AV Jennings

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#21
They totally forgotten about AVJ especially when Sing high-end properties have literally stalled and Simon is likely to be a keen seller...

Property stocks with potential
Larry Schlesinger
541 words
7 Jun 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
On the radar Smart investors will be looking for the next Australand, writes Larry Schlesinger.
Stockland may have lost out in its bid for smaller rival Australand after a higher bid from Singapore-listed Frasers Centrepoint, but there will still be a consolation prize – and a lesson for retail investors.
Australia's biggest diversified property group stands to make an $85 million profit from its holding in Australand.
Stockland acquired its 19.9 per cent stake in Australand in March at $3.78 per security. Frasers' all-cash offer values Australand at $4.48 per security. Not a bad return for a few months' work.
Smart investors will be looking for the next Australand or Commonwealth Property Office Fund, the office trust acquired by DEXUS in partnership with the Canada Pension Plan Investment Board in January.
Further opportunities are expected.
In a recent research note, DEXUS said it anticipated "an increase in corporate -mergers and acquisitions to enable major players to expand their asset base and gain efficiencies".
The $3 billion Investa Office Fund (IOF) is tipped by analysts as a possible takeover target.
The Morgan Stanley-backed fund (with 22 Australian office properties weighted heavily to Sydney, Melbourne and Brisbane) is said to be a possible takeover target for GPT, but could also be a platform for a potential backdoor listing for the wider, privately held Investa portfolio. The portfolio is 96 per cent leased and has a weighted average lease expiry of five years.
Analysts also consider the $1.4 billion BWP Trust (which owns a portfolio of Bunnings warehouses, among the best performing retail assets) as a possible takeover target. Another is the $1.6 billion Charter Hall Retail REIT, which invests in supermarkets and shopping centres. Billionaire shopping centre owner John Gandel owns 5.8 per cent of Charter Hall Retail REIT and has been increasing his exposure to the listed retail property sector.
Small cap REITs, such as pub and bottle shop landlord HPI, office syndicator GDI Property and APN Property Group's Industria REIT were all on takeover radars after poor debuts last year – although they have since recovered ground.
"If they were to trade at a discount to their net tangible asset for some time, they could be targets," says Andrew Smith, a fund manager at Freehold Investment Management.
Outside of the property trusts, Brisbane-based developer Devine has firmed up as a takeover target after raising its full year earnings guidance. Leighton Holdings is Devine's majority shareholder, but is looking to exit this non-core investment as it focuses on infrastructure, mining and civil engineering work.
Some of the smaller listed residential developers may come into play as bigger rivals look to grow their work books and demand for new housing rises. "There could be synergy and scale benefits," says Ken Atchison, who heads up advisory firm Atchison consultants.
As a general rule, investors should keep an eye out for stocks trading at a discount to their net tangible asset backing. "This could indicate that current management is less than ideal," says Atchison.
Price-to-earnings ratios are also important. A high P/E could indicate expectations of higher earnings growth in the future.

Fairfax Media Management Pty Limited

Document AFNR000020140606ea670000n
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#22
Given that SC Global's luxury portfolio is virtually at a standstill, it is more likely that AVJ will repeat Devine's sale process rather than be a predator... NB that AVJ (A$0.57) continues to trade at an attractive discount to its last reported and written down book value of A$0.75

Vested
GG

Devine puts itself on the block
THE AUSTRALIAN JULY 17, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne
RESIDENTIAL builder Devine Limited has put itself on the sales block after its majority shareholder Leighton Holdings decided to exit the business. Potential buyers are expected to vie for the $3 billion pipeline.

Some believe Devine could sell for as much as $1.32 a share, valuing the business at $210m, and private developers as well as larger listed groups are expected to ­review the Brisbane company.

The Devine sale comes as Australian property companies go through a process of consolidation including the takeover of Australand by Frasers Centrepoint.

The sale process also coincides with a considerable uplift in the residential property market.

