illinois and Indiana). PointsBet has developed a scalable cloud-based wagering platform which offers customers sports and racing wagering products. PBH’s key products include fixed odds sports, fixed odds racing and PointsBetting.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Fixed Income Fixed Income

Suncorp’s stock is in the spotlight following the announcement of a $350 million capital round.

final margin set at 2.90%. The margin is also in line with the recent issuances from Westpac Capital Notes 8 (WBCPK) and Macquarie Capital Notes 3 (MBLPD) (MBPLD are trading largely in line with par value since listing). We note this is a new issuance and therefore has no rollover or reinvestment plan attached to it. The underlying issuer, Suncorp Group, is a strong business and a regular issuer of debt in the market. We would have liked to have seen the final margin at the upper end of the indicative range (3.1% above BBSW). However, the demand for this relatively small issuance ($375m market cap) is also likely to be high given the issuer is someone other than the big 4 banks (although the sector exposure is the same, therefore we are not fully convinced of the diversification benefits here). Our positive view on these is a relative call.

Security Description: 

SUNPI securities are fully paid, subordinated, perpetual, redeemable, convertible, unsecured, non-cumulative, subject to a capital trigger event and non-viability trigger event, listed securities. The securities are scheduled to convert into ordinary shares on 17 Dec 2030 (subject to the conversion conditions being satisfied). 

Issuer Description: 

Suncorp is an ASX-listed company and financial services provider in Australia and New Zealand, and the ultimate parent company of the Suncorp Group, with a market capitalisation of approximately $16 billion as at 27 August 2021. The Suncorp Group offers insurance and banking products and services in Australia and New Zealand. 

KEY RISKS

  • The market price of SUNPI may fluctuate due to various factors that affect financial market conditions. It is possible that SUNPI may trade at a market price below their Issue Price of $100. Interest Rate will fluctuate with changes in the market rate.
  • Significant economic shock to the Australian economy, including a severe and prolonged downturn in the Australian economy. These capital notes are not deposit liabilities or protected accounts.
  • There is a risk that Distributions will not be paid given they are discretionary.
  • Unless exchanged on or before that date, SUNPI are expected to Convert into Ordinary Shares on the Mandatory Conversion Date. However, there is a risk that Conversion will not occur on the Mandatory Conversion Date because the Scheduled Conversion Conditions are not satisfied due to a large fall in the Ordinary Share price relative to the Issue Date VWAP, or if Ordinary Shares cease to be quoted on ASX or have been suspended from trading for a certain period. Mandatory Conversion may therefore not occur when scheduled or at all. The Ordinary Share Price may be affected by transactions affecting the share capital of Suncorp Group, such as rights issues.
  • The market price of SUNPI (and the Ordinary Shares into which they are expected to Convert) may be affected by Suncorp Group’s financial performance and position.

Interest Rate: Margin of 2.9% above the 90day BBSW rate. 

Interest / Distribution Payments: Discretionary, Non-cumulative and subject to following conditions: (1) Distributions will be paid if Suncorp’s capital requirements are sufficient as required by APRA. (2) Distributions will not cause Suncorp to become insolvent. (3) APRA not objecting to distributions being paid. Distributions are expected to be fully franked but not guaranteed.

Mandatory Conversion: On 17 Dec 2030, SUNPI Holders will receive ordinary shares worth $101 per note. Conversion may not occur on 17 Dec June 2030, being the first possible Mandatory Conversion Date, or at all if the Conversion Conditions are not satisfied.  Holders have no right to request that their Notes be Converted, Redeemed or Transferred.  Holders would need to sell their Notes on ASX at the prevailing market price to realise their investment. That price may be less than the Face Value (initially $100 per Note) and there may be no liquid market in the Notes.

Non-Viability Trigger Event:  In case of the event that APRA considers Suncorp non-viable, these notes will be written off (in all or in part) or Converted into Ordinary Shares and Holders will hold Ordinary Shares and rank equally with other holders of Ordinary Shares in a subsequent Winding Up of the Bank. Following a Non-Viability Trigger Event, if Conversion does not occur within five Business Days for any reason, those Capital Notes 4 that are required to be Converted will be Written-Off and Holders will not receive any Ordinary Shares with respect to those Capital Notes 4.

