Tag: Recommendations

Categories
Shares Small Cap

Super Retail’s attractive loyalty program with 8 million member

Shot of elegant smart businesswoman explaining a project to his colleagues with statistics on the computer on coworking place.

Investment Thesis

  • Trading below our valuation and on attractive trading multiples and dividend yield. 
  • Strong tailwinds/fundamentals in SUL’s four core segment. For instance, sales for vehicle aftermarket continue to remain strong (with increase in secondhand vehicle sales (Supercheap); travelers seeking social distancing and hencemoving away from public transport (Supercheap); with Covid lockdown measures in forced, more people are spending their holidays domestically (BCF; macpac), utilising their vehicles (Supercheap); growing awareness of fit and healthy lifestyles (rebel). 
  • Solid capital position. 
  • Strong brands in BCF, macppac, rebel and Supercheap with solid industry positions in largely oligopolies and solid store network. 
  • Transitioning to an omni-channel business. Whilst previously the business has been modeled on like-to-like store numbers, management now thinks of business metrics based on club members and has been able to grow the active club membership much faster than store numbers (store numbers in last 5 years have grown +2% CAGR vs active club members at +10% CAGR), providing it with an opportunity to expand customer base and therefore revenue base without significant capex for investment in stores (most of the customers are omni channel). 
  • Management continues to push towards expanding its online sales (Covid-19 added to this tailwind), with online sales penetration of ~13-15% of total sales currently and expected to reach 20-25% over the next 5 years. 
  • Attractive loyalty members program, with over 8 million members.

Key Risks

  • Rising competitive pressures.des 
  • Any issues with supply chain,especially as a result of the impact of Covid-19 on logistics which affects earnings. 
  • Rising cost pressures eroding margins (e.g. more brand or marketing investment required due to competitive pressures). 
  • Disappointing earnings update or failing to achieve growth rates expected by the market could see the stock price significantly re-rate lower.

FY21 Results Highlights

  • Total Group sales of $3.45bn, up +22% (Group like-for-like sales growth of +23%).Online sales of $415.6m, up +43% and nowaccounts for ~12% of total sales. On the impact of Covid -19 lockdowns, management noted its “omni-retail capability enabled it to pivot to online channels to meet consumer demand through both Click & Collect and home delivery”.
  • Segment EBIT of $476.8m was up +80%. 
  • Segment normalised PBT of $435.8m, up +108%.
  • Normalised NPAT up +107% to $306.8m. Basic EPS up +139% to 133.4cps.
  • The Board declared a fully franked final dividend of 55.0cps, bringing the full year dividend to 88.0cps, significantly higher than 19.5cps in FY20. Dividend equates to 65%, which is in line with SUL’s 65% payout ratio policy.
  • Management guided capex in FY22 of $125m to fund expanded store development and investment in omni and digital capability.

Company Profile 

Super Retail Group (SUL) is one of Australasia’s Top 10 retailers. SUL comprises four core segments. (1) BCF: Australia’s largest outdoor retailer focused on selling Boating, Camping and Fishing products. (2) macpac: retailer of apparel and equipment with their own designs focused on outdoor adventurers. (3) rebel: retailer of branded sporting and leisure goods and equipment for casual and serious fitness enthusiast. (4) Supercheap Auto: specialty retail business which specialises in automotive parts and accessories. 

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
LICs LICs

Metrics Income Seeks to Raise up to $152m through Institutional Placement and Unit Purchase Plan

Currently, their Annual Yield is 6.98 percent and their dividend amount is 0.009. Metrics Income’s P/E Ratio is 13.8 percent. 

Metrics Income Opportunities Trust’s Revenue is 30.70 million till June 2021. Their last traded price is $2.05. The trust targets a cash yield of 7 percent p.a. which is intended to be paid monthly with a total target return of 8 percent p.a to 10 percent p.a in each case net of fees and expenses.

Their Net Asset Value is $407,156,629. Metrics Income Opportunities Trust ((MOT)) announced on August 26, 2021, that they intend to raise $52.86 million by issuing 26.04 million new fully paid ordinary MOT units to wholesale investors at a price of $2.03 per unit. 