Devine, with housing estates and an apartment projects in Queensland, Victoria and South Australia, has been mooted as a takeover prospect since Leighton announced it would sell its 50.6 per cent stake in the company last month.

Yesterday Devine managing director David Keir announced the sale process.

“There are no assurances that a sale of Devine will be finalised or what form the transaction (if any) will ultimately take,” Mr Keir said.

Goldman Sachs has been appointed as an adviser to the sale, as revealed by The Australian.

Leighton also is looking to offload its $5 billion property arm, which includes major developments in Melbourne and Perth.

According to sources, ARA Asset Management is considering a tilt for the Leighton Properties business, potentially vying with Mirvac and Lend Lease.

Devine has posted losses for the past three years as the property downturn in Queensland ate away at revenues and it wrote down the value of several projects.

It has flagged a profit of between $7m and $8m this year after a raft of asset sales.

Lend Lease and David Devine’s Metro Properties also have been mentioned as possible buyers of Devine, which has a land bank, apartment projects and a construction business.

Three other potential bidders for Devine — Japan’s Sekisui House and Daiwa House, and Singapore-controlled AVJennings — have all but ruled themselves out of the race.

AVJennings chief executive Peter Summers said the group was confident in the direction of the Australian and New Zealand residential markets. “As a result we are certainly looking to increase our land holdings and we are actively looking at opportunities. However, our main focus is on specific plans around other types of activities at this stage,” he said.

Sources said a sticking point in the sale of the company was the $50m debt guarantee Leighton has provided to Devine at the behest of the group’s lender, ANZ.

A would-be bidder would be required to cover the guarantee, according to banking sources.

Other possible buyers such as Cedar Woods, Villawood, Peet and Sunland are all thought to be cool on buying Devine.

An analyst who declined to be named said Devine showed “more upside” and could sell for as much as $1.32 a share, based on its current book value of $1.52.

Devine closed down 1c at $1.08.
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#23
Will see what Simon says since when he can't sell Singapore high end prop, he is more likely to divest noncore. Best sell above bv (75) to maybe CDL or eventually Capland/Temasek when they decide to re-enter Down Under... lol

http://infopub.sgx.com/FileOpen/AVJFY14T...eID=310589

ASX RELEASE
AVJENNINGS LIMITED
(ASX: AVJ)
FULL YEAR RESULTS TO 30 JUNE 2014
AVJennings Limited advises that it proposes to release its Full Year Results to
30 June 2014 on Thursday, 21 August 2014.
AVJennings Limited’s Managing Director, Peter Summers and Chief Financial
Officer, Larry Mahaffy will present the Company’s results via teleconference.
Teleconference details are as follows:
Date: Friday, 22 August 2014
Time: 9.00 a.m. (AEST) (7.00 a.m. Singapore time)
Dial In: 1800 558 698 (Australia)
800 101 2785 (Singapore)
+61 2 9007 3187 (International)
Conference ID: 131926
The presentation slides and results announcement will be made available on the
AVJennings website www.avjennings.com.au prior to the teleconference.
For further information contact:
Media Contact: Investor Relations:
Tom Briglia Carl Thompson
Pinnacle Public Relations Company Secretary
+61 432 794 381 +61 3 8888 4802
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#24
convincing turnaround... confidence looking into the future... obviously dressing up for potential sales if there are suitors...

FCL Charoen is right, Capland down right wrong and out...

