Bell Potter

We recap some of the profit reporting season highlights from the past week including Bionomics, Medical Developments International, Accent Group, Altium and WiseTech Global. Full reports are available below via links.

Bionomics (BNO)

The underlying net loss for 1HFY19 was better than our forecast loss and driven by higher revenue, with opex in-line. The net result of model revision is a large decrease in our NPAT forecast for FY19 and FY20 and a 5% decrease in net loss forecast for FY21, primarily driven by removal of oncology assets (BNC105 and BNC101) and related upfronts/milestones, partially offset by lower opex.

Our valuation for BNO has reduced to $0.44/sh (was $0.69/sh), driven by dilutive effect of the recent capital raising, near term earning changes and longer term impact of removal of oncology assets and replacing it with PTSD indication for BNC210 and pushed timelines of launch and related milestones for BNC210 for GAD and agitation. We retain a Buy (spec) rating.

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Medical Developments International (MVP)

1HFY19 underlying NPAT (up 59.1% over pcp) at $0.2m was largely in-line with our forecast of $0.21m. Revenue was up ~22% at $9.5m (and grew over pcp across all 3 segments), however was below our forecast of $10.5m. Interim dividend of 2.0cps (fully franked) was in-line with BPe. MVP has a net cash position of $32m having repaid its debt during the half. ~$7m milestones from Mundipharma could be received in 1QFY20 to further improve their cash position.

The net result is our NPAT forecast for FY19-21 reduced by ~$1-3m, primarily driven by lower revenue forecasts and lower margins. The short term decrease in NPAT was partially offset by rolling forward of our DCF model. Our valuation and price target for MVP has modestly reduced to $6.73 (was $7.00). We retain a Buy rating.

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Accent Group (AX1)

AX1 announced underlying 1H19 EBITDA of $61.3m, up 23.3% on pcp, ahead of its 15-20% growth guidance range, and 4.4% ahead BPe $58.7m. 1H19 like-for-like (LFL) sales increased 1.2% (cycling 1.0%) and strengthened to 2.5% in the first 7 weeks of 2H19. Including the 19 net new stores, 1H19 total sales increased 10.5%.

We retain our Buy rating and have strengthened our sales & margin forecasts. We have also made adjustments to our capex estimates. The net effect is our FY19/FY20/FY21 EPS estimates increase by 4.5%/5.5%/7.6%. Our 12-month price target increases from $1.75 to $1.78. The combination of AX1’s vertical model, leading omni-channel capabilities and strong leadership team, is attractive.

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Altium (ALU)

ALU’s 1HFY19 NPAT was up a very strong 58% to US$23.4m and was 20% above our forecast of US$19.6m. The beat was mostly driven by a strong uplift in the EBITDA margin from 30.0% in 1HFY18 to 36.3% in 1HFY19 while revenue was only 2% above our forecast (US$78.5m vs BP US$77.0m). Operating cash flow was also up a very strong 80% to US$26.8m which represented 114% of NPAT so the cash flow was strong. The interim dividend was up 23% to A16.0c (unfranked) which was consistent with our forecast.

We have increased our price target to $35.00 (a 40% increase), which is a 29% premium to the current share price and so we upgrade our recommendation from Hold to Buy.

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WiseTech Global (WTC)

1HFY19 NPAT grew by 48% to $23.1m but was 10% below our forecast of $25.7m. Revenue grew by 68% to $156.7m and was 5% above our forecast while EBITDA grew by 52% to $48.5m and was in line with our forecast which implies a lower than expected EBITDA margin (31.0% vs BP 32.5%).  Cash flow was up 50% to $43.7m (which equated to 189% of NPAT) and the interim dividend of 1.5c was in line with our forecast.

We have increased our price target by 9% to $17.50 (driven by the recent rally in the Altium and Technology One share prices) which is still a reasonable discount to the current share price so we maintain our sell recommendation.

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