Director, RaaS Advisory, Research as a Service (RaaS)

Research as a Service (RaaS)

Director, RaaS Advisory

Insightful Financial Models and Research Analysis

Connect to the right investors through smart and insightful financial models and research analysis.

Equity Bottom-Up

Betmakers Technology Group  / Equity Bottom-Up

<p>COVID-19 has taken Australia officially into recession but the real impact is still being masked by the economic stimulus being pumped into industry by the Federal and state governments. We had a taste of the volatility that can be created by uncertainty. March 2020 delivered the most volatile month of trading for micro- to mid-cap companies since the 2008 Global Financial Crisis, with the S&amp;P/ASX Emerging Companies Index down 31.5%, its greatest ever monthly decline. In the 70 days since, the S&amp;P/ASX Emerging Companies Index has substantially outperforming the broader market lifting 40.04% this quarter to date.</p>
<p>The market rout together with the economic stand-still brought about by COVID-19 have put Australian companies and investors in uncharted waters. Past experience shows that investors fly to the top end of the market, access to capital becomes scarcer for smaller growth stock, research teams reduce head counts and as a result broker research coverage of small and microcap stocks diminishes along with <strong>stock liquidity (which can cause “value voids”).</strong></p>
<p>We entered this current environment with &nbsp;fewer than 530 of the 2,050 companies on the ASX with research coverage despite the ASX’s annual investment in its smaller company equity research scheme. With the effects of the COVID-19 pandemic likely to lend more volatility to the financial markets and broader economy, we expect further diminution of smaller company sell side research, creating an even bigger void of information for retail and wholesale investors in a key part of the market. If we are correct in our expectation that broker research coverage will continue to diminish for smaller stocks, companies will need to find other ways to get their investment case heard. Investor briefings by investor relations and/or third parties is one avenue, but without earnings estimates, it does not allow for discovery. <strong>Independent equities research has a role to play in that discovery process.</strong></p>
<p>Earnings estimates combined with consistent, relevant and timely research to dimension valuation and outlook for a company presents a powerful combination for investors looking for new opportunities. In this paper we examine RaaS’s methodology for choosing the companies we seek to engage with for independent investment research, the team’s experiences and learnings through past cycles and revisit the companies currently under coverage by RaaS and the specific features that we find compelling. Despite diversity of industry and sector, there are some overarching similarities between the companies we cover and, for the most part, they should continue to demonstrate operational resilience in the current challenging environment.</p>

COVID-19 has taken Australia officially into recession but the real impact is still being masked by the economic stimulus being pumped into industry by the Federal and state governments. We had a taste of the volatility that can be created by uncertainty. March 2020 delivered the most volatile month of trading for micro- to mid-cap companies since the 2008 Global Financial Crisis, with the S&amp;P/ASX Emerging Companies Index down 31.5%, its greatest ever monthly decline. In the 70 days since, the S&amp;P/ASX Emerging Companies Index has substantially outperforming the broader market lifting 40.04% this quarter to date.
The market rout together with the economic stand-still brought about by COVID-19 have put Australian companies and investors in uncharted waters. Past experience shows that investors fly to the top end of the market, access to capital becomes scarcer for smaller growth stock, research teams reduce head counts and as a result broker research coverage of small and microcap stocks diminishes along with stock liquidity (which can cause “value voids”).
We entered this current environment with &nbsp;fewer than 530 of the 2,050 companies on the ASX with research coverage despite the ASX’s annual investment in its smaller company equity research scheme. With the effects of the COVID-19 pandemic likely to lend more volatility to the financial markets and broader economy, we expect further diminution of smaller company sell side research, creating an even bigger void of information for retail and wholesale investors in a key part of the market. If we are correct in our expectation that broker research coverage will continue to diminish for smaller stocks, companies will need to find other ways to get their investment case heard. Investor briefings by investor relations and/or third parties is one avenue, but without earnings estimates, it does not allow for discovery. Independent equities research has a role to play in that discovery process.
Earnings estimates combined with consistent, relevant and timely research to dimension valuation and outlook for a company presents a powerful combination for investors looking for new opportunities. In this paper we examine RaaS’s methodology for choosing the companies we seek to engage with for independent investment research, the team’s experiences and learnings through past cycles and revisit the companies currently under coverage by RaaS and the specific features that we find compelling. Despite diversity of industry and sector, there are some overarching similarities between the companies we cover and, for the most part, they should continue to demonstrate operational resilience in the current challenging environment.

