2 'E' Stocks With Growth And Value - EHL And ECX

  • Mar 24, 2019 AEDT
  • Team Kalkine
2 'E' Stocks With Growth And Value - EHL And ECX

Emeco Holdings Limited

New Acquisitions Contributed Significantly to 1H FY 19: Emeco Holdings Limited (ASX: EHL) for the first half of FY 19 has reported 53.4% rise in the Operating EBITDA to $102.8 million. There was a 60% increase in the Operating EBIT to $60.0 million and whopping growth of 159.8% growth in Operating NPAT to $31.7 million compared to the corresponding period last year. This robust rise in earnings of the company is on back of the full contribution, from Force Equipment and Matilda Equipment, increase in the average operating utilization to 64% from 57% in 1H18 and strong demand from the coal mining customer in the Eastern Region. Operating EBITDA margin in 1H 2019 has also expanded substantially to 45.8% from 39.2% in 1H18. It was driven by Matilda Equipment’s high margin earnings, the rise in customer contracts, strategic management of cost, and optimization of the Force workshops for minimizing the cost of preparing equipment for the company’s projects. During the 1H of FY 19, the company has completed the integration of Matilda Equipment after its acquisition and is contributing to the company as per the expectation. Moreover, the company during 1H 2019, had continued to optimize the company’s capital structure and anticipates the reduction of future interest payments by about $4.5 million per annum. Additionally, the company remains positive for rest of the FY 19. It anticipates a continued strong market conditions in the Eastern Region and rise in bidding activity for the new projects in the Western Region to come online during FY19. However, the asset purchase by EHL will have a one-off impact of an additional ~$90 million on Capex in 2H19. The purchased assets are projected to start contributing to earnings and cash generation in FY20. Meanwhile, EHL’s stock has fallen by 44% in the last six months. The stock last traded at the price of A$2.060, down by 1.905% from its previous close, as noted on 22 March 2019.

Eclipx Group Ltd

Trading Performance: Eclipx Group Ltd’s (ASX: ECX) stock was put on the trading halt until 20 March 2019, at the request of the company. Recently, the company came up with its trading performance, where it mentioned that its financial performance has turned softer from the company’s update on 29 January 2019. Few of the reasons are as follows: Grays Industrial and Insolvency had continued to have underperformed. The company’s Right2Drive’s results for the previous two months have been influenced by factors such as softer trading conditions than anticipated at the time of its 29 January 2019 guidance, and a re-assessment of recovery rates on some debtor groups. Moreover, for FY 18, ECX has reported 27% rise in the Net Operating Income to $325.3 million and 14% growth in the Group Net Profit After Tax adjusted for Amortisation and One-off Costs (NPATA) to $78.1 million. However, during FY 18, the company has posted a 2% fall in the cash earnings to 24.7 cents. Further, the company’s New Business writings had crossed the $1 billion mark for the first time in FY 18 and posted 11% growth to $1.1 billion. The company’s Assets Under Management grew 9% to $2.43 billion during the period. There were some challenges faced by GraysOnline and Right2Drive segments in 2018, which resulted in ECX revising its earlier assumptions about growth. Vehicle auctions volume through GraysOnline had started slowing & Right2Drive is facing strong competition from some insurers that are providing accident replacement vehicles. Also, during the first half of FY19, NPATA was projected around 40% for the full FY19. Meanwhile, ECX’s stock has fallen 67.70% in three months as on March 22nd, 2019. The stock of the company last traded at the price of level A$0.745, up by 2.055% from its previous close.


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