A Look At Five Consumer Discretionary Stocks – BET, JAY, MFD, RFG, SIT

Consumer Discretionary products comprise of those goods and services that are certainly avoided by a consumer in the phase of economic downturn. A consumer is more likely to avoid spending on these goods when he has to cut down his expenditure. As the consumer discretionary stocks move in the direction of the economy, investors are more likely to ascertain the fluctuations in these stocks through the state of the economy.

Recognizing the importance of consumer discretionary stocks, let us discuss few consumer discretionary stocks that are listed on the Australian Stock Exchange (ASX):

BetMakers Technology Group Limited

Western Australia-headquartered, BetMakers Technology Group Limited (ASX: BET) is a world’s leading supplier of Analytics, Racing Data and Trading Solutions. The company offers plug-in widget solutions and full white-label platforms that slot flawlessly into the current sportsbook via iFrame or javascript code.

Source: Company’s Presentation (10th May 2019)

Operational Performance

In July this year, the company signed a deal with Racing Victoria that involved the use of a BetMakers’ new technology – Barrier Tech – for providing information and real-time data on horses loading into barriers prior to races. The sophisticated technology product was customised by Racing Victoria and BetMakers over several months to launch the technology ahead of Spring Racing Carnival.

Financial Performance

Recently, BetMakers released its quarterly report for the quarter ending 30th June 2019. The company reported a positive normalized EBITDA for the quarter and updated its guidance for FY20. The company now expects its revenue to be at AUD 10 million and EBITDA to be between AUD 3.4 million and AUD 3.7 million in FY20.

During the quarter, the company spent AUD 545k on operating activities and AUD 3.40 million on investing activities. The company received AUD 4.06 million from the financing activities during the period. The cash balance at the end of the quarter amounted to AUD 453k, with the company expecting AUD 1.8 million cash outflows for the next quarter.

Stock Performance

On 19th August 2019, BET closed the trading session lower on the ASX at AUD 0.069, down by 10.39 per cent relative to the last closed price of AUD 0.077. With ~187k shares of the company in rotation, the market cap of the stock stands at AUD 31.84 million. The stock has delivered a return of 65.70 per cent on a YTD basis and a return of 130.14 per cent during the last six months.

Jayride Group Limited

A leading global airport transfers marketplace across the world, Jayride Group Limited (ASX: JAY) creates flawless experiences for travellers by permitting them to book and compare airport transfers throughout the world. Travellers can book and compare with more than 3.3k transport companies with Jayride.com, servicing over 1.5k airports across the world.

Operational Performance

On 16th August 2019, the company notified about the approval of $150,000 worth Export Market Development Grant and $959,000 worth R&D tax incentive. The company informed that R&D tax incentive for the FY19 has been approved by AusIndustry and filed with the ATO. The company expects to receive the funds from the ATO within 30 days.

Financial Performance

In its Quarterly Report for the quarter ended 30 June 2019, the company mentioned that its Net Operating Cash Outflows has improved by 49 per cent to AUD 0.9 million in Q4 FY19 from AUD 1.8 million in Q3. The company Cash Receipts from Customers in the June quarter also increased by 93 per cent to AUD 1.3 million from AUD 0.7 million in Q3.

Source: Company’s Report (25th July 2019)

The company witnessed a rise of 63 per cent year on year in its Net Revenues from Passenger Trips to AUD 1 million and an increase of 93 per cent year on year in its Gross Profit post Paid Acquisition from Trips to AUD 0.5 million in Q4 FY19.

Stock Performance

JAY last traded on the ASX at AUD 0.395 on 12th August 2019 with a fall of 1.25 per cent. The stock has generated a return of 5.33 per cent, 31.67 per cent and 21.54 per cent during the last six months, three months and one month, respectively.

Mayfield Childcare Limited

Mayfield Childcare Limited (ASX: MFD) operates and owns twenty-one long day care childcare centres situated in and around Melbourne. The company offers quality care and education services to more than 3,000 Victorian families. The company aims to surpass the National Quality Standard ratings by improving the quality of service delivered at each of its centres.

