Appen Limited (APX):
The language data and search services provider issued a full-year earnings upgrade on May 17, saying its earnings before interest, tax, depreciation and amortisation for the year to December 31 would be 40-50 per cent above the 2016 full year, up from its previous guidance of mid-to high teen percentage growth. The significant upgrade led Bell Potter, Canaccord Genuity and Baillieu Holst to increase their 12-month price targets. The stock finished May up 38 per cent for the month at $3.65. The growth for the company, which counts nine of the top 10 global technology companies as customers, was driven by increasing spend from its largest customers, including Microsoft and Facebook, and new clients, as well as improved margins. Chris Savage, Bell Potter senior industries analyst, says a concentrated customer base was also one of the biggest risks for the company. To get its cost base under control, the company found cheaper freelancers to complete project work without compromising the quality of the data. Baillieu Holst equity research analyst Josh Kannourakis said society was approaching a tipping point for the use of voice to become a regular interface with technology, and Appen was well positioned to benefit from this.
Challenger Ltd (CGF): Challenger’s share price has more than doubled since David Murray’s financial system inquiry found in late 2014 that more risk pooling could significantly increase the retirement incomes generated from accumulated super balances. The market remains focused on its growth prospects, as demand for it score annuities product is propelled by a combination of demography and regulation. At its investor day last month Challenger said the government’s target commencement date for ’comprehensive income products for retiremen’ (CIPRs), a product supported by the government as it promises to sustain economic growth as the population ages, of mid-2018 is realistic and that it is well advanced in preparations to begin delivering these products, which will contain an annuity component. In the 2016 March quarter retail annuity sales grew by significantly more than this, up 53 per cent to almost $900 million, helped by new distribution agreements with local superannuation platforms and in Japan, where the market for Australian-dollar annuities is around seven times larger than the entire domestic market. Credit Suisse analyst Andrew Adams also expects growth from selling annuity products in Japan, where Challenger seven months ago announced a new relationship with Mitsui Sumitomo Primary Life Insurance Company, the largest provider of Australian-dollar annuities in Japan. The deal contributed $275 million to annuity sales in the most recent third-quarter. However, analysts not that the company is subject to macroeconomic risks such as credit risks and holds more risk assets like property, equities and infrastructure.
BWP Trust (BWP); Folkestone Limited (FLK): Fund manager Folkestone has extended its development at Altona North in Melbourne’s south-west through a deal with BWP Trust to develop a $70 million retail complex. Through the transaction, Folkestone acquires a 1-hectare site from BWP and has call options on another 2.4 hectares at the Millers Road development. The newly acquired land will be joined with 2.2 hectares already under Folkestone’s control to become the site for a retail complex to be anchored by a Woolworths. The new project will stand opposite Folkestone’s recently completed Millers Junction Home development, which includes a 16,885 square metre Bunnings, Officeworks and JB Hi-Fi Home. Folkestone has just struck its fourth agreement with Wilmac for business park developments. They have agreed to develop another 2.2 hectares of Folkestone’s land at Altona North into 76 office and warehouse mews with an end value of $28 million.
Simonds Group Ltd (SIO): Melbourne developer Frank Palazzo has increased his stake in Simonds Group to almost 5.2 per cent, saying the low price made the struggling builder a good opportunistic buy. Mr Palazzo bought another 2.4 million Simonds shares in the last week of May at an average price just under 30.1¢ to boost his total holding to 7.4 million shares, or 5.17 per cent, Simonds said on Friday. He claimed the volume builder was likely to increase in value: ‘‘You do your sums on those figures, multiply that by the prices of houses being sold and it looks – it might take a few years – but I think the value of the stock will be higher than what it is now at 31-34¢,’’. Mr Palazzo’s FJP is the second trade buyer to take a stake in the builder, which has only shed value since listing at $1.78 in November 2014. Newcastle based home builder MJH Group, which has amassed a 15.9 per cent stake, blocked a bid by founder Gary Simonds late last year to take the company private at 40¢ a share. While he regarded the stake as just one of numerous equity investments he has made over time in businesses, he said he might look to contemplate working with Simonds eventually. A public consultation process still needs to take place before approval is confirmed for the project with a reported value of $180 million.