AVJ 61 vs NTA 81.4 last reported... DPS resumed at 2...

http://infopub.sgx.com/Apps?A=COW_CorpAn...416dac8319

Thursday, 21 August 2014
ASX / Media Release
Highlights
 Profit up 216% to $27.0m before tax and $18.8m after tax
 Revenue up 58.1% to $250.6m
 Work in progress levels up 77% on prior year (up 298% on last 2 years)
 Debt remains low at $80.8m (debt to total asset ratio of 17%)
 Fully franked final dividend 2 cents per share
AVJennings Limited (ASX: AVJ) is pleased to announce its results for the financial year ended
30 June 2014. Revenue was up 58.1% to $250.6m and profit increased 216% to $27.0m
before tax and $18.8m after tax compared to the previous corresponding period.
In line with the statement given with the release of the 1H14 accounts, Directors have declared
a fully franked final dividend of 2 cents per share. Whilst obviously related most directly to the
FY14 result, it also reflects Directors' confidence in the future prospects of the Company.
The most pleasing aspect of the results for the year is that they were the outcome of
AVJennings’ strong commitment to strategy over a number of years and reliance upon our
experience and our systems, developed over many years, to analyse and forecast our markets
and develop appropriate strategies.
Being a developer with a mainly horizontal development profile has also enabled us to adapt
strategies to match our market forecasts as we can scale up or down more easily than if we had
a significant high rise apartment or vertical development profile.
In past years this has seen the Company reduce its level of activity as market conditions
deteriorated to avoid a build-up of exposure to unsold inventory. However, in recent years it
has resulted in increased volumes and turnover but, encouragingly, it has been achieved
without any increased exposure to completed unsold stock.
We have also maintained a focus on our core strengths of building great but affordable places
and communities for our customers to live in. Our brand has been built on 82 years of listening
to our customers and ensuring we meet their needs. We continue to be recognised for quality,
value, integrity and reliability.
We don't see our business as just developing land and building houses; we see the parks,
playgrounds and wetlands we create, the schools and students our projects support, the
sporting teams that compete on our playing fields, the public art we commission and other
aspects we create to develop outstanding communities.
Our people are what make the difference and we will continue to ensure we attract, retain and
develop the highest calibre people who have the same values for which we are known.
2
Looking forward, we expect market fundamentals to remain supportive. Consumer confidence,
whilst still somewhat volatile, is strong as it relates to residential property. Interest rates remain
historically low and there is a significant housing shortage in many markets, most notably
Auckland, Brisbane and Sydney. Adding to this the population continues to increase, placing
further pressure on an industry which typically struggles to meet underlying demand due to
constraints around the supply of suitably zoned and serviced land.
AVJennings is well placed for growth due to strong opening work in progress levels of 1,264 lots
at June 2014 (up 77% on prior year and 298% in the last two years). This reflects both the
opening of new projects, most of which only partially contributed to results in FY14, as well as
greater production levels in existing projects.
Growth will also be supported by a more active acquisition strategy. In recent months we have:
 Agreed to acquire the remaining 50% of the St.Clair joint venture in South Australia;
 Acquired over 400 lots in the Catalina Precinct at Hobsonville Point Auckland, continuing
the Company's successful involvement in this project; and
 Recently acquired a relatively small equity stake in a development in Subiaco, Perth. This
is the Company's first involvement in the Perth market for over 20 years.
We also continue to look for other acquisition opportunities. In some markets prices for sites
have accelerated beyond what we believe are reasonable. However, overall we believe
sufficient opportunities exist to acquire sites in line with our required returns, targets and
strategies. Additionally, our low gearing levels of 17% (debt to total assets) will support such
an acquisition strategy.
Whilst timing of production and usual seasonal issues will see results skewed towards the
second half of FY15, we expect to achieve increased contract signings. Our forecast for FY15
is in the range of 1,500 to 1,700 lots.
Directors and management appreciate the support of stakeholders during the residential
downturn that much of Australia experienced in recent years and also the participation and
support shown for the rights issue concluded in early 2013. This equity raising enabled funding
of increased work in progress levels which, in turn, led to the improved result for FY14. Given
the current environment, we remain confident of continuing improvement in results.
Media Contact: Investor Relations:
Tom Briglia Carl Thompson
Pinnacle Public Relations Company Secretary
+61 432 794 381 +61 3 8888 4802
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#25
http://infopub.sgx.com/Apps?A=COW_CorpAn...gFinal.pdf
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#26
AVJennings swings to FY profit
AAP AUGUST 21, 2014 6:00PM

AVJennings is gearing up to develop more homes as the east coast property market takes off.