Operational Performance

The company released its half-year report for the period ending 30 June 2019 on 2nd August 2019. The company highlighted that its occupancy was 0.3 per cent up on pcp during the CY19 first half, along with a slow April and a small number of underperforming centres, now addressed, affecting the Group average. The weekly revenues of the company continued to strengthen on the back of favourable occupancy and occupancy mix, along with higher fee levels. The company also witnessed an improvement in operating margins that reflect tighter control of wages, rostering and staffing mix.

Financial Performance

During the first half of Calendar Year 2019, the company observed a 13.6 per cent rise in revenue from continuing operations to $15.9 million. It delivered a Reported NPAT of $0.9 million, which was 36.1 per cent down on pcp. The company expects to deliver revenue of ~$34.0 million and Group EBIT between $5.8 million and $6.2 million in CY 2019.

Stock Performance

MFD ended the trade flat on the ASX at AUD 0.980 on 19th August 2019, with 10k shares in rotation. The stock’s market cap was recorded at AUD 31.2 million. MFD has delivered a return of 8.89 per cent on a YTD basis.

Retail Food Group Limited

The Australian-headquartered food and beverage company, Retail Food Group Limited (ASX: RFG) is the biggest multi-brand retail food franchise proprietor of Australia that supplies high-quality coffee products. The company is also a developing leader in the wholesale bakery, dairy processing and foodservice sectors.

Operational Performance

In April this year, the company notified that the negotiations with the potential buyer regarding the potential sale of its QSR and Donut King divisions have ended. The company mentioned that the formal binding agreement was not signed as it was not in the best interests of the company as a whole.

Financial Performance

The company released its half-year results for the financial year 2019 in February this year. It reported an Underlying NPAT of $6.6 million for the period, against $24.7 million recorded in pcp. The company also announced a statutory net loss after tax for the six months to 31 December 2018 of $111.1 million, relative to $87.8 million statutory net loss after tax in pcp.

Stock Performance

On 19th August 2019, RFG closed the trading session higher at AUD 0.175, with a rise of 2.94 per cent relative to the last closed price. With ~198k number of company’s shares in rotation, the market cap of the stock stood at AUD 31.07 million. The stock has generated a negative return of 42.37 per cent on a YTD basis.

Site Group International Limited

An emerging Australian-headquartered company, Site Group International Limited (ASX: SIT) operates several businesses that are specialised in the delivery of labour, training and education services. These services are offered to corporate, individual and government clients, particularly working in construction, energy, oil and gas, industrial and mining sectors.

Operational Performance

In its recently published quarterly report for the June 2019 quarter, the company notified that it has remained in dispute with ASQA (Australian Skills Quality Authority) in the Federal Court and the Administrative Appeals Tribunal (AAT) with the pending ACCC litigation. The company expects these actions to continue for some time, possibly into the 2nd half of 2020.

Financial Performance

On 17th August 2019, the directors of the company have informed about a further placement of $750,000 at 4 cps with Armada Trading Pty Ltd. The Placement brought Armada Trading’s total investment in Site to $2 million with 50 million shares issued.

For the 12 months ending June 2019 quarter, the company reported an unaudited EBITDA loss of AUD 3.0 million and revenues of AUD 30.9 million. Throughout the June 2019 quarter, AUD 888k was spent on operating activities and AUD 238k on investing activities. The company received AUD 979k from financing activities and its cash and cash equivalents at the end of quarter valued at AUD 606k. The company has estimated cash outflows amounting to AUD 7.92 million for the next quarter.

Stock Performance

SIT ended the trading session flat at AUD 0.045 with ~457k number of shares in rotation on 19th August 2019. The stock’s market capitalisation was noted at AUD 34.44 million at the time of writing the report. SIT’s 52-week high and low value was recorded at AUD 0.046 and AUD 0.017, respectively. The stock has provided an enormous return of 164.71 per cent during the last six months.


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