Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

S&amp;P Dow Jones Indices will announce changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the March index review on 12 March and the changes will be effective after the close of trading on 19 March.The data cutoff for the March review is 26 February.Using market data to the close of trading on 15 January, we expect <a href="https://www.smartkarma.com/entities/pointsbet-holdings-pty-ltd" target="_blank" data-smartkarma-citation="entities:29102:1" rel="noopener">PointsBet Holdings Pty Ltd (PBH AU)</a>, <a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> and <a href="https://www.smartkarma.com/entities/codan-ltd-australia" target="_blank" data-smartkarma-citation="entities:6189:1" rel="noopener">Codan Ltd (CDA AU)</a> to be added to the index, replacing <a href="https://www.smartkarma.com/entities/service-stream-ltd" target="_blank" data-smartkarma-citation="entities:18493:1" rel="noopener">Service Stream (SSM AU)</a>, <a href="https://www.smartkarma.com/entities/tassal-group-ltd" target="_blank" data-smartkarma-citation="entities:16234:1" rel="noopener">Tassal (TGR AU)</a> and <a href="https://www.smartkarma.com/entities/gwa-group-ltd" target="_blank" data-smartkarma-citation="entities:663:1" rel="noopener">Gwa Group Ltd (GWA AU)</a>.<a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> and <a href="https://www.smartkarma.com/entities/champion-iron-ltd" target="_blank" data-smartkarma-citation="entities:19734:1" rel="noopener">Champion Iron (CIA AU)</a> are close adds while <a href="https://www.smartkarma.com/entities/bravura-solutions-ltd" target="_blank" data-smartkarma-citation="entities:23648:1" rel="noopener">Bravura Solutions (BVS AU)</a> and <a href="https://www.smartkarma.com/entities/smartgroup-corp-ltd" target="_blank" data-smartkarma-citation="entities:19954:1" rel="noopener">Smartgroup Corp (SIQ AU)</a> are close deletes.

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the March index review on 12 March and the changes will be effective after the close of trading on 19 March.The data cutoff for the March review is 26 February.Using market data to the close of trading on 15 January, we expect PointsBet Holdings Pty Ltd (PBH AU), De Grey Mining (DEG AU) and Codan Ltd (CDA AU) to be added to the index, replacing Service Stream (SSM AU), Tassal (TGR AU) and Gwa Group Ltd (GWA AU).Pilbara Minerals (PLS AU) and Champion Iron (CIA AU) are close adds while Bravura Solutions (BVS AU) and Smartgroup Corp (SIQ AU) are close deletes.

ASX200 Index Rebalance Preview: Three Potential Changes for Now; Could Increase to Five

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Equity Bottom-Up

The 18th November 2019 release regarding guidance on the full Year profit expectations and the retirement of the CEO, has provided light on the SIQ's performance for the next few months. We examine, what does it mean to forecasts, the share price as well as what to expect in February 2020 full year earnings are scheduled to be released. SIQ has been a stock which has delivered attractive returns to investors in the last three years, can it continue to do so?

The 18th November 2019 release regarding guidance on the full Year profit expectations and the retirement of the CEO, has provided light on the SIQ's performance for the next few months. We examine, what does it mean to forecasts, the share price as well as what to expect in February 2020 full year earnings are scheduled to be released. SIQ has been a stock which has delivered attractive returns to investors in the last three years, can it continue to do so?

Notes from the Silk Road: Smartgroup Corporation (SIQ.AX): Our Stretch Target Could Be Just That

For 2019, Smartgroup Corporation Ltd (SIQ.AX) has largely been consolidating recent acquisitions. Their H1 2019 results have shown the green shoots of organic growth seen at the end of fiscal 2018 continue to grow. We examine what this may mean for SIQ and its seasonal revenue and profitability targets. This analysis supports a positive bias to a company, which the market misunderstood in H1 2019 and has not fully accommodated in the recent share price rally. We examine how this company may well surprise on the upside and deliver multi-year growth.

For 2019, Smartgroup Corporation Ltd (SIQ.AX) has largely been consolidating recent acquisitions. Their H1 2019 results have shown the green shoots of organic growth seen at the end of fiscal 2018 continue to grow. We examine what this may mean for SIQ and its seasonal revenue and profitability targets. This analysis supports a positive bias to a company, which the market misunderstood in H1 2019 and has not fully accommodated in the recent share price rally. We examine how this company may well surprise on the upside and deliver multi-year growth.

Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX) Organic Progress

Whilst Smartgroup Corporation Limited (SIQ) has reported a  solid set of 2018 earnings, the real story is not the results, but the outlook.
We examine the potential for the company to simply deliver a multiple expansion. If SIQ succeeds with some further consolidation of acquisitions. The potential for this Event-driven upside is significant if this is combined with additional earnings trends. 
Furthermore, the stock rank system which the company is benchmarked against suggests potential to post an upgrade, which inevitably fuels share price performance.

