Investment Research Updates

Company Updates: EVT, APX, CIA, ALQ, FPH, TNE, NUF, ELD, CDA

30/05/2022

Event Hospitality and Entertainment Ltd (EVT) revealed on Friday it had agreed to sell Rydges North Sydney for $75 million to High Street Holdings and a Singaporean entity. Proceeds from the sale will be used to pay down debt and fund further growth initiatives. The sale, which is expected to be completed on 24 July, now means that EVT has achieved its target to realise $250 million of divestments of non-core properties. EVT is in the process of selling Rydges Rotorua and may look to divest additional non-core assets. Shares finished Friday 2.08% higher at $14.75.

27/05/2022

Appen Limited (APX) announced it has received a non-binding, indicative proposal from Canadian IT company Telus International (operator of APX competitor Lionbridge) yesterday. The bid for 100% of APX shares valued the company at $9.5 per share, representing nearly a 48% premium to Wednesday’s closing price. The Indicative Proposal was subject to several conditions including completion of due diligence and financing arrangements. APX’s board has unanimously recommended the proposal and both parties initially entered into a mutually acceptable scheme implementation agreement. However, after Thursday’s market close it was revealed that Telus had walked away from the $1.2 billion takeover offer, with no explanation provided by either party. APX shares rose 29.22% to close at $8.27.

Champion Iron Limited (CIA) reported its FY22 results yesterday, reporting revenue of C$1.46 billion and net income of C$522 million, an increase of 14% and 13% respectively on the pcp. The stronger result was largely driven by a 14% increase in the net average realised iron-ore selling price received to C$190.9/dmt, despite production decreasing 1% during the period. CIA’s cash cost rose 8.6% higher to $58.9/dmt as a result of higher fuel prices and delayed haul cycle times. CIA shares finished the day 1.55% lower at $7.64.

26/05/2022

ALS Limited (ALQ) released its FY22 results yesterday, reporting revenue of $2,182.3 million, up 23.9% on the pcp and underlying NPAT of $264.2 million, up 42.1% and at the top end of guidance. ALQ’s Life Sciences segment performed well with EBIT of $194.8 million and margins of 16.9%, up 68 bps driven by strong volume, process automation and efficiency gains on invested capital. The commodities segment also performed strongly, with EBIT of $245.0 million and margins of 29.9%, up 230bps driven by strong sample volume and price improvement in Geochemistry. The Industrials segment underperformed due to border closures, with EBIT down 17.1% to $17 million. Price increases have allowed ALQ to offset some inflationary cost pressures, however management noted trading conditions remain volatile. ALQ shares rose 2.0% to close at $12.01.

Fisher & Paykel Healthcare Corp Limited (FPH) released its FY22 results yesterday, with revenue of NZ$1,681.7 million down 15% vs pcp and at the lower end of guidance announced in Mar’22. Fewer COVID-19 patient numbers acted as a headwind on hospital revenue, down 19% to $1,207 million. Revenue in Homecare grew modestly at just 1% on the back of competitor supply issues. Higher freight costs have remained post COVID-19 causing FPH’s gross margin to fall 147bps to 62.6%. At the end of the period, FPH was in a net cash position of $221.6 million. While management acknowledged ongoing short-term disruptions, their outlook remains positive and plans to invest $700 million over the next five years in facilities and land. FPH shares fell 3.9% to close at $19.90.

25/05/2022

TechnologyOne Limited (TNE) released its 1H22 results yesterday, with SaaS ARR up 44% to $225.1 million and Profit After Tax up 18% to $33.2 million, underpinned by continuing strong demand for the TechnologyOne global SaaS ERP solution. TNE’s SaaS and Continuing Business reported revenue of $169.5 million in 1H22, up 21% and representing 97% of the business revenues, a reflection of a huge shift from the legacy license business. TNE expect FY22 Net Profit Before Tax growth of 10-15% on FY21, with SaaS ARR expected to continue growing strongly, up more than 40% over the full year. TNE shares fell 1.6% to close at $10.24.

Nufarm Limited (NUF) announced yesterday that Sumitomo Chemical Company Limited have decided to sell its 15.9% shareholding in NUF. NUF and Sumitomo plan to continue their mutually beneficial business alliance that started more than 12 years ago. NUF have stated that the crop protection business is important to both companies and therefore the desire to continue to grow the commercial relationship and synergies in global agriculture markets remains a key objective. NUF shares fell 14.6% to close at $4.99.

24/05/2022

Elders Limited (ELD) released its 1H22 results yesterday, with sales revenue rising 38% vs the pcp to $1,514.8 million, EBIT rising 80% to $132.8 million and NPAT increasing by 34% to $91.2 million. All segments saw strong growth, with Rural Products leading the charge as sales increased by 47% to $312.9 million and Wholesale Product sales which increased by 27% to $46.7 million. Growth across the Rural Products business has been driven by strong demand for fertiliser and crop protection products following favourable seasonal conditions across key cropping regions. Full year underlying EBIT guidance has been upgraded 30% to 40% above the prior financial year. ELD shares rose 8.9% to close at $14.92.

Codan Limited (CDA) released an investor presentation and market update yesterday, with management expecting that the record 1H22 profit of $50 million will be matched in 2H22, resulting in a record FY22 profit. CDA’s strategy to diversify revenues and profitability continues to deliver results, with the increased profitability in the Communications division continuing in the second half of FY22. The DTC and Zetron business acquisitions integration and expanding opportunities pipelines are tracking ahead of schedule, while FY22’s revenue and profit for Minelab will be it’s second best year ever, with growth to come from continued penetration of new markets. CDA shares rose 14.5% to close at $7.73.

 

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