Research as a Service Playbook - Great Companies Are Built in Tough Times

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<p><a target="_blank">Ricegrowers (ASX: SGLLV) trades as SunRice – the company’s main brand, which is ubiquitous in supermarkets. SunRice is a global fast-moving consumer goods (FMCG) business and one of Australia’s largest branded food exporters with more than 30 brands across 50 countries. SunRice has announced that notwithstanding Vietnam’s temporary ban on rice exports and the shortage of rice in Australia, the group is flexing its international supply capability to meet increased demand in Australia and other key markets. SunRice also noted that at this stage it does not anticipate any material change to its FY20 guidance for group NPAT. The company’s guidance is for full year FY20 revenue to be materially in line with FY19 but that 2H FY20 NPAT is expected to be lower than 1HFY20 NPAT. As we noted in our initiation report of late last year </a><a href="https://raasgroup.com/download/ASX:SGLLV%20Ricegrowers%20SunRice%20RaaS%20Information%20Paper%202019%2011%2026/?wpdmdl=3194" target="_blank" rel="noopener">Quality Income from Branded Products</a><span class="MsoHyperlink">, </span><span class="MsoHyperlink">SunRice has built significant resilience into the business with its international footprint in rice supply and branded products. In our view, the company is well positioned to trade through this turbulent time with leverage to upside from new consumer products emerging from the portfolio. We have revisited our sum-of-the-parts Compco valuation, adjusting for recent share price movements among peers and more conservative multiples, to derive a mid-point valuation of $9.50/share (previously $11.44/share).<br></span></p>
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Ricegrowers (ASX: SGLLV) trades as SunRice – the company’s main brand, which is ubiquitous in supermarkets. SunRice is a global fast-moving consumer goods (FMCG) business and one of Australia’s largest branded food exporters with more than 30 brands across 50 countries. SunRice has announced that notwithstanding Vietnam’s temporary ban on rice exports and the shortage of rice in Australia, the group is flexing its international supply capability to meet increased demand in Australia and other key markets. SunRice also noted that at this stage it does not anticipate any material change to its FY20 guidance for group NPAT. The company’s guidance is for full year FY20 revenue to be materially in line with FY19 but that 2H FY20 NPAT is expected to be lower than 1HFY20 NPAT. As we noted in our initiation report of late last year Quality Income from Branded Products, SunRice has built significant resilience into the business with its international footprint in rice supply and branded products. In our view, the company is well positioned to trade through this turbulent time with leverage to upside from new consumer products emerging from the portfolio. We have revisited our sum-of-the-parts Compco valuation, adjusting for recent share price movements among peers and more conservative multiples, to derive a mid-point valuation of $9.50/share (previously $11.44/share). 







SGLLV AU Diversified Supply Chain on Display; Guidance Maintained

Australia

Ricegrowers Limited, doing business as SunRice, operates as a rice food company. The Company processes and distributes rice products such as rice blends and snacks. SunRice serves customers worldwide.

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Ricegrowers Ltd (SGLLV AU)

Research as a Service Playbook - Great Companies Are Built in Tough Times

COVID-19 has taken Australia officially into recession but the real impact is still being masked by the economic stimulus being pumped into...

Research as a Service (RaaS)

SGLLV AU Diversified Supply Chain on Display; Guidance Maintained

Ricegrowers (ASX: SGLLV) trades as SunRice – the company’s main brand, which is ubiquitous in supermarkets. SunRice is a global fast-moving...

Research as a Service (RaaS)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)