InvoCare is a provider of services in the funeral Industry. The company is engaged in operating funeral homes, cemeteries and crematoria in Australia, New Zealand and Singapore with smaller operations in Hong Kong and the United States.
InvoCare (IVC) reported CY18 operating earnings (EBITDA – Earnings Before Interest, Tax, Depreciation and Amortisation) of $103.1 million, which is broadly in line with forecasts of the major investment houses. A fully-franked final dividend of 19.5c per share was declared, taking payout for the year to 37.0c. Despite a lack of earnings guidance, the market reacted very positively to the result, given commentary that 1) despite needing some adjustments, the returns from the Protect & Grow capital expenditure program are running ahead of plan, 2) industry volumes are expected to rebound (considering our aging population), and 3) In order to fund its near-term growth profile, the company does not need to raise capital.
Afterpay Touch Group is Australia-based technology platform company. The company is focused on applying its technology to provide a retail payments outfit, that facilitates commerce between retail and end customers, offering a buy now, pay later service.
Afterpay’s traction in the US continues to grow at a rate of knots. They have added 500 new retailers since 1st Jan 19. The global appeal of afterpay continues to grow and the impending launch into the UK market only excites us more. Urban outfitters have signed on as an initial partner to launch into the UK market later this half. Afterpay in Australia and New Zealand have repeat customers now at 95% and the US repeat customers now at 61%. The company has cited $10m for further investment into the offshore push, especially in the US market to capture customers.
Tassal Group is engaged in hatching, farming, processing, sale and marketing of Atlantic salmon. The company is an integrated Salmon grower and Salmon and Seafood processor, seller and marketer. The company’s segments include Domestic market and Export Market.
Tassal reported $64.3 million in operating earnings. At least 10% ahead of major firms estimates for the period. An area of potential growth for Tassal is the move into prawns. Management at Tassal Group is guiding to salmon growth volume slowing to 3-4% in FY20 despite strong market dynamics, all the while ramping up the untested (for now) prawn business which has the potential to become a huge success for the company. Overall Tassals result was ahead of the major’s recommendations. 1st half 2019 operating EBITDA of $64.3 million was <13% ahead of the majors’ forecasts and cashflow was also well ahead.
Lendlease Group is an integrated property and infrastructure company. Its segments include Property Development, Infrastructure Development, Construction and Investment Management. Lendlease reported a first-half net profit of $16 million. A modest unfranked distribution of 12c per security was declared, which was in line with the majors forecast. Lendlease has recently announced it has decided to exit its underperforming engineering and services business, which will see it reclassified as non-core. The company will book a $450–550 million restructure cost to downsize the platform and structurally separate it from the rest of the business. The potential sale of the business, is now part of the potential scenarios being considered. The sale of the business could potentially preserve $400–500 million of shareholder value.
The major investment houses have increased their earnings estimates for FY19 and FY20 to reflect the engineering and services business being reclassified as a discontinued operation. Lendlease Group is trading well below the valuations of the majors. Lendlease is in a sound capital position and the 2nd half of 2019 should see the business degear materially, especially if the second portion of the Barangaroo Towers transacts.
G8 Education Ltd provides developmental and educational child care services. The company’s main activities include the operation of early education centres and the ownership of early education franchises. G8 Education Limited reported $136.3m – just within guidance range being $136-$139m. Looking forward into 2019 financial year, while GEM is repeating similar positive industry vibes, it is once again revisions to growth investment and higher costs that continue to surprise us. Due to occupancy trends constantly improving and supply appears to be moderating. Self-help initiatives are also starting to gain traction. we like GEM for one of our top 5 picks for April.