Furthermore, the Trust announced a Unit Purchase Plan (UPP) for existing eligible unit holders to purchase up to $30,000 in new units at a price of $2.03. The Trust hopes to raise up to $100 million through the UPP. Excessive applications may be scaled back on a pro rata basis. The UPP is set to open on September 6, 2021, and close on September 30, 2021.

The offer price of $2.03 corresponds to the NAV at the time of the announcement, with the UPP allowing unit holders to acquire units at a 1.9 percent discount to the unit price at the close of the trading day preceding the announcement (25 August 2021).

The proceeds from the institutional placement and the UPP will be invested in accordance with MOT’s investment mandate and target return.

Company Profile 

Metrics Income Opportunities Trust seeks to provide investors exposure to a portfolio of private credit investments. The Investment Objective of the Trust is to provide monthly cash income, preserve investor capital and manage investment risks, while seeking to provide potential for upside gains through investments in private credit and other assets such as Warrants, Options, Preference Shares and Equity.

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
LICs LICs

Sandon Capital Declares Special Dividend and Further Aligns Interest with Shareholders

Market Capitalisation of Sandon Capital Investments Limited $111.99 Million. Their last trade was 1.01 on 22nd September 2021.

Net profit is 37.3 Million. Their Annual Revenue is 56.5 Million. 

Sandon Capital Investments Limited (SCN) has declared a fully franked special dividend of 1cps in addition to the full franked FY21 final dividend of 2.75cps. 

The Board anticipates paying an interim FY22 dividend of 2.75cps, fully franked, subject to the Company having sufficient profit reserves, franking credits and it is within prudent business practices. 

This would represent a 10% increase on the FY21 interim dividend. SNC currently has 32.1cps in profits reserves and more than 9cps in franking credits.

In addition to this, the Manager announced that from FY22 onwards, the Manager intends to invest at least 50% of the after-tax proceeds of performance fees earned from SNC in SNC shares. 

Shares will be purchased on-market and will be acquired after the payment of the relevant performance fee where SNC’s share price is trading at a discount to its after-tax NTA. 

The Manager and entities associated with its directors and shareholders currently have in excess of $7.3m invested in funds managed by Sandon Capital Pty Ltd, including 2.1m SNC shares.

Company Profile 

Sandon Capital Investments Limited is an investment company. The Company is engaged in investing activities, including tangible assets, marketable securities or cash. The Company will seek to invest in securities, which Sandon Capital Pty Ltd (the Manager) considers to be under-valued and where the Manager considers there to be opportunity to encourage changes to unlock what the Manager has identified as intrinsic value. The Manager may also invest, from time to time, in market-based investment opportunities, such as placements, merger arbitrage and other investments it considers appropriate. Sandon Capital Pty Ltd is the investment manager of the Company.

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

Janus Henderson Tactical Income Fund: An absolute return fund aiming to outperform benchmark

Two young women talking together with a tablet in the living room. They sit spaced apart to prevent the virus.

that makes tactical asset allocation decisions between cash, duration, and higher yielding investments to produce returns in both rising and sliding bond yield environments.. The strategy aims to outperform the Benchmark in terms of net total return over rolling three-year periods by investing primarily in Australian fixed income securities.

Investment Philosophy + Process:

The Manager believes that taking a flexible approach to asset allocation allows the team to better manage fixed interest exposure and enhance returns depending on market.

The Fund’s investment and portfolio construction process consists of:

Stage 1: Strategy Formulation: The team ranks the active duration and credit positions of their core Australian Fixed Interest Income strategy. 

Stage 2: Risk Calibration: Determine asset allocation using the ranking. 

Stage 3: Implementation: Invest in range of cash, fixed interest and higher yielding securities, based on investments decisions from the following:

  • Interest rates: (holding longer duration securities versus shorter-dated paper).
  • Sectors:  (government securities versus non-government given the risk premium).
  • Securities: (given the underlying risk/reward, select appropriate non-government securities). 

