In the conference held on 24 October 2018, the managing director of Propel funeral Partners limited, (ASX: PFP) Albin Kurti had shared the trading update on Q1 FY19 and the general outlook for the 1H FY19.
In the FY18, the company was able to generate revenues worth $80.9 million which got increased by 76% as compared to the previous financial year. The Average revenue per funeral growth (ARFG) rate also increased by 5.5%. The operating EBITDA has also increased by 75% which is equivalent to $21.5 million. The net operating profit after tax also increased by 125% representing $12.3 million. The net operating cash flow also increased by 71% representing $20.7 million. The cash flow conversion of the company was 96.5%. As on 30 June 2018, the net cash available with the company is $28.3 million. As per the prospectus forecast the company reported an increase of 10% in the dividend which is 6.4 cents per share fully franked. As on 30 June 2018, the company operates across 103 locations. The company has entered into new markets in WA and the ACT. There were also expansions made in the existing markets in QLD, NSW and VIC.
The company also highlighted the increase in the number of deaths. In Australia it is expected that there will be an increase in death rate by 1.4% from 2016 to 2025. In New Zealand the expected growth in the death rate is expected to be 1.1% from 2016 to 2015. This will further increase by 1.8% from 2025 to 2050.
The company acquired Seasons Funeral at WA entry during FY18 and Newhaven Funerals in the YTD FY19.
In the Q1 FY19 the revenue generated was approximately $24 million which was 20% more than the previous corresponding period. The operating EBITDA margin is above 26% and is maintaining the consistency with the FY18. The cash conversion remain strong at 100%The market share also remains stable. In 1H FY19, the funeral volume expected to go down. Earlier due to the severe flu season in FY17 and FY18 the funeral volumes were high. The financial results of the company reflect the solid start in Q1 of FY19. The acquisitions have got completed by FY18. The company’s balance sheet also remains strong. The current net cash available with the company is approximately 15 million. The targeted dividend payout ratio remains unchanged at 75% to 85%.
The company has given a negative performance throughout its journey. The performance remains -19.09% since inception. The current market price of the company is A$2.65 with market capitalization of A$262.1 million. The total asset of the company is $248.305 million and total liabilities of $68.617 million showing company’s ability to pay long term obligations. The total current asset of the company is $82.305 million and total current liabilities of $61.126 million showing company’s ability to clear short term obligations. The total shareholders equity is worth $179.847 million.
As per the chart, it is seen that the moving average convergence and divergence line was earlier moving above the signal line and has now touched the MACD line from the top and it can be expected that the line will further move in the downward direction.
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