The home builder expects to develop between 1,500 and 1,700 lots in the next 12 months.

It developed 1,264 lots in 2013/14, which was towards the bottom of what it had originally expected.

Chief executive Peter Summers says he expects the housing market will continue to recover on the back of stronger consumer confidence and low interest rates.

"We entered FY2014 with only NSW starting to enter into a recovery market," he said on Thursday as the company.

"But this financial year we've got NSW in full recovery, Queensland entering into a stronger property cycle, Victoria stabilising and improving a bit, and Auckland continuing to go strong."

His comments came as AVJennings announced it had returned to the black with an $18.8 million profit for the 12 months to June 30, reversing a $15.3 million loss in 2012/13.

Mr Summers attributed the turnaround to the company's commitment in recent years to scaling up or down its development plans based on the housing market outlook.

"We can look at where the market is going in three to six months and scale down to where we can see the market is heading," he said.

AVJennings' earnings were also supported by several acquisitions, including a joint housing venture in South Australia, more than 400 lots in Auckland and a small stake in a Perth development.

Mr Summers said a recent rise in first home buyer activity was a good indicator of strong market conditions.

"Overall market conditions are good. It's much about consumer confidence."

While the jobless rate is at a 12-year high of 6.4 per cent and expected to rise, Mr Summers did not expect this to reverse the housing recovery.

"Most people are confident in their existing jobs, the unemployment rate is really an issue when people get insecure about their future," he said.

"And while those headline numbers are up, I don't think that has been accompanied by a level of anxiety."

AVJennings' shares were 1.5 cents higher at 61 cents at 1504 AEST.
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#27
AVJennings' Summers sets goals
Matthew Cranston
668 words
18 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
AVJennings chief executive Peter ­Summers is getting to know plenty about rebuilding.

Not only does the listed company he run suddenly have 7 ½ years' worth of home lots to develop around Australia, but as president of cellar-dweller ­football club, St Kilda, he has a famous sporting team to rebuild.

His strategy and the success he has will be closely monitored.

"We are in a rebuild phase at the moment," Mr Summers said.

"It will take some time."

A plain-speaking accountant by ­profession, Mr Summers has a ­conservative approach to both the footy and development games which is best summarised by his address at St Kilda's season launch this year.

"Whatever challenges lie ahead, we will be thorough, honest, strategic, ­consistent and committed to ­overcoming them."

In the world of developing and ­building houses during a time where the housing market is showing ­increasing signs of a bubble, Mr ­Summers will need those virtues.Issues around spec building

Speculative building is one area he accepts needs to be discussed.

"We do spec in the sense that we build product before it is sold, but we are not spec in the sense that there is no other reason to build but gaining a sale."

Mr Summers' view on speculative building is unique:

"We are participating in the new housing market by participating in established housing."

Speculative building is something he does not want to be synonymous with and instead wants to communicate that each stage of development, from land acquisition to approval, to building and sale, is calculated and controlled at AVJennings.

"We are an integrated developer. We tend to try and avoid the reactive side to developing and building.

"My belief is that there are some companies that construct and then do the marketing and see where the ­market takes them.Decisions on next stage

"For us, if we are ready to go to the next stage our decision on how big it will be is not just about our capability but where the market is at and whether we can sell them."

AVJennings is entering fiscal 2015 with its highest level of lots under ­development in seven years.

The company's pipeline of 9219 lots is split 31 per cent in Victoria, 28 per cent in South Australia, 19 per cent in NSW and 17 per cent in Queensland.

There are rumours that AVJennings, which is more than 50 per cent owned by ­Singaporean developer, SC Global Development, could be a contender for listed Brisbane based developer Devine. That would help AVJennings beef up its Queensland exposure which Mr ­Summers says is a state with strong growth potential.