Portfolio Characteristics:

Portfolio Characteristics                              Details
Benchmark50% Bloomberg Composite 0 + 50% Bloomberg Bank Bill
Alpa target p.a.n.m (pree –fees)1.0%
Minimum suggested time frame3 years
Alpha source30% Rates + 30% Sector / Security selection + 40% Asset Allocation
Minimum weighted average credit qualityBBB

(Source: Janus Henderson)

Investment team:

The Janus Henderson Australian fixed interest team, headed by Jay Sivapalan, is highly experienced and well resourced. 

The environmental, social, and governance (ESG) factors are factored into the credit decision-making process. The Manager adheres to the “quality before price” attitude, and hence considers ESG factors to be critical in their four-pillar bottom-up credit analysis. The four pillars are as follows:

  • Competitive Advantage and Industry Dynamics 
  • Financial Risk 
  • Management Profile 
  • ESG Risk

Asset and sector allocation:

C:\Users\Akhila\Downloads\TODAY 2.png

(Source: Janus Henders)

 Fund Performance(as of august2021:net) and current positioning:

PercentageFundBenchmarkOutperformance
1-month-0.09%0.05%-0.14%
3-month0.15%1.28%-1.13%
6-month0.74%2.11%-1.37%
1-year1.28%0.56%+0.72%
3-year (p.a.)2.60%2.68%-0.08%
5-year (p.a.)2.60%2.28%+0.32%
Inception4.72%3.93%+0.79%


(Source: Janus Henderson)

Credit Process:

C:\Users\Akhila\Downloads\credit process.png

(Source: Janus Henderson)

Downside Risks:

  • Investment strategy selection fails to yield alpha.
  • Lead PM departsor significant turnover in the broader investment team
  • Manager fails to make the right duration (short or long) call over an extended period of time. 
  • Credit and interest rate risk

Company Profile:

Janus Henderson is a worldwide asset management company with over 340 investment experts who specialise in all major asset types. Its individual, intermediary, and institutional clients come from all over the world and entrust it with over $500 billion in assets. Over the course of market cycles, Janus Henderson’s commitment to active management allows customers to outperform passive strategies. Its managers use their skills to analyse risk vs reward potential in times of both market calm and growing uncertainty, ensuring customers are on the right side of change.

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

VanEck Australian Property ETF: A sound choice for diversified exposure to Australian REITs

The process sets its universe by screening ASX-listed stocks with a market cap greater than USD 150 million. International companies incorporated outside of Australia are considered as well, provided they generate 50% of their revenue in Australia or have 50% of their total assets in Australia. For existing holdings, the market-cap limit is set at $75 million and the revenue threshold for offshore companies is established at 25%. To meet liquidity requirements, stocks must also have had at least USD 1 million daily trading average over three months and at least 250,000 shares traded per month. Stocks, which make up the top 90% of the investable universe, are equally weighted and capped at 10% at the time of quarterly rebalancing. VanEck has a deep global presence and uses robust daily portfolio monitoring systems and multi-levelled risk management to ensure trading is efficient and compliant. 

Portfolio

The ETF mirrors the composition of the MVIS Australian A-REIT Index. The index consisted of 15 names as of July 2021. The portfolio holds a minimum of 10 stocks and excludes the smaller end of the cap spectrum, while mid-cap exposure is beefed up. Stocks that meet size and liquidity requirements are weighted by their free-float market capitalisation subject to a 10% weighting cap. While about a third held in the portfolio is directly invested in retail A-REITs, it has almost half of the allocation to diversified REITs. Sector exposures are significantly more consistent through time. A-REIT Index owing to limited stock changes in the top of the ASX/200 and the stock exposure limit of 10%. The portfolio is rebalanced every quarter; because of its exposure cap, turnover is typically 20%-40% .