Ranking: In the event of a Winding Up, if the Notes are still on issue and have not been Redeemed or Converted, they will rank ahead of Ordinary Shares, equally among themselves and with all Equal Ranking Capital Securities and behind Senior Creditors (including depositors and holders of Westpac’s senior or less subordinated debt). This means that if there is a shortfall of funds on a Winding Up to pay all amounts ranking senior to, and equally with, the Notes, Holders will lose all or some of their investment.

The above is a brief summary of the terms and risks. Investors should read the PDS for more information.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Wesfarmers reported solid revenue in FY 21

Global network and financial technology concept.

Investment Thesis:

  • Ongoing momentum in discretionary spending, fueled by rising property values.
  • Diversified asset base with core assets continuing to grow.
  • Expect improved performance from Target and Industrials business.
  • Continued emphasis on shareholder return, including a high yield.
  • A capable management team.
  • A strong sense of balance allows to seize opportunities as they emerge.
  • Potential  Capital management initiatives.

Key Risks:

  • Due to competitive pressures, margins are eroding.
  • Bunnings earnings have been disappointing.
  • The macro picture is deteriorating, resulting in decreasing retail sales activity and volumes.
  • Metrics on the balance sheet have deteriorated.
  • Adverse movements in AUD/USD.

Key highlights of FY21: Relative to the pcp:

  • During the year WES revenue rose by 10% to $33.9bn relative to previous year.
  • During the year 2020, WES revenue from continuing operation arises broadly from the following segment : 62% from Bunnings,19 % from kmart group, 11% from WesCEF , 6%from Office work  and 2% from Industrial and safety.
  • Bunnings delivered a 15% increase in revenue to $16,871m. Kmart Group revenue increased by 8.3% to $9,982m. Officeworks revenue increased by  8.7% to $3,029m . Wesfarmers Chemicals, Energy &Fertilisers (WesCEF) revenue increased by 2.9% to $2,146m.  Industrial and Safety saw revenue increased by 6.3% to $1,855m
  • NPAT from continuing operations increased by 16.2 % to $2.4 billion (excluding major items).
  • Operating cash flows of $3,383m were 25.6% lower over pcp as strong earnings growth businesses was offset by the normalisation in working capital positions across the retail combined with gross capex of $896m (+3.3% higher over pcp) due to increased investment in data and digital initiatives across all divisions, the conversion of Target stores to Kmart stores, as well as the ongoing development of the Mt Holland lithium project .
  • The company announced a $2.3 billion capital return in the form of a $2 per share payment on top of a final dividend of 90 cents per share, bringing the total payout for the year to $3.78 per share.
  • The Board declared a fully franked final dividend of 90cps, taking the full-year dividend to 178cps (up by 17.1% over pcp) and recommended a return of capital of 200cps, equating to total shareholder return for the year of 378cps.
  • The Company maintained significant balance sheet flexibility, ending the year with a net cash position of $109m.

Company Profile

Wesfarmers Limited (WES) operates convenience stores, home improvement stores, office supply stores, and department stores, among other businesses. Chemicals and fertilisers, industrial and safety items, and coal are all part of the industrial sector of the corporation. Wesfarmers has a workforce of about 220,000 workers.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

IDP Education reported low earnings due to pandemic

Investment Thesis:

  • Global re-open and vaccine roll-out acts as leverage for IDP Education.
  • The company is expected to be benefitted from margin expansion (computer- based IELTS), network expansion (latest inclusion of IELTS test centres in Ireland, Poland, Chile and Peru and student placement offices in Pakistan and Canada).
  • IDP’s English Language Testing stream (IELTS) has a strong reputation as the world’s most trusted English language test for study, work and migration.  
  • Solid margin and strong earnings/revenue growth/strong cashflow generation is maintained by IDP.
  • Strong management team.
  • Growth opportunities at global level due to international student population and education industry. 
  • Introduction and planned roll out of online IELTS delivery to provide opportunities for stronger growth.
  • Strong balance sheet, with high liquidity. 
  • Substantial margin opportunity is unlocked by potential restructuring with British Council  

Key Risks:

