Changing trends for Consumer Discretionary stocks – PBH, KGN, RDC, ALG

  • Nov 19, 2019 AEDT
  • Team Kalkine
Changing trends for Consumer Discretionary stocks – PBH, KGN, RDC, ALG

By the end of the trading session, on 19th November 2019, the benchmark index, i.e. S&P/ASX200 was at 6814.2 with a rise of 47.4 points compared to its last close. On the same day, index of Consumer Discretionary (Sector) managed to close the trading session in green, at 2,722.9 points with a rise of 0.4% from its previous close.

In this article, we will be looking at four consumer discretionary stocks and their updates:

PointsBet Holdings Limited (ASX: PBH)

PointsBet Holdings Limited (ASX: PBH) offers innovative sports as well as racing wagering products and services directly to its consumers through its scalable cloud-based wagering platform.

The company recently announced that Regal Funds Management Pty Ltd has become a substantial holder in the company on 11th November 2019 with a voting power of 5.72%.

Capital Raising Announcement

PointsBet through a release dated 28th October 2019 announced a capital raising amounting to $122.1 million, which comprises an institutional placement to raise A$60 million as well as 1 in lieu of 6 accelerated pro rata renounceable entitlement offer with retail entitlements trading to raise an amount of $62.1 million.

  • For raising $60 million, the company would issue new fully paid ordinary shares at a consideration of $3.60 per New Share. It was mentioned in the release that the placement price demonstrates a discount of 13.9% to the company’s closing price of $4.18 as of 28th October 2019, as well as a discount of 14.2% to the 5-day VWAP.
  • The price for 1 for 6 Entitlement Offer would be $3.20 per New Share, by which PBH would be raising $62.1 million.
  • The company would primarily utilise the proceeds from the capital raising towards (1) marketing and client acquisition, (2) technology and product development, and (3) balance sheet flexibility.

The stock of PBH last traded flat at $4.120 per share, on 19th November 2019. The stock has generated returns of -7.73% and 44.50%% during the last one month and three months, respectively.

Kogan.com Limited (ASX: KGN)

Kogan.com Limited (ASX: KGN) is an online retail company, with a portfolio which is a blend of retail and services business.

A Look at First Quarter of Financial Year 2020
  • The company recently informed the market its activities for Q1 FY20 and stated that this quarter witnessed a launch of key New Verticals such as Kogan Money Super, Kogan Mobile NZ, Kogan Energy and Kogan Money Credit Cards and added that every vertical is being supported by a strong commercial partnership with a top tier incumbent provider which focuses on providing customers with a market-leading offer.
  • Q1 FY20 also experienced strong growth in exclusive brands and continued momentum in Kogan Marketplace.
  • It was mentioned that Kogan.com achieved a growth of 14.0% on a year-on-year basis on the Active Customer front. KGN had Active Customers of 1,653,000 as at 30 September 2019 against 1,450,000 as of 30th September 2018.
  • During Q1 FY20, third party brands revenue witnessed a decline materially in comparison to Q1 FY19 mainly because of continued decline in handset sales.
  • In the same period, the company entered into an agreement with Corporate Travel Management Limited (ASX: CTD), which would see the company offering Kogan Travel branded travel services, including flights, cars and holiday packages, during FY20.

Kogan.com Limited

The stock of KGN last traded at $7.090 per share, with a fall of 6.588% as on 19th November 2019. The stock has generated returns of 10.48% and 44.85% during the last one month and three months, respectively.

Redcape Hotel Group (ASX: RDC)

Redcape Hotel Group (ASX: RDC) is an owner and operator of pubs and hotels in the Australian region. The company through a release dated 31 October 2019 addressed the market and outlined the following:

Reaffirmed FY20 Guidance
  • It was mentioned that Redcape Hotel Group Management Ltd, a responsible entity of the RDC has exchanged contracts in order to sell the St George Hotel, Belmore in New South Wales for the consideration amounting to $47.1 million, representing a premium of 2.7% to June 2019 (independent valuation).
  • It was mentioned in the release that the divestment represents the value supporting RDC’s portfolio of high-quality freehold assets, many of which are in high population growth areas of Sydney.
  • The company reiterated that its guidance for FY20 remains unchanged after the settlement of the sale. Wrap up of the divestment is subject to condition precedents with an expected settlement before February 2020.

Interim Distribution for the Quarter Ended September 2019

The responsible entity of the Redcape Hotel Group- Redcape Hotel Group Management Ltd via a release dated 20th September 2019 announced an interim distribution of 2.199 cents per stapled security for the 92-day period from 1 July 2019 to 30 September 2019.

The following picture provides an idea of key dates for the interim distribution:

Redcape Hotel Group The stock of RDC last traded at $1.100 per share as on 19th November 2019. The stock has generated returns of 1.40% and 0.93% during the last one month and three months, respectively.

Ardent Leisure Group Limited (ASX: ALG)

Ardent Leisure Group Limited (ASX: ALG) owns and operates theme parks and family entertainment stores.

Chairman’s Address to Shareholders

The Chairman of ALG, Gary Weiss addressed the shareholders at 2019 Annual General Meeting conducted on 13 November 2019 and outlined the following:

  • The Chairman of ALG stated that the financial performance for FY19 did not the fulfill the company’s expectations and was impacted by a number of non-recurring items which it anticipates to significantly decrease in future.
  • Ardent Leisure Group reported a net loss amounting to $60.9 million and remained to be affected by difficult after incident trading situation for the Theme Parks division, related incident costs because of the Coronial Inquest hearings, restructuring (non-recurring) costs, as well as additional impairment charges at a range of US entertainment centres.
  • Chairman added that in the month of April 2019, ALG wrapped up a debt facility of US$225 million with US lenders as well as repaid ALG’s current Australian bank debt facility. This new facility provided ALG with enough headroom to finance the growth of Main Event and invest in new rides and attractions at its Theme Parks business.

The stock of ALG last traded at $1.155 per share, with a fall of 0.431%, as on 19th November 2019. The stock has generated returns of 13.17% and -1.69% during the last one month and three months, respectively.


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