(Source: AIMS)
The language data and search services provider issued a full-year earnings upgrade on May 17, saying its earnings before interest, tax, depreciation and amortisation for the year to December 31 would be 40-50 per cent above the 2016 full year, up from its previous guidance of mid-to high teen percentage growth. The significant upgrade led Bell Potter, Canaccord Genuity and Baillieu Holst to increase their 12-month price targets. The stock finished May up 38 per cent for the month at $3.65. The growth for the company, which counts nine of the top 10 global technology companies as customers, was driven by increasing spend from its largest customers, including Microsoft and Facebook, and new clients, as well as improved margins. Chris Savage, Bell Potter senior industries analyst, says a concentrated customer base was also one of the biggest risks for the company. To get its cost base under control, the company found cheaper freelancers to complete project work without compromising the quality of the data. Baillieu Holst equity research analyst Josh Kannourakis said society was approaching a tipping point for the use of voice to become a regular interface with technology, and Appen was well positioned to benefit from this.
Challenger Ltd (CGF): Challenger’s share price has more than doubled since David Murray’s financial system inquiry found in late 2014 that more risk pooling could significantly increase the retirement incomes generated from accumulated super balances. The market remains focused on its growth prospects, as demand for it score annuities product is propelled by a combination of demography and regulation. At its investor day last month Challenger said the government’s target commencement date for ’comprehensive income products for retiremen’ (CIPRs), a product supported by the government as it promises to sustain economic growth as the population ages, of mid-2018 is realistic and that it is well advanced in preparations to begin delivering these products, which will contain an annuity component. In the 2016 March quarter retail annuity sales grew by significantly more than this, up 53 per cent to almost $900 million, helped by new distribution agreements with local superannuation platforms and in Japan, where the market for Australian-dollar annuities is around seven times larger than the entire domestic market. Credit Suisse analyst Andrew Adams also expects growth from selling annuity products in Japan, where Challenger seven months ago announced a new relationship with Mitsui Sumitomo Primary Life Insurance Company, the largest provider of Australian-dollar annuities in Japan. The deal contributed $275 million to annuity sales in the most recent third-quarter. However, analysts not that the company is subject to macroeconomic risks such as credit risks and holds more risk assets like property, equities and infrastructure.
BWP Trust (BWP); Folkestone Limited (FLK): Fund manager Folkestone has extended its development at Altona North in Melbourne’s south-west through a deal with BWP Trust to develop a $70 million retail complex. Through the transaction, Folkestone acquires a 1-hectare site from BWP and has call options on another 2.4 hectares at the Millers Road development. The newly acquired land will be joined with 2.2 hectares already under Folkestone’s control to become the site for a retail complex to be anchored by a Woolworths. The new project will stand opposite Folkestone’s recently completed Millers Junction Home development, which includes a 16,885 square metre Bunnings, Officeworks and JB Hi-Fi Home. Folkestone has just struck its fourth agreement with Wilmac for business park developments. They have agreed to develop another 2.2 hectares of Folkestone’s land at Altona North into 76 office and warehouse mews with an end value of $28 million.
Simonds Group Ltd (SIO): Melbourne developer Frank Palazzo has increased his stake in Simonds Group to almost 5.2 per cent, saying the low price made the struggling builder a good opportunistic buy. Mr Palazzo bought another 2.4 million Simonds shares in the last week of May at an average price just under 30.1¢ to boost his total holding to 7.4 million shares, or 5.17 per cent, Simonds said on Friday. He claimed the volume builder was likely to increase in value: ‘‘You do your sums on those figures, multiply that by the prices of houses being sold and it looks – it might take a few years – but I think the value of the stock will be higher than what it is now at 31-34¢,’’. Mr Palazzo’s FJP is the second trade buyer to take a stake in the builder, which has only shed value since listing at $1.78 in November 2014. Newcastle based home builder MJH Group, which has amassed a 15.9 per cent stake, blocked a bid by founder Gary Simonds late last year to take the company private at 40¢ a share. While he regarded the stake as just one of numerous equity investments he has made over time in businesses, he said he might look to contemplate working with Simonds eventually. A public consultation process still needs to take place before approval is confirmed for the project with a reported value of $180 million.
(Source: AIMS)
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