  • Periodic growth cannot be predicted with IDP’s business model 
  • Future economic lock-downs to Covid-19
  • Risk of currency conversion
  • In order to justify the valuations, high growth rate should be met  
  • Threat of a new entrant or competition from the existing players

Key Highlights:

  • FY21 Earnings were impacted by the pandemic, with adjusted EBIT of $71.8m, which was down by 31% over the pcp (previous corresponding period).
  • IELTS volumes were up 5% despite ongoing disruptions at the operational level due to the on-going pandemic and government-imposed restrictions.
  • The placement volumes of students to countries except Australia reduced by 12% relative to FY20 in spite of the uncertainties that were associated with travel and physical learning
  • Digital Marketing revenue jumped 8% to $30m driven by institutional clients looking up to IDP’s global digital platform for marketing and data insights.
  • Strategic acquisition in a growth market in British Council’s IELTS operation in India for £130m, which is highly strategic for IDP and provides several benefits like increased exposure to the high-growth Indian IELTS market; simplified distribution arrangements providing the opportunity to simplify and improve the delivery of IELTS to test takers in India.
  • The highlights by segments are stated as below:
  • English Language Testing: Revenue of $325.6m, which was up by 8%
  • Student Placement: Revenue of $143.3, was 22% lower; for Australia, revenue was 34% weaker at $59.7m, due to border closures relating to Covid-19. For Multi-destination, revenue was -17% weaker at $83.5m.
  • English Language Teaching: Revenue of $20.2m, which is -23% lower
  • Digital Marketing and Events: Revenue of $36.4m, which is -2% lower
  • Others: Revenue of $3.2m was -20% weaker

Company Profile:

IDP Education Ltd (IEL) offers: (i) Student placement: student recruitment/placement in 93 offices across 30 countries into  approximately 600 universities, schools and colleges globally in 5 destination countries; and (ii) co-owner of IELTS, an English language proficiency test which foreigners must pass in order to obtain certain visas and permanent residency in Australia. IEL is 50% owned by Education Australia Ltd – a business in which 38 Australian universities own a 50.1% stake.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Despite pandemic disruptions, NIB Holdings produce strong FY21 results

85215903 - attractive businessman using mobile phone while having lunch

Investment Thesis:

  • Increased demand for health care services due to ageing population of Australia, thereby contributing increased dependence on private health care insurers. NHF offers exposure to the business model of providing a funding mechanism for the high-growth health care sector.
  • Healthcare expenditure is expected to rise by 5-10% per annum, so government cannot offer healthcare services to people without increase in tax.
  • The average premium rates increased at the rate of 5 – 6% per annum. 
  • Policyholder growth and exposure to speed up the investments, NHF is expected to offer double-digit growth in medium term.
  • Strong members in management.
  • Chalking out budget plan, which improves the company’s expense ratio. 
  • PHI (Protected Health Information) is promoted by giving incentives and benefits. 
  • Joining with Tasly Holdings (Chinese Pharmaceutical Company) in Joint Venture and making international presence through the same.

Key Risks:

  • Increase in competition among top 6 players
  • Putting policy growth targets at risk 
  • Marketing expenses are anticipated to go high, thereby straining earnings growth.
  • Unexpected decline in policyholders in spite of providing incentives 
  • Rapid increase in healthcare spending and health services demand from people have left Australian Government struggling.
  • Registered health insurance firms are unable to increase premium rates without prior approval from the Government/Minister for Health/PHIAC/APRA. Because of this, NHF’s ROE and margins would be exposed to political process and pressures if the company makes large profits.
  • Regulatory changes including tax incentives and benefits which encourage take up of PHI. 
  • Due to poor insurance policy design, aging population, and costs of new medical equipment, procedures and treatments; lapse rates and claims inflation would be higher than expected.
  • Negotiations not done rightly with healthcare providers (private hospital operators) which may result into unfavorable contractual terms;
  • Investment returns might be lower than expected.