Analysts liked where he was taking the company.Profit upgrade

Bell Potter's Jonathan Snape upgraded net profit after tax for ­AVJennings by 5.3 per cent following the results in August.

In a note to clients he pointed out that AVJennings collected higher revenues than expected for each lot it sold and because there were more lots sold, ­margins for the company expanded.

"Lead indicators for east coast detached dwelling activity looks to have recovered substantially, with approvals up 48 per cent from their lows. ­AVJennings is strongly leveraged to this thematic," Mr Snape said.

The company, which had a market cap of $248 million is trading at about 64¢ but Bell Potter has lifted its target price to 82¢ from 78¢.

The company launched a $41.2 million equity raising to help bring down its debt last year in anticipation of a recovery in Australian housing.That has proven to be a smart bet already.

For Mr Summer, his goal to ­transform both AVJennings and the St Kilda Saints, will not be a job done in isolation.

He has kept the team on through the tough times at AVJennings.

Furthermore, his St Kilda board colleague is former Coles boss Ian McLeod, and he of all people, can offer a few tips on how to turn the game around.


Fairfax Media Management Pty Limited

Document AFNR000020140917ea9i00050
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#28
AVJennings takes control of Adelaide project
THE AUSTRALIAN OCTOBER 02, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne
RESIDENTIAL property developer AVJennings has bought out a Macquarie Bank subsidiary’s share of its St Clair project in South Australia.

AVJennings has purchased Urban Pacific’s 50 per cent stake in the project to assume full ownership. AVJennings chief executive Peter Summers said the acquisition would have a positive impact on the company’s results for the current financial year.

“With some 600 residential lots and apartment sites remaining, this project will continue to form a major component of the AVJennings results for some time,” Mr Summers said. “(We) respect Urban Pacific’s desire to head in a different direction as an organisation.”

The project, on the former Cheltenham racecourse in Adelaide, covers 64ha and already houses 470 homes.
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#29
Suburb rising from ground

Holly Petersen
382 words
22 Oct 2014
Weekly Times Messenger
WEETME
English
© 2014 News Limited. All rights reserved.

THE  WEST’S newest suburb is in the midst of a housing boom, with almost 200 homes under construction or planned in the coming months.

AV Jennings marketing manager Steve Testar said about 500 residents had already moved in to St Clair since sales opened in 2008.

He expected about 700 people would call the suburb home within the next year. Charles Sturt Council last week approved the new suburb’s first five-storey apartment building as part of the 1250-home development.

“We have two more apartment buildings due to start by the end of the year,” Mr Testar said.

“The opening of the St Clair train station about three months ago was a really positive thing and there has been a real hub of activity in the retail precinct as well.” About 270 homes had been sold at St Clair, and work or planning on 64 apartments, 85 townhouses and 45 freestanding homes was in progress.

Mr Testar said the development had been planned so all of the community areas were finished early.

St Clair Oval was among the first features to be completed and hosts Waugh in the West, an annual community Twenty20 cricket event featuring Steve Waugh, celebrity players and local sports clubs.

A retail hub off Cheltenham Pde includes the Coles head office, employing about 200 people, and was built next to the new train station on the Outer Harbor line.

About a third of the 64ha development site will be open space, including extensive wetlands.

An extension of St Clair Ave was due to open this month, Mr Testar said. The road will run through the middle of the development, connecting the main areas and running beside the wetlands.

“Millions of dollars in grants has been spent setting up the wetlands and the residents haven’t really been able to see it yet.

“Our central park is completed and allows resident to have barbecues and events. “When you work on a true community this size, these are the things people want in their community and having them here at the start has given us a point of difference.” Mr Testar said the Cheltenham Grandstand was being demolished and construction would start in that area soon.Real Estate, Page 34


News Ltd.

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#30
Celebrate the performers

Trevor Hoey - Trevor Hoey uses socio-economic trends to identify stocks with the best potential for growth.
2395 words
17 Oct 2014
Financial Review Smart Investor
FRSINV
English
Copyright 2014. Fairfax Media Management Pty Limited.
HOEY'S TOP TEN

With earnings season now over, the market has had time to sort the wheat from the chaff, writes Trevor Hoey, and there are plenty of opportunities among well-run companies.

