A portfolio comprising of securities belonging to various sectors serves the purpose of diversification and balances the risk to reward ratio. Three important stocks covered in this article are Charter Hall Group (ASX: CHC), Pilbara Minerals Limited (ASX: PLS) and EML Payments Limited (ASX: EML), which belong to three important sectors i.e. Real Estate, Resources and Financial Services, respectively. Let’s see how the recent updates of these companies are impacting their stock prices.
Charter Hall Group (ASX: CHC)
Charter Hall Group (ASX: CHC) is involved in investment in property funds; and property funds management. Recently, the company along with Abacus Property Group as consortium announced that CHAB Office Pty Limited will be acting as trustee for the CHAB Office Trust. The new entity remains fully committed in acquiring all units in Australian Unity Office Fund (ASX: AOF), under the value $3.04/ unit. As per both the company’s view, the scheme provides all the shareholders of Australian Unity Office Fund, an opportunity to receive a certain cash price for their shares at a premium.
In a previous update, CHC informed the market about the sale of a part-stake in 242 Exhibition St, Melbourne, the global headquarters of Telstra Corporation Limited to Charter Hall Long WALE REIT (ASX: CLW) for $63.6 Mn, taking the final holdings from 15% (indirect interest) to 1.8%. The development underpins company’s strategy to reuse capital to support the growth of its funds as well as maintain an on-going co-investment in these funds and the transaction is expected to be completed in the month of December 2019.
In another update, Mitsubishi UFJ Financial Group, Inc. became substantial holder in the company with voting power of 5.04%, effective from October 28, 2019.
FY19 Key Highlights for the period ended June 30, 2019: Operating earnings for the period was reported at $220.7 Mn and operating earnings per share post-tax was reported at 47.4 cents per share, an increase of 25.5% on the prior corresponding period. Statutory profit for the period was reported at $235.3 Mn.
During the period, the company witnessed $3.4 Bn of new equity inflow across the platform, helping it to achieve $3.3 Bn of net acquisitions and $5.0 Bn of gross transactions. Additionally, company’s development pipeline finished $1.1 Bn worth of projects following the successful acquisition and integration of the Folkestone platform into the Charter Hall business, which is expected to serve as an important conduit of additional growth for the Group.
The funds under management (FUM) grew by $7.2 Bn to $30.4 Bn at the year end. The group has delivered an annualised return of 17.3% and 13.4% in pre-tax and post-tax earnings, respectively, over a timeframe of five years.
FY19 Key Metrics (Source: Company Reports)
On the stock price performance front
On November 13, 2019 (AEST 01:01 PM), Charter Hall Group was trading at $10.710, down 0.372%, with a market cap of ~$5.01 Bn. Its current PE multiple is at 21.290x. It has generated an absolute return of 50.98% for the last one year, 4.67% for the last six months, and -9.28% for the last three months.
Pilbara Minerals Limited (ASX: PLS)
Pilbara Minerals Limited (ASX: PLS) is engaged in selling premium products from the conduct of safe mining and processing activities at the Pilgangoora Lithium-Tantalum project located in the Pilbara region of Western Australia. On November 11, 2019, the company informed the market about a death incident occurred unrelated to mining operations at Pilgangoora project. The operations are in temporary suspension, in order to ease the investigation by homicide squad of the Western Australian Police Force.
The company has requested the market for a trading halt until the earlier of the release of an announcement or the commencement of trading activities on November 13, 2019.
Key highlights for the quarter ended September 30, 2019: As a part of A$111.5 Mn equity raising process, the company secured strategic investment from China’s largest EV battery manufacturer, CATL, to support its long-term growth strategy. During the period, the production was moderated looking at the customer requirements and market conditions. Production (at 6.06% Li2O) and Shipment (including parcels of both SC6 (6% Li2O) and SC5.5 (5.5% Li2O)) of spodumene concentrate for the period stood at 21,322 dry metric tonnes (dmt) and 20,044 dmt, respectively, as compared to production of 63,782 dmt and shipment of 43,214 dmt in the previous quarter. Sales for Tantalite concentrate reduced from 38,856 lbs in the previous quarter to 12,171 lbs in the September quarter.
Company’s cash balance at the end of the quarter was reported at A$60.9 Mn, as compared to cash balance of A$63.6 Mn in the previous quarter.
Quarterly Total Ore Mined and Processed Data (Source: Company Reports)
On the stock price performance front
On November 13, 2019 (AEST 01:03 PM), Pilbara Minerals was trading at $0.310, down 3.125% with a market capitalisation of ~$711.59 Mn. It has generated an absolute return of -62.57% for the last one year, -58.44% for the last six months, and -32.63% for the last three months.
EML Payments Limited (ASX: EML)
EML is involved in providing prepaid payment services to clients in Australia, as well as regions including Europe and North America. On November 11, 2019, the company proposed to issue 18,824,660 new shares under placement to new and existing institutional shareholders @$3.55 per new share and 51,091,614 new shares under accelerated pro-rata non-renounceable entitlement offer @$3.55 per new share.
Determination by the company along with holding reconciliation and rounding will decide the final number of shares issued under the Entitlement Offer, and the split of those shares between the institutional and retail components of the Entitlement Offer. The new shares to be issued under the Placement and Entitlement Offer would have same terms as existing shares on issue and would rank equally in all respects with those existing Shares from the issue date.
The proceeds from the issue of new shares under the Entitlement Offer and Placement will be used for acquisition of Prepaid Financial Services (Ireland) Limited (PFS), a multi-award winning European provider of white label payments and banking-as-a-service technology. The binding agreement values PFS at an enterprise value of £226 Mn (A$423 Mn) (the Acquisition) plus an earn-out component of up to £55 Mn (A$103 Mn). PFS is expected to process GDV of A$5.3 billion and generate net revenue of A$84 Mn and EBITDA of A$24 Mn for the twelve months to June 30, 2020.
This development is expected to strengthen EML’s market position as one of the largest FinTech enablers in the prepaid and digital banking segment worldwide.
FY20 Financial Guidance for Prepaid Financial Services (Source: Company Reports)
On the stock price performance front
On November 13, 2019 (AEST 01:12 PM), EML was trading at $4.220, up 10.183% with a market capitalisation of ~$978.4 Mn. Its current PE multiple is at 115.360x. The stock has generated an absolute return of 155.33% for the last one year, 85.92% for the last six months, and 29.39% for the last three months.
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