MYOB Group, Iluka Resources, Crown Resorts and Flight Centre - First Impressions from Reporting

Bell Potter


MYOB Group (MYO):   Recurring revenue represented 95.6% as compared to 95.1% pcp | Paying SME subscribers up 7% to 585k and online subscribers up 47% to 249k | 93% cash conversion in 2H16 as compared to 95% in 1H16, Net debt lowered by $4m to representing gearing 2.2x Net Debt/EBITDA as compared to 2.6x pcp. | Outlook: The Connected Practice strategy, underpinned by the MYOB Platform, is expected to accelerate online subscriber growth in 2017. We expect double digit revenue growth for the 2017 year and EBITDA margins to remain in the 45-50 per cent range. Investment in the MYOB Platform will continue and R&D investment is expected to be at the upper end of the reported 13-16 per cent of revenue range. We continue to look for and expect to make targeted acquisitions which fit in the core of our business, and investment in new growth opportunities outside of our business.


Iluka Resources (ILU):  Mining Area C royalty EBIT 23.0% lower to $47.1 million (2015: $61.2 million) | Unit cash cost of production for Z/R/SR (excluding by-products), decreased 33.1% to $373 per tonne of Z/R/SR (2015: $558 per tonne). | Operating cash flow down 38.2% to $137.3m. Free cash flow $47.3m as compared to $155m in CY15 | Net debt  $506.3 million (2015: $6.0 million net cash) – includes total SRL acquisition of $469.2 million. Net debt 31 January $441.8 million as compared to net cash at cash $6m in pcp | Outlook: Iluka estimates supply and demand now broadly balanced. Encouraging initial 2017 volumes – some evidence of restocking. Iluka advised customers of a US$50/tonne price increase from 15 February. First quarter 2017 volumes secured at higher prices. Lower volume of zircon concentrate sales for 2017. 


Crown Resorts (CWN):  Divisional Performance: Crown Melbourne revenue down 13.3% to $1042.6m (Main floor gaming revenue up 0.5% and VIP program down 47.4%), EBIT down 18.7% to $208m; Crown Aspinalls revenue up 26.3% to $62.2m, EBIT up 83.6% to $17.7m; Crown Perth revenue down 10.7% to $440.9m, EBIT up 4% to $100.5m; Crown Wagering revenue up 39.8% to $153.7m and EBIT ($13.6m). | Crown’s share of MCE’s normalised NPAT for the half year to 31 December 2016 was an equity accounted profit of $42.4 million, up 14.0% on the pcp. | Net operating cash flow for the period of $230.0 million compared to cash flow of $200.9 million in the pcp. | Crown has adopted a new dividend policy to pay 60 cents per share on a full year basis, subject to the Company's financial position. This new policy will apply to Crown’s interim dividend for the financial year 2017, in respect of which an ordinary dividend of 30 cents per share has been declared. | Crown intends to undertake an on-market share buy-back of approximately $500 million commencing following the receipt of regulatory approvals. Based on the Company's closing share price of $11.39 per share on 22 February 2017, a buy-back of $500 million represents the repurchase of approximately 43.9 million shares or approximately 6.0% of issued capital. Also, CEO Rowen Craigie will depart from CWN effective 28 Feb-17. | Outlook: No quantitative guidance provided-CROWN REIT IPO to not proceed at this point in time as a consequence of the completion of the MCE sell down transactions.


Flight Centre (FLT):  Net operating cash flow ($146.7m) as compared to ($96.7m) in pcp. | Outlook: “Given this ongoing uncertainty ahead of the company's busiest booking periods, FLT believes it is appropriate to amend its FY17 guidance to an underlying PBT between $300million and $330million (previously $320million-$355million).”


Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

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