Investment Matters

Company News: NSL, Paragon Care, Threat Protect and more

NSL Consolidated is plugging along quite well.  After a positive sales and marketing update a couple of weeks ago – especially about sales prices and order quantities - the company announced it is proceeding with the engineering and design work for, and has engaged a company to project manage, the Phase 3 expansion of its operations.  This will see production of high grade ore increasing to 400ktpa by H1 2019. The shares of NSL remain trapped in retail punter land, as was the case with Emeco only two years ago when it had a $16m market cap and only two professional investors on the register.  Hence, the share price of this stock will be subject to emotion, until such time as the register settles with new blood. This will most likely occur over time as the company starts to deliver to its current Phase 3 plans.

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Paragon Care will acquire a NZ-based healthcare supplies distribution business, REM Systems.  It is a meaningful acquisition for Paragon: enterprise value of NZ$54m, and annual FY-18 EBITDA of NZ$7.2m.   The acquisition is considered highly synergