Macro
Clime Asset Management

The minority of Australian TV viewers that chose the Budget Address rather than tuning in to Married at First Sight were still entertained by coverage that combined poor quality acting with choreographed hugs. Whether this is a government that has decided to leave is unclear. They seem to want... Show More

Clime Asset Management

Woolworths’ interim result last month disappointed and the shares fell briefly before rebounding to where they were before the result: around $30. Does this mean there is nothing to worry about after all and the stock is a buy? Show More

Clime Asset Management

The few large-cap growth stocks on the ASX tend to trade on steep premiums to the market. Therefore, investors seeking meaningful and sustainable growth are likely to find it outside the ASX 50. This report discusses a range of quality mid and small-caps as Clime analysts update company valuations post... Show More

Clime Asset Management

Just before Christmas, the Productivity Commission presented its final 700-page report to the Government titled “Superannuation: Assessing Efficiency and Competitiveness”. The Government released it to the public in early January. Show More

Clime Asset Management

Sometimes it seems like there’s nowhere to hide. Equity investors were smacked in the face over the month of October, with waves of selling hitting sharemarkets from Sydney to Shanghai and London to New York. Something like $7 trillion was wiped off the value of global sharemarkets. Tighter financial conditions,... Show More

Clime Asset Management

Webjet (WEB) is Australia’s leading online travel agent, through its website www.webjet.com.au. It is also the second largest player globally in hotel room procurement, with hotel room inventory provided to bricks and mortar and online travel agents. Both of these businesses are growing strongly and, importantly, are expected to continue... Show More

Clime Asset Management

Warren Buffett recently gave an interview where he reiterated his firm belief in the US economy, which justifies Berkshire Hathaway’s investment focus on quality US companies. In doing so, he emphasised the long-term investment horizon, bemoaned the focus on short-term forecasting but defended his right to receive quarterly updates. Show More

Clime Asset Management

It would be understandable if investors with large holdings in the four major commercial banks spent much of their time reviewing the recent mixed earnings results and negative newsflow from the Royal Commission. However, the vast amount of negative media and analyst coverage makes it tempting to spend too much... Show More

Hi James, Thanks for engaging with the article – we will try to address your points as best we can. We don’t typically look at businesses from a lens of relative value but taking this approach, we see FY18 EBITDA - including UltiSat – as being >$150m without organic growth. D&A will be much higher than 6% of revenues (you may be thinking of depreciation alone, which is typically 5-6% of revenues). Net debt (gross drawn debt less cash) was $333.2m and management’s guidance implies it will cap out around $340-350m. EV/EBITDA therefore comes in around 7.5x (EV of $1170m vs. our FY18e EBITDA of $157m). We see EV/EBIT as being less relevant for this type of business, given EBIT is not a good proxy for operating cash flow but on that basis, obviously a high depreciation business will look more expensive. As for organic growth, the CAGR we calculate ex-acquisition since CY14 is around 8% (revenue) and from CY16-CY18, 0% assuming CY18 revenue is c. $650m. Regards, Clime Team

On SDA potentially a great opportunity for patient investors -

Hi Daniel, thanks for your question. The ‘fair value’ we refer to simply reflects our view on the aggregate intrinsic value of the market. As the note discusses, the methodology we use to derive intrinsic value largely focuses on return on equity (ROE) and an appropriate required return (discount rate). Regards, Clime team

On Why the Australian stock market is now back to fair value -