Sub- Industry Weightage
Diversified REITS46.20%
Retail REITS28.00%
Office REITS11.90%
Industrial REITS10.70%
Specialized REITS3.20%
Other/Cash0.00%

                                                Source: MVA-Factsheet

Performance

MVA has closely matched the broader A-REIT market return while delivering standout performance against the category average from its inception through 31 July 2021. The ETF has annually outperformed the category average by 1.4% or 21% on a cumulative basis since inception. 

C:\Users\Akhila\Downloads\performance.png

                Source: MVA-fact-sheet

Fundamentals

No. of securities15
Price/Earnings Ratio*10.66
Price/Book Value Ratio*1.12
Dividend Yield4.26
Weighted Avg. Market Cap (M)$12,362.00 

                                                  Source: MVA-fact-sheet

People

The VanEck investment team is headed by Russel Chesler with Jamie Hannah as his deputy. Chesler is an industry veteran with over 25 years of experience across Sunstone Partners, Perpetual Limited, and Liberty Life. Hannah joined VanEck in 2014 from Source ETF where he was a part of the investment management team. The duo is supported well by two senior associates: Cameron McCormack and Alice Shen.

Price 

The Net Asset Value of the fund (NAV) is $24.88 as on 31 August 2021 while the management cost is 0.35% p.a.n.m.

Top 10 Holdings of VanEck Australian Property ETF

C:\Users\Akhila\Downloads\Top HOLDINGS.png

Source: MVA-fact-sheet

About the fund

The VanEck Australian Property ETF incorporated on 14/10/2013 which  invests in a diversified portfolio of ASX-listed securities with the aim of providing investment returns (before management costs) that closely track the returns of the MVIS Australia A-REITs Index.

The MVIS Australia A-REITs Index is a pure-play Australian sector index that aims to reflect the performance of Australia’s property sector.

The shares outstanding is 23,955,918 and the dividend is paid two times each in a year.

Individual Index components are chosen based on a strict rules-based system that prioritises liquidity, with a minimum of 10 holdings and a maximum weighting of 10% for each. . The underlying index sets itself apart from market-cap-weighted benchmarks with its sensible portfolio size that covers 

 (Source: Morningstar)

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

Wisetech FVE Significantly Increased Following Evidence of Strategy

Business Strategy and Outlook

WiseTech Global was founded in 1994 as a software provider to the Australian logistics sector and has since grown organically to become a leading global provider of logistics software as a service, or SaaS. The company has over 6,000 customers, including 19 of the 20 largest third-party global logistics providers, and a customer retention rate of over 99%. WiseTech’s business model generates revenue based on the extent to which customers use its software rather than a traditional subscription model, which usually offers unlimited use within a set time frame. Despite strong revenue growth, WiseTech still comprises less than 5% of the global logistics software market, much of which is created in-house by logistics companies. 

Although WiseTech lacks the scale of much larger enterprise resource planning, or ERP, software providers such as SAP and Oracle, the company’s niche focus and innovative culture have enabled it to outmanoeuvre larger peers. Descartes increased revenue at a CAGR of 14% over the five years to fiscal 2021 we forecast a CAGR of 14% over the next decade. WiseTech’s cloud-based platform is being adopted by logistics companies as a replacement for legacy and in-house developed systems, and we attribute client wins to the superior functionality and usability of the software and proven global SaaS platform.

Financial Strength

WiseTech is in good financial health thanks to its capital-light business model, highly recurring earnings, and narrow economic moat. The company is effectively equity-funded with no debt. Founder and CEO Richard White to remain reluctant to undertake large acquisitions and leverage the balance sheet. However, it’s not uncommon for technology companies to forgo short term profitability for long-term strategic benefits, and we are comfortable with management’s long-term focus.

WiseTech in a much more bullish light and have dramatically raised our earnings forecasts and fair value estimate to AUD 60.00 from AUD 9.00 per share. Our forecast revenue CAGR over the next decade, to 19% from 12% and our terminal EBIT margin to 37% from 32%, both of which add around AUD 14 to the fair value, or 28% of the total fair value increase. WiseTech’s cost of equity to 7.5% from 9.0% and increased the terminal growth rate to 4.9% from 2.2%, both of which add AUD 11 to our fair value or 22% of the total fair value increase.