Key Highlights:

  • nib holdings Ltd. (NHF) reported strong FY21 results in spite of Covid-19, however it was in line with management expectations
  • Revenue grew by +2.9% to $2.6bn and Group operating profit (UOP) of $204.9m, which is up by 39.5%
  • NPAT of $160.5m was mainly driven by net investment income of $51.8m.
  • Statutory EPS of 35.2 cents, which was +82.4% higher.
  • ROIC of 19.1% which was similar to pre-pandemic levels.
  • Final dividend of 14cps fully franked (up from 4 cents), which brings the full year dividend to 24cps.

Company Profile:

nib Holdings Limited (NHF) is the Australian private health insurer. NHF operates in four divisions which are private health insurance, life insurance, travel insurance and related health care activities.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Small Cap

Nanosonics achieved a strong FY21 performance

Investment Thesis

  • Ultrasound disinfection is required. To avoid cross-infection, ultrasound transducers must be disinfected between patients. Trophon EPR outperforms traditional methods (soak, spray, wipe, or other manual reprocessing/disinfection methods). Traditional soaking, for example, takes 25 minutes, whereas Trophon disinfects ultrasound probes in 7-8 minutes.
  • Potential addressable installed base of 120,000 Trophon EPR units worldwide (40,000 each in the US, Europe, and the Rest of the World).
  • Higher level disinfection required to reinforce the drive path for new guidelines and regulations. New Guidelines in Australia and New Zealand for example, establish Trophon as the gold standard in high-level disinfection.
  • Trophon become standard of care and direct sales team driven for strong adoption as its continuous growing in North America.
  • With the demand for safety inventory, GE Healthcare has retained a large and credible distribution partner.
  • In the United Kingdom, the Managed Equipment Service (MES) business model is overcoming client capital budget constraints.
  • Progress is being made in terms of geographic expansion.
  • A strong balance sheet will help to support the growth strategy.

Key Risks

  • Increased competition as new entrance entered the market. 
  • Non-receptive markets where NAN’s product is regarded as excessive when compared to traditional disinfection methods such as using sterile wipes.
  • Key customer risk, as one of NAN’s largest customers
  • Product flaws or incidents that necessitate recalls.
  • Unfavorable foreign currency movements in the AUD/USD.
  • Poor R&D execution with no progress.
  • Because of the nature of the business, it is prone to quickly reaching a natural penetration rate, where growth becomes subdued.

FY21 results highlights

  • Revenue of $103.1m, up +3.0 percent (or +12 percent in constant currency), driven by recovery in 2H21 with revenue of $60.0m, up +39 percent (or +50 percent in CC) compared to 1H21.
  • NAN’s global installed base of 26,750 units increased by +13 percent or 3,030 units (with 2H new installed base increasing by +20 percent compared to 1H21 with 1,650 units installed).
  • Revenue of $76.4m, up +9% from 1H21 revenue of $42.7m, up +27% from 1H21, driven by a recovery in ultrasound procedure volume to pre-Covid-19 levels.
  • Operating profit before tax of $11.0m was -11 percent lower than the $12.4 m pcp, driven by 2H21 profit before tax $10.8m which grew as total revenue increase +39% in 2H21 versus 1H21.
  • NAN retained a strong balance sheet position to fund growth initiative with net cash position improving $4.2 to $96.0m.
  • Revenue of $26.7 million was down -11 percent, but 2H revenue of $17.3 million was up +84 percent compared to 1H21, with installed base growth recovering and GE Healthcare capital purchases increasing.
  • EBIT of $10.8 million fell -7 percent. Operating expenses increased by 12% to $70.8 million, primarily due to $20.3 million in 4Q expenses as NAN returned to its intended investment run rate.
  • The $5.9 million in free cash flow was driven by $8.3 million in 2H free cash flow, which offset a $2.4 million net cash outflow in 2H21.