1 AV Jennings

REAL ESTATE

As a national property development company with nearly 10,000 lots under management, with a gross value of more than $2.5 billion, it is hard to understand how AVJennings flies under the radar. In part it could be attributed to the sector being out of favour until recently, or its smaller market capitalisation of about $250 million.

But the company is punching above its weight financially, with pre-tax profit up 216 per cent in 2013-14 to $27 million and Bell Potter forecasting net profit after tax to increase from $15.2 million to $17.2 million in 2014-15. This represents year-on-year earnings per share growth of 13.7 per cent, but the real kick is expected to come in 2015-16 when the broker is forecasting growth of 33 per cent, implying earnings per share of 6¢. This would see AVJennings trading on a price-earnings multiple of about 14 relative to Bell Potter's 12-month price target of 82¢, upgraded from 78¢ after the company delivered its 30 per cent higher than expected full-year result.

The price target is supported by AVJennings' net tangible asset backing of 81.4¢ per security, as at June 30, 2014. This is likely to increase substantially in the near to medium term as the company enters a growth phase, developing its large land bank into residential housing projects.

Bell Potter highlighted that detached dwelling activity on the east coast looks to have recovered substantially, with approvals up 48 per cent from their post-GFC slump. AVJennings built up its land bank when prices were low so now has a strong balance sheet, with a debt to total asset ratio of 17 per cent.

Despite the low interest rate environment, affordability for first home owners remains a challenge. But AVJennings' house prices are mainly in reach of entry-level buyers.

Management said there is a significant housing shortage, notably in Auckland, Brisbane and Sydney. AVJennings recently acquired 400 lots in Auckland, potentially extending its success in the Catalina Precinct project.

Si view: AVJennings forecasts between 1500 and 1700 contract signings in 2014-15. Its metrics look strong, with the group having its highest levels of lots under development in seven years.

2 Pioneer Credit

DIVERSIFIED FINANCIALS

Pioneer Credit defied the market rout in September, its shares gaining more than 10 per cent. It benefited from a strong 2013-14 result and from an agreement struck with one of its major banking partners.

The provider of consumer debt management services listed on the ASX in May, but its share price flatlined until August, trading below its IPO price of $1.60. However, the quality of its annual result couldn't be denied. Customer payments were up about 60 per cent compared with the previous corresponding period, helping to generate net revenues of $25.8 million.

Operating profit after tax of $4.6 million was slightly ahead of prospectus forecasts, and management provided guidance which implied a sharp uptick in earnings in 2014-15. The group forecasts customer payments of $57.4 million, underpinning an after-tax profit of $6.6 million, representing earnings per share of 14.6¢.

Pioneer's announcement in late September that it had expanded its forward flow investment program through a new agreement with one of its major banking partners was viewed favourably by Bell Potter. The broker highlighted this was the first such agreement with this bank, and was an important step in further diversifying its vendor base.

Bell Potter sees Pioneer as well positioned for long-term sustainable earnings growth, assisted by debt portfolio purchases and the demonstrated ability of its customer-focused model to maximise payments, essential in transforming debt repayment clients into users of its broader financial services product offering.

Si view: Bell Potter has a buy recommendation, with a 12-month target of $1.95. It believes recent developments have added credibility to the company's ability to secure business partnerships, as well as increasing its industry profile, providing a platform for further banking relationships.

3 Nick Scali

RETAILING

Furniture retailer Nick Scali lived up to its reputation of underpromising and outperforming, with a net profit of $14.2 million for the year to June 30. This was ahead of the expectations of Moelis analysts, who forecast a $14 million net profit, in line with management's June guidance.

The broker said the result underlined Nick Scali's qualitative strengths and its ability to negotiate challenging conditions. Like-for-like sales growth of 6.3 per cent speaks for itself as many retailers are struggling to sustain previous year's sales levels while maintaining margins.