Whilst Smartgroup Corporation Limited (SIQ) has reported a  solid set of 2018 earnings, the real story is not the results, but the outlook.
We examine the potential for the company to simply deliver a multiple expansion. If SIQ succeeds with some further consolidation of acquisitions. The potential for this Event-driven upside is significant if this is combined with additional earnings trends. 
Furthermore, the stock rank system which the company is benchmarked against suggests potential to post an upgrade, which inevitably fuels share price performance. 

Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX) - Multiple Expansion Potential

<ul class="">
<li>
2018 full results due on the 18th February 2019: Since our initial report on 3rd September 2018, SIQ’s share price has declined some 21% versus the ASX All Ordinaries fall of circa 8%. With results due, we expect the market to refocus on Smartgroup and its good growth story. This is important as much of the focus for the group in the last two years has been on the acquisitions being made. To see management return focus to organic growth, post these acquisitions should help investor confidence in SIQ. Specifically concentrating on the cross-selling of its services whilst benefiting from Australia’s tight labour market and corporates chasing incremental cost savings can only be positives.</li>
<li>
Review and upgrade to forecasts: With the benefit of further time to review SIQ’s business progress and the composition of our forecasts, we have increased fiscal 2018 and 2019 EPS forecasts 10% and 12% respectively. Much of our thought process is at the SG&amp;A line, whilst the view that the overall trajectory of earnings remains on track. 
</li>
<li>
2019 we expect to be a year of consolidation, with consistent growth: In the two years to the end of fiscal 2017, SIQ had made six acquisitions. These acquisitions were aimed at both industry consolidation, as well as complementary product build out. We expect 2019 to be a year where the benefits from these acquisitions are exhibited in both the bottom and top-line growth. We expect this even though 2019 may present macro challenges. 
</li>
<li>
We reiterate our view that SIQ offers Growth at a Reasonable price: SIQ’s forward multiples are positive for a company which has posted a long term book value growth rate of circa 7%  (net of dividend) and is forecast to post a similar rate 2019 and in 2020. Based on our 2019 EPS forecasts SIQ should be able to deliver circa A$0.62/share, which implies 18% YoY growth and a 13 times P/E. 
</li>
</ul>



2018 full results due on the 18th February 2019: Since our initial report on 3rd September 2018, SIQ’s share price has declined some 21% versus the ASX All Ordinaries fall of circa 8%. With results due, we expect the market to refocus on Smartgroup and its good growth story. This is important as much of the focus for the group in the last two years has been on the acquisitions being made. To see management return focus to organic growth, post these acquisitions should help investor confidence in SIQ. Specifically concentrating on the cross-selling of its services whilst benefiting from Australia’s tight labour market and corporates chasing incremental cost savings can only be positives.

Review and upgrade to forecasts: With the benefit of further time to review SIQ’s business progress and the composition of our forecasts, we have increased fiscal 2018 and 2019 EPS forecasts 10% and 12% respectively. Much of our thought process is at the SG&amp;A line, whilst the view that the overall trajectory of earnings remains on track. 


2019 we expect to be a year of consolidation, with consistent growth: In the two years to the end of fiscal 2017, SIQ had made six acquisitions. These acquisitions were aimed at both industry consolidation, as well as complementary product build out. We expect 2019 to be a year where the benefits from these acquisitions are exhibited in both the bottom and top-line growth. We expect this even though 2019 may present macro challenges. 


We reiterate our view that SIQ offers Growth at a Reasonable price: SIQ’s forward multiples are positive for a company which has posted a long term book value growth rate of circa 7%  (net of dividend) and is forecast to post a similar rate 2019 and in 2020. Based on our 2019 EPS forecasts SIQ should be able to deliver circa A$0.62/share, which implies 18% YoY growth and a 13 times P/E. 



Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX)

Australia

SmartGroup Corp Ltd. is an Australian outsourced salary packaging company within the health, not-for-profit, State and Federal Government departments and corporate sectors nationwide.

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Smartgroup Corp (SIQ AU)

ASX200 Index Rebalance Preview: Three Potential Changes for Now; Could Increase to Five

There could be up to 5 changes at the next ASX200 rebalance in March. The expected adds have outperformed the deletes significantly and are trading...

Brian Freitas

Notes from the Silk Road: Smartgroup Corporation (SIQ.AX): Our Stretch Target Could Be Just That

The 18th November 2019 release regarding guidance on the full Year profit expectations and the retirement of the CEO, has provided light on the...

David Lepper

Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX) Organic Progress

For 2019, Smartgroup Corporation Ltd (SIQ.AX) has largely been consolidating recent acquisitions. Their H1 2019 results have shown the green shoots...

David Lepper

Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX) - Multiple Expansion Potential

Whilst Smartgroup Corporation Limited (SIQ) has reported a solid set of 2018 earnings, the real story is not the results, but the outlook. We...

David Lepper

Notes from the Silk Road: Smartgroup Corporation Ltd (SIQ.AX)

2018 full results due on the 18th February 2019: Since our initial report on 3rd September 2018, SIQ’s share price has declined some 21% versus...

David Lepper

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