Company Profile 

Nanosonics Ltd (NAN) is an ASX-listed company which focuses on developing and commercialising infection control devices. NAN’s first device, the trophon® EPR is a proprietary automated device for low temperature, high level disinfection of ultrasound probes. The device is approved for sale across major markets including, Australia and New Zealand, US, Europe, Japan, Hong Kong, and South Korea. The trophon® EPR is sold through distributors including GE Healthcare, Philips, Samsung, Siemens Toshiba and Miele Professional.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Ramsay Health Care reported solid earnings in fiscal year 2021

Investment Thesis :

  • Holds a leading positions in Australia, France and Scandinavia.
  •  Earnings will begin to rise in FY22-24 as a result of pent-up demand on waiting lists.
  •   Has a well-diversified portfolio with a large scale.
  • Australia’s largest private hospital operator, with strong industry fundamentals  
  • Favourable macro-industry trends include an ageing and growing population, the spread of chronic disease, and more innovation, treatment, and technology, all of which are driving demand to private hospital.
  • Supportive government policy (tax incentive for people to get private health insurance). 
  • Ongoing brownfield program driving earnings and offshore earnings growth
  • Significant international operation paves way for the firm to grow internationally in near future.
  •  Attractive industry dynamics with high entry barriers for new firms.

Key Risks:

  • Competitive risk (new hospitals, new beds), from listed and unlisted hospital operators
  • Brownfield projects fail to deliver the earnings uplift.
  • Cost pressures (negotiating price increases with private health insurance companies).
  • Government policy on private health insurance is changing.
  • Execution risk (able to get the uplift in earnings from brownfield projects).
  • Snap economic lockdowns due to Covid-19
  • Currency risk

Key financial highlights of year2021:

In relative to the previous corresponding period i.e pcp (herein pcp is year 2020)

  • During the year 2021, RHC revenue increased by 3.9% to $12.4bn.
  • The increase in revenue was driven by strong earning growth across all of its geographical segments-i.e from Asia Pacific, UK and Europe.
  • In Asia Pacific, revenue from patients increased by 7.8% to $5.4bn reflecting strong growth in surgical admission (2) In U.K, revenue increased by 10.2% to $1,024.1m and included payments from the NHSE of $417.6m representing net cost recovery for services provided by Ramsay to the NHSE during the year (3) Europe revenue increased by 6.9% to $6,839.9m and included government grants of $428.3m and was impacted by 80m euros from the sale of a portfolio of nine German hospitals in 1H21
  • EBIT increased by 29.1% to $1.1bn and statutory profit increased by 58.1% to $449m, reflecting a strong increase in admissions.
  • The Board declared a fully franked final dividend of 103cps, bringing the FY21 dividend to 151.5cps (up by 142.4 %) and representing a payout ratio of 79 percent of statutory profit.
  • During the underlying period ROCE improved by 60bps to 9.3% and ROIC gained by 260bps to 7%.
  • Operating cash flow fell by 11.9 % to $1.5 billion, owing to changes in working capital as a result of cash loans from the French government while FCF fell by 14.8 percent to $85,
  • Financial metrics improved, with net debt (excluding lease liabilities) fallen by 15 % to $2.4 billion, lowering leverage to 3.7 times from 4.4 times. 

Company Profile:

Ramsay Health Care Ltd (RHC) is a company that provides medical services. RHC has hospitals, day surgery centres, treatment facilities, rehabilitation centres, and psychiatric units all around the world. It has about 500 sites throughout Australia, the United Kingdom, France, Sweden, Norway, Denmark, Germany, Indonesia, Malaysia, Hong Kong, Italy, and the Nordic countries.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Technology Stocks

Whispir’s strong FY21 results seems positive for the stock

Investment Thesis

  • Sizeable market opportunity – in the U.S. alone WSP TAM is US$4.7bn (WSP North American target markets) vs total U.S. CPaaS TAM of US$98bn.
  • Established a solid foundation to build from – the Company has over 800 customers worldwide with leading brand names.  
  • Structural tailwinds – ongoing automation and digitization. 
  • Increasing direct sales penetration.
  • Attractive recurring revenue base via subscriptions. 
  • Investment in R&D to continue developing the Company’s competitive position and enhance value proposition with customers.   

Key Risks

We see the following key risks to our investment thesis:

  • Rising competitive pressures.
  • Growth disappoints the market, given the company trades on high valuation multiples – growth in subscriptions, new customers and penetration of existing clients. 
  • Product innovation stalls and fails to resonate with customers. 
  • Emergence of new competitors and technology.
  • Key channel partnerships breakdown.

