Stocks from Consumer Discretionary space- RDC, GUD, BGP

On 19 August 2019, the S&P/ASX 200 Consumer Discretionary (Sector) Index closed higher on ASX at 2,481.7, adding 32.8 points through an increase of 1.32%, while the benchmark index S&P/ASX 200 last traded at 6,467.4, up by 1% (as on 19 Aug 2019). Let’s look through the financial performance of the following three Australian Consumer Discretionary companies being – Redcape Hotel Group, G.U.D. Holdings Limited and Briscoe Group Limited, all with market capitalisations of over AUD 500 million.

Redcape Hotel Group

Australia-based Redcape Hotel Group (ASX: RDC) owns and operates hotels and motels and offers a range of services including food and beverage, gaming, accommodation, events, and meetings. The Group’s asset portfolio comprises a total of 32 quality hotels, including 31 on freehold and one on leasehold) located across Queensland and New South Wales. The Group has a market capitalisation of around AUD 603.83 million with ~ 551.45 million shares outstanding. On 19 August 2019, the RDC stock price settled the day’s trading at AUD 1.08, down 1.37% by AUD 0.015 with ~ 226,975 shares traded. In addition, the RDC stock has generated positive returns of 7.88% YTD and 6.83% in the last six months.

New senior debt facility On the same day, Redcape Hotel Group Management Ltd, as responsible entity of the Redcape Hotel Group announced that it had secured a new senior debt facility of $503 million to replace its existing facility (scheduled to expire in September 2020). Redcape CEO, Dan Brady commented on the development stating that the company had expanded its lender group introducing National Australia Bank Limited (ASX: NAB) to its lender pool alongside existing financiers -Australian and New Zealand Banking Group Limited (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC).

The new senior debt facility provided by the four major banks is split into two tranches expiring in September 2022 ($ 250 million) and September 2024 ($ 253 million). This structure extends Redcape’s weighted average debt tenure to four years.

Acquisition of The Pig ‘N’ Whistle On 1 August 2019, Redcape Hotel Group Management informed the stakeholders that contracts had been signed for the acquisition of Pig ‘N’ Whistle Hotel in Redbank Plains Queensland for a total purchase price of $ 11.5 million, before transaction costs. The transaction costs would be funded from the Group’s existing debt facility and would take the assets within Redcape’s portfolio to 33, enhancing the Group’s exposure to the strong projected growth for the high-growth LGA of Ipswich, Queensland.

Quarterly Dividend On 24 June 2019, the Board of Redcape Hotel Group declared  a dividend of AUD 0.02181507 on fully paid units stapled securities for the quarter ended 30 June 2019 (Record Date: 28 June 2019; Payment Date: 30 August 2019).

First half FY19 Results The Group disclosed its financial results for the six months to 31 December 2018, posting Operating EBITDA of $ 32.4 million, reflecting 13.8% increase on 1H18, primarily driven by acquisitions. The Group portfolio value stood at $ 1.1 billion while the Net Asset Value (NAV) per stapled security stood at $ 1.13. A snapshot of the H1 FY19 is as follows-

G.U.D. Holdings Limited

G.U.D. Holdings Limited (ASX: GUD), based in Victoria, Australia, is engaged in the manufacturing and marketing of consumer and industrial products including small electrical appliances, lawnmowers, cleaning products, automotive parts, water transfer pumps and water pressure systems, security products, swimming pool pumps, and spa bath controllers. With a market capitalisation of around AUD 759.5 million and approximately 86.7 million shares outstanding, the GUD stock price settled the day’s trading on 19 August 2019 at AUD 8.68, slipping down 0.913% by AUD 0.080 with ~ 246,224 shares traded.

FY19 Full-Year Results On 26 July 2019, G.U.D. Holdings disclosed its financial results for the year ended 30 June 2019, posting the revenue from continuing operations at $ 434.01 million, up 9% on the prior year FY18. The Underlying EBIT from continuing operations was also up 6% at $ 88.9 million on pcp, while the NPAT from continuing operations was at $ 60 million, up 18% on pcp, 13% net of tax provision writeback. Despite a challenging operation environment in the automotive sector, a solid growth was recorded at 12%, including 1% organic and 11% acquired. Moreover, the acquisition of Disc Brakes Australia (DBA) added to the strong performance.

On the other hand, the water business witnessed modest revenue and EBIT growth in down market. The Group’s medium-term strategy for this segment is to build scale organically, including export markets and implement further commercialisation of product innovation through building on MWT foundations, commercialisation of TankSense, introduction of Lifeguard and pursue further operational efficiencies.

G.U.D. Holdings also added that its cash conversion had improved in line, with H1 projections and FY19 target that would provide the working capital for continued support for sales growth.

The Group also paid out a final fully franked dividend of AUD 0.310 (Record Date: 16 August 2019; Payment Date: 30 August 2019) up 11% on pcp.

G.U.D. Holdings maintained a sustained focus on safety performance with the total recordable injury frequency rate (TRIFR) of 6.0 slightly up, but still strong against recent mid-term results. The employee engagement was at 75% – top 30% of global benchmark and the Group received Multiple Supplier Awards for Ryco, BWI and Wesfil.

The Group corporate structure as of 1 July 2019 is given below-
Going forth, G.U.D. Holdings aims to focus on five pillars of business foundation being customer relationships, supplier engagement, people cycle planning, product cycle planning and operational efficiency.

Briscoe Group Limited

Briscoe Group Limited (ASX: BGP), headquartered in Auckland, New Zealand, operates as a holding company, which retails homeware and sporting materials through its subsidiaries, to customers in New Zealand. With a market capitalisation of around AUD 752.48 million and approximately 221.97 million shares outstanding, the BGP stock last traded on 05 August 2019 at AUD 3.390. Also, BGP has delivered a positive return of 9.35% YTD.

Second quarter Sales Update Recently on 5 August 2019, the directors of Briscoe Group Limited announced unaudited sales growth of 4.05% to $ 152.3 million for the thirteen-week second quarter to 28 July 2019, up from $ 146.4 million achieved for last year’s second quarter. The total sales for the homeware segment edged up 2.32% during the concerned period, while the sales growth for the sporting goods segment was also positive at 7.61%.

Besides, there was over 3.40% same-store sales growth for the quarter and on a same-store basis, the sporting goods sales rose 5.62% over the prior corresponding period.

In total, the Group sales for the first half, that is 26-week period to 28 July 2019, amounted to $ 303.0 million, an increase of 3.34% on the $ 293.2 million recorded in the previous corresponding period. Also, the total homeware segment sales for the same period increased 2.57%, the sporting goods segment sales by 4.68% while on a same-store basis, the Group’s total sales for the half-year were 2.74% ahead of the prior corresponding period in 2018.

The sales through Briscoe Group’s online channel also continued to expand strongly and are now approaching 11% of total Group sales, having grown at over 20% compared to the prior corresponding period. The Group also mentioned that New Zealand retailing continues to be highly competitive, sensitive to continued cost and margin pressures, as well as experiencing subdued consumer and business confidence.

Full Year Results snapshot For the 52-week period ended 27 January 2019, the Group’s total sales revenue amounted to ~$631.91 million while the net profit after tax was at ~$ 63.39 million. As at 27 January 2019, the Group’s total assets were valued at around ~$365.35 million with a cash at bank of $ 80.78 million.

Briscoe Group also announced an ordinary fully paid dividend of NZD 0.14117600 (Record Date: 26 March 2019; Payment Date: 29 March 2019) with respect to the six months ended 27 January 2019.


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