ADVISOR WATCHLIST
Angus Traves
Wealth Management Advisor atraves @ burrell . com . au ( 07 ) 3006 7288
Endeavour Group ( EDV ) After seeking to create a more ESG friendly façade for their major shareholders , Endeavor successfully demerged from Woolworths Group in July 2021 . This continues to represent one of the most direct exposures to the retail liquor market in Australia , a $ 16bn market predicted to grow by 6 % plus annually to 2025 ( IBIS , 2022 ). The demand of Dan Murphy ’ s loyal 6.2 million-client base ( 30 % of the Adult Australian population ) has been strong and stoked innovation in the space with technology such as electronic live pricing on store shelves . Venue operation equates to ~ 26 % of the group ’ s sales revenue ( hotels and pubs ) but the majority driven by their retail liquor store holdings . The online business has also been improving with sales up 24 % vs H1 FY21 . Combine this with record high consumer spending expectations and it is reasonable to land on the conclusion that EDV may be positioned for some capital growth over the next twelve months .
Jamie Elgar
Associate Director - Head of Dealing Desk jelgar @ burrell . com . au ( 07 ) 3006 7232
This month ’ s meeting of the small and mid-cap committee highlighted three stocks to watch . Silk laser Limited ( SLA ), Peter Warren Automotive ( PWR ) and Mighty Craft ( MCL ). We are meeting the management of Peter Warren later this month . We also had a meeting with Motor Cycle Holdings ( MTO ) which we have started to buy for portfolios . We feel that the market is pricing in a drop off in activity for MTO and is therefore being conservative on the company ’ s price target . Speaking with management , business activity is still strong and we believe MTO could be due a re-rating at its next result release .
Silk Laser ( SLA ): Silk Laser is a non-surgical aesthetics clinic network . Its core offerings comprise laser hair removal , cosmetics injectable , skin treatments , body contouring and skincare products . 1H ’ 22 result showed cash sales of $ 16.4m , proforma EBITDA up 20 % to $ 12.7m and NPAT of $ 5.7m . SLA currently has 119 clinics with goal to expand to 150 . The stock is currently trading around $ 3.20 with target prices of $ 5.30 . The aesthetics market is seen as a rapidly growing market and SLA is well placed to benefit from this growing market .
Peter Warren Automotive ( PWR ): PWR is an automotive dealership with 82 franchises across the volume , prestige and luxury segments . 1H ’ 22 results showed a 35 % increase in PBT and an inaugural interim dividend of 9c . We have followed AP Eagers for a long time and PWR looks to be a comparable smaller player in the sector . We have also had a very good meeting with Motorcycle Holdings ( MTO ) this month in the same sector . PWR is currently trading at $ 2.75 with consensus price targets around $ 4 .
Mighty Craft ( MCL ): MCL is a craft beer accelerator with a diversified portfolio of craft beverages . MCL invest in craft beer producers , providing them with capital and industry solutions to grow their brand awareness and accelerate growth and scale . 1H ’ 22 result showed a significant increase in revenue of $ 29.6m , up 130 % from previous period despite disruption from Covid lockdowns . As MCL gains scale and size within the beverage market it is likely that the company becomes a takeover target from larger players looking to increase their product mix . We have reached out to the company to meet management and dig deeper into the story . MCL is currently trading at 30c with broker target of 54c .
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