FY21 key trading metrics 

  • FY21 ARR (annualized recurring revenue) was up +28.5% to $53.6m, driven by increased spending by installed customer base and addition of new customers. Recurring revenue is now at 96.7%.
  • Customer revenue retention was 115.9%, with management noting that whilst customers may initially engage for single communication solutions, once implemented with operational processes, management find that new applications / use cases across client’s organization. 
  • Over the year, WSP added 171 net new customers (up +27% YoY), bringing total customer numbers to 801. An attractive component of WSP’s solution is the Company’s “low code-no code” platform, which easily integrates with existing inhouse client IT systems and can be deployed within hours. This is one of our key competitive advantages.
  • New customer acquisition costs were down more than 50% due to higher sales efficiency and a growing proportion of digital direct sales (self-discovering the platform). 
  • LTV / CAC (ratio of lifetime value to customer acquisition costs) improved to 26.1x (from 23.7x). 
  • Gross revenue churn (3 month average) at Jun-21 was 2.4%.

Company Description  

Whispir Ltd (WSP), founded in 2001, is a global enterprise software-as-a-service (SasS) company. WSP provides a communications workflow platform that automates interactions between businesses and people. The Company has over 800 customers, operates in 60 countries and more than 200 staff globally. WSP operates in an emerging subset of the enterprise communications SaaS market known as Workflow Communications-as-a-Service (WCaaS). WSP currently solves two communication problems: (1) Operational Messaging – engaging with employees; and (2) External Messaging – engaging with customers. WSP operates in 3 key markets – Operational messaging (size $8bn), API messaging (size $32bn) and Marketing messages (size $66bn).

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ETFs ETFs

SPDR S&P/ASX200 Fund : A well diversified fund providing exposure to Australian market at low cost

Investment Objective:

The State Street SPDR S&P/ASX200 is the first ASX-listed ETF, launched in the year 2001.The SPDR S&P/ASX 200 Fund aims to closely match with the results of the S&P/ASX 200 Index before fees and expenses.

Investment strategy:

The fund aims to give exposure to core Australian stocks. The portfolio is well-diversified, covering approximately 90% of the Australian market in terms of capitalisation. The fund aims to provide both capital growth and income by investing in ASX-listed firms that are liquid. Herein, an investor can get diversified exposure to Australian share market at a low cost and yield performance of the 200 largest and most liquid publicly listed entities in Australia.

The entity responsible for the fund is State Street Global Advisors, Australia Services Limit.

Portfolio Objective:

  • Diversified exposure to Australian share.
  • Provides capital appreciation and growth if funds are invested over long term basis.
  • Provides adequate diversification to investors by investing in a single fund.

Fundamentals:

  • The size of the fund is $4.9bn and no. of holdings  in 203 shares of Australia.
  • The total market capitalization of the fund is AUD $2,196,388.80M as on 31/8/2021.
  •   Minimum subscription or redemption of 25,000 units is available to investor.
  • The fund provide an earnings growth of 10.66% and return on equity is 11.63%.
  • The equity (dividend) yield of the fund is 3.37% and its P/E ratio is 19.34.
  • Generally, the fund make distributions to investors on  quarterly basis.
  • The  management fee of the fund is 0.13%  p.a. of NAV.

Positives:

  • Diversification with low cost
  • Fast, flexible trading
  • Transparency

Negatives:

  • Failure to meet investment objective.
  • Exposure to various risk such as regulatory, credit, market, company,industry, derivative etc.
  • During the holding period the portfolio value may go up and down due to market volatility.

Company Profile:

State Street is a global asset manager and credited for creating the world’s first ETF and being an index pioneer.  Over the past forty years the company has built a universe of active and index strategies across asset classes to help investors achieve their goals.The company has $3.59 trillion asset under management, 23 million clients across 62 countries.

ETF Performance…

Figure 1: Fund performance as at 31 July 2021

(%)FundBenchmark
1-month+1.09%+1.10%
3-months+5.78%+5.80%
1-year+28.52%+28.56%
3-year (p.a.)+9.37%+9.48%
5-year (p.a.)+9.90%+10.05%
Since Inception (p.a.)+8.23%+8.54%

Source:State Street. 

ETF Positioning…

Figure 2: Top ten holdings

Source: State Street

   Figure3: Sector Allocation                       

     Source: State Street

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.