Pendal Group – Valuation Review

Posted on | by Leon Hinde

Pendal Group is under Algo Engine buy conditions and is a recent addition to our ASX 100 model portfolio.

The current 13x forward earnings multiple offers a discounted entry level.

FY20 revenue is set to increase by 10% to $550mn, EBIT +10% to $230mn, DPS increases by 10% to $0.50, placing the stock on an attractive 6.6% yield.

We are not applying a high conviction call to PDL, due to structural challenges facing the business, however, we highlight that the current share price reflects a more bearish scenario, than what is likely to playout over the next 1 – 2 years.

 

 

CIMIC – Valuation Review

Posted on | by Leon Hinde

Cimic Group is under Algo Engine sell conditions and with the group reporting 1H19 earnings later this month, we will be looking closely at the underlying growth trends.

We expect guidance to be at the top end of the $800-$840mn range, with mining related income to be strong, and construction to be flat.

CIM’s exposure to resources and infrastructure growth should lead to FY20 Revenue of $19bn, EBIT $1.3bn and underlying profit growth of 5%+.

CIM trades on a 3.8% forward yield, based on FY20 DPS growth from $1.65 to $1.75.

 

 

 

Crown Resorts – up 10%

Posted on | by Leon Hinde

Crown Resorts has been a high conviction buy expressed on the blog. The share price made a low at $11.69 and is now trading at $12.80.

Following Melco Resorts (NASDAQ listed) buying 50% of James Packer’s holding in Crown at $13 per share, we see scope for increased VIP flow from Melco’s large high roller customer base.

Whilst there is scope for Melco to make a full takeover of Crown, it is not our base assumption. We suggest investors hold Crown for the 4.5% yield and for those seeking greater cash flow, selling an out of the money covered call option will boost the annualised cash flow to 10% plus.

 

 

Scentre Group – Algo Update

Posted on | by Leon Hinde

Scentre is under Algo Engine buy conditions and  a name we’ve recently drawn our readers attention to, as a buy write.

The share price has since rallied from $3.80 to $4.08. We still  see scope for gains from a buy write strategy, which captures the upcoming dividend .

SCG goes ex div $0.11 on the 14th of August.

Low global bond yields and the  announced share buy back by SCG, will help underpin downside risks.

Boral, CIMIC & Downer EDI

Posted on | by Leon Hinde

$280 billion in announced public infrastructure projects by 2020 in Australia, will help support growth for Boral, Downer EDI and CIMIC.

Boral & CIMIC are showing  Algo Engine sell signals, whereas, DOW is under a a recent Algo Engine buy signal.

All three names are attractive on a fundamental basis, however, the deep discount in Boral makes it our preferred allocation.

 

 

 

Altium – algo update

Posted on | by Leon Hinde

Altium switched from sell to buy conditions in July 2018 at $21 and more recently we had an Algo Engine buy condition again in May at $31.00.

ALU is a strong momentum play and the stock is now up 10% in the past 4 weeks. We continue to hold ALU and will look to take profit once the short-term indicators turn negative.

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Scentre Group – Buy to generate 10% cash flow

Posted on | by Leon Hinde

Scentre Group announced an on-market buy-back of outstanding shares, the Company intends to complete the buyback within 12 months. The buy-back will add incremental support to our suggested buy-write strategy.

We recommend buying Scentre and selling covered call options. The stock goes ex-div $0.11 on the 14th of August.

Selling a Sept out of the money call will generate an additional $0.12 per share of income.