WiseTech’s fair value increase is largely due to a higher terminal value, as 83% of our prior fair value was attributable to the terminal value. The terminal value increase is driven by the following four factors which have approximately equal impacts. The strong fiscal 2021 result, improved disclosure, and better than expected fiscal 2022 outlook, which increase our confidence in WiseTech’s global expansion strategy.

Bulls Say’s

  • WiseTech has a narrow economic moat based on customer switching costs, as evidenced by a very high customer retention rate of over 99% for the past four years.
  • WiseTech’s revenue is expected to continue growing strongly over the next decade as its logistics software platform replaces in-house and legacy software solutions. A high degree of operating leverage should create even stronger EPS growth.
  • The capital-light business model should enable the balance sheet to remain debt-free, with operating cash flow covering research and development spending and dividend payments.

Company Profile 

WiseTech is a leading global provider of logistics software, and 19 of the largest 20 third-party logistics companies are customers of the firm. The company has a very strong customer retention rate of over 99% per year, and is growing quickly as its global SaaS platform replaces legacy software. The company reinvests around 30% of revenue into research and development, but around 50% of this cost is capitalised, leading to poor cash conversion. Founder Richard White remains CEO and the largest shareholder.

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
Dividend Stocks

Treasury Wines reported solid earnings in spite of challenges faced during the year

Investment Thesis

  • China’s investigation outcomes are better than expected.
  • There is a significant opportunity to expand its Asian business (reallocation opportunities).
  • Premiumization and good cost control provide opportunities for group margin expansion.
  • The recovery in America’s business could result in significantly higher margins.
  • Currency movements in favour (due to a falling AUD/USD).
  • Additional capital-management initiatives.

Key Risks

  • Further deterioration (or worst than expected) outcome from china tariff / investigation.
  • United States turnaround disappoints.
  • Consumptions of wine decreases in the key market.
  • Unfavorable condition in demand and supply of wine’s global market.
  • Increase competition in key market.
  • Currency fluctuations that are unfavorable (negative translation effect).
  • Changes in Chinese policy and/or demand have an impact on volume growth.

FY21 Results Highlights

  • EBITS of $510.3 Million, was in line with the pcp, on EBITS margin 0.6ppts higher to 19.9%. On an organic basis, EBITS was up +3%, reflecting top-line growth driven by $10-30 Premium portfolio and improved CODB, partially offset by ongoing impacts from the pandemic, significantly reduced shipments to Mainland China (due to import duties) and higher COGS on Australian sourced wine.
  • Strong operating cash flow reflects a lower Californian vintage intake and adjusted Australian vintage, in addition to shift in regional sales mix in Asia. Cash conversion of 100.8% (or 96.9% excluding the changes in non-current luxury and premium inventory) was in line with TWE’s target of 90% or above.
  • Net debt declined $376.5m to $1,057.7m as a net debt to EBITDAS of 1.6x improved from 2.1x at year end. TWE has total available liquidity of $1.2billion at year ended versus $1.4billion at FY20 end.
  • Return on Capital Employed improves 0.6ppts to 10.8%.
  • The board declared a final dividend of 13.0cps, up and resulted in the full year dividend of 28.0cps (equating to payout of 65% of NPAT, consistent with TWE’s long term dividend policy). 

Company Profile 

Treasury Wine Estates (TWE) is one of the world’s largest wine companies listed on the ASX. As a vertically integrated business, TWE is focused on three key activities: grape growing and sourcing, winemaking and brand-led marketing. Grape Growing & Sourcing – TWE access quality grapes from a range of sources including company-owned and leased vineyards, grower vineyards and the bulk wine market. Winemaking – in Australia, TWE’s winemaking and packaging facilities are primarily located in South Australia, NSW and Victoria. The Company also has facilities in NZ and the US.  Brand-led Marketing – TWE builds their brands through marketing and distributes its products across the world.

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

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
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
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.