Though gross margins were slightly lower than last year they remained solid, evidenced by the underlying net profit growth of 16.3 per cent being ahead of sales growth of 11 per cent.

Providing further positive sentiment were management's comments about a solid pipeline of orders, which should see the company deliver a strong result in the first quarter. The company will provide earnings guidance later in the year.

Si view: Moelis's 12-month price target of $3.30 appears easily within reach given it implies a forward price-earnings multiple of 16.6. This is supported by the current growth profile, but accelerating the store roll-out would bring higher earnings momentum.

4 Tassal Group

FOOD, BEVERAGE & TOBACCO

Shares in salmon farmer Tassal Group rallied after it delivered a solid 2013-14 result featuring lower revenues than the previous corresponding period, but a 13.9 per cent increase in EBITDA.

A warm summer in 2012-13 contributed to reduced supply, driving down revenue. But EBITDA of $78.6 million was achieved due to improved pricing and operational efficiencies, generating more dollars per kilo of fish.

Net profit of $30.5 million was lower than CIMB estimates of $31.3 million, but the full-year dividend of 11.5¢ compared well with brokers' expectations of an 11¢ return.

Management said it had agreements with major customers for fresh and smoked salmon for two to three years, an important factor when supermarkets are squeezing suppliers.

Strong cash flows helped Tassal improve its balance sheet, and net debt to equity is 15.4 per cent. Management is targeting a statutory return on assets of 15 per cent in 2014-15.

Si view: Tassal is trading in line with its 12-month price target, and any upside in 2014-15 appears to be factored in. The stock has merits for long-term investors comfortable with the risks linked to crop production.

5 Tandou

FOOD, BEVERAGE & TOBACCO

Agricultural group Tandou isn't easy to understand, particularly its financial performance. In 2013-14 profit fell from about $6 million in the previous corresponding period to a break-even result. Despite this, Tandou's shares barely moved. It all comes back to accounting treatment and even from this perspective there are anomalies, including the company's inability to recognise fair value for its water entitlements.

This has been a growth area, with valuation gains of $8.7 million pre-tax. But management provided some indication of the value of its assets. Tandou had a net asset backing of 59¢ a share as at June 30. This represented a rise from 57¢ a share in 2013. Based on independent valuations, the net asset value per share including water entitlements is 64¢ a share, a substantial premium to its current trading range. Water entitlements holdings rose 148 per cent in 2013-14 to $78 million.

Si view: With core debt of $12.1 million and the potential for better growing conditions, Tandou looks reasonable value given its shares are trading at a substantial discount to net tangible asset value.

6 NIB Holdings

INSURANCE

Shares in NIB Holdings pushed up to their all-time high of $3.38, struck in mid-June, when it delivered its 2013-14 result in August. Top-line growth was 15.6 per cent and revenue increased to $1.5 billion. Though operating profit was up 4.3 per cent to $72.3 million and was below guidance of between $73 million and $78 million, the result was generally well received by analysts.

Bell Potter highlighted the combination of increased competition and a loss of $8.8 million associated with one product contributed to a modest result for the core health insurance division. The broker expects the average 8 per cent premium rise, which began in April, will lead to a big improvement in margins in 2014-15.

NIB declared a special dividend of 9¢ a share as part of its capital management plan, and Bell Potter anticipates this strategy will continue in 2014-15. The broker made nominal increases in earnings per share estimates in 2014-15 and 2015-16, but increased the 12-month target from $3.04 to $3.21.

Si view: NIB seems robust with cash and investments of nearly $560 million at year-end, up from about $500 million in the previous corresponding period . Net cash inflow of $93.7 million is a better indicator of performance than net profit and perhaps caused the positive share price response.

7 Sedgman

CAPITAL GOODS

Engineering and construction group Sedgman's break-even 2013-14 result wouldn't normally be well received by investors, but with consensus estimates indicating a loss of $2.3 million it wasn't surprising to see the company's share price bounce.

From closing at 50.5¢ on August 27, its shares spiked more than 20 per cent over the next three days. Moelis said a strong second-half performance in projects provided momentum into 2014-15 but assumptions shouldn't be made about the renewal of three contracts.

Aside from this potential upside, the 10 per cent increase in the order book to $385 million is important when put into perspective. This represents income in excess of the $355.9 million generated in 2013-14.

Even though revenue will be spread over more than 12 months, it is robust work in hand. Benefits are starting to materialise from diversification beyond the coal industry.

Si view: Moelis is forecasting 2014-15 EBITDA to increase from $17.1 million to $30 million. It expects Sedgman to pay dividends totalling 5¢, implying a substantial yield relative to its current trading range.

8 Collins Foods

CONSUMER SERVICES

Collins Foods provided a positive update at its annual general meeting in September, indicating it had achieved a net profit of $4.5 million in the 2014-15 first quarter, representing an increase of 21 per cent on the previous corresponding period. This was driven by good sales figures, with revenue up 28 per cent to $124.3 million.

First quarter same-store sales growth was 3 per cent. The company should go on to harness additional growth from store rollouts. It plans to open five KFC restaurants in Queensland and two in Western Australia, and remodel 16 outlets. While Collins tries to rejuvenate its Sizzler operations in Australia, it's a different story overseas where it has 60 restaurants across China, Japan and Thailand.

Moelis' analysts expect the March acquisition of Competitive Foods will provide earnings per share accretion of 15 per cent in 2014-15, a significant proportion of overall forecast growth of 20.4 per cent.

Si view: Moelis has a 12-month target of $2.75 on Collins Foods. The company should maintain earnings per share growth of 11 per cent in 2015-16 and 2016-17 after the sharp uptick in 2014-15.

9 SMS Management & Technology

SOFTWARE & SERVICES

While shares in SMS Management & Technology plunged from the previous day's close of $4.22 to hit an intraday low of $3.72 on the day it delivered its 2013-14 result, some analysts believe it could be poised to rebound.

The IT services provider had a stellar run after the global financial crisis as its shares increased from about $1.70 at the start of 2009 to a high of $7.20 in early 2010, an increase of more than 300 per cent. It remains to be seen whether the company can produce a similar rally when business investment in the IT sector recovers.

Certainly, the 2013-14 net profit of $12.7 million, down 40 per cent on the previous corresponding period, was uninspiring. But new contracts worth $348 million were signed during the year, representing an increase of 10 per cent.

Another encouraging sign was an improved fourth-quarter performance, reflecting more traditional patterns with a seasonal uplift in utilisation and client activity.

Si view: CIMB analysts believe SMS is set to recover. It upgraded its recommendation to add, forecasting earnings per share growth of 25.6 per cent in 2014-15 and 13.2 per cent in 2015-16.

10 Australian Vintage

FOOD, BEVERAGE & TOBACCO

Shares in Australian Vintage rallied 30 per cent in the two months leading up to the winemaker announcing its 2013-14 result. With net profit up 49 per cent to $10.5 million, despite nominal revenue growth, it was an impressive performance, demonstrating management has been successful in focusing on more profitable areas of its business while driving down costs.

These should continue to drop, with the group announcing it won't renew above market-priced grower contracts that expire in 2016. Chief executive Neil McGuigan said they would be replaced with fair market-priced grape contracts which would immediately yield cash benefits.

Exports to North America and Asia were up by 25 per cent and 15 per cent respectively and, with strong sales of its McGuigan brand, helped boost profits in a low sales growth environment.

Australian Vintage also had to deal with the challenges of a low vintage which negatively affects processing margins.

Si view: Bell Potter noted AVG continues to transition from a bulk wine operation to a branded wine play. Its growing presence in Australia is likely to be complemented by an emergence in China.


Fairfax Media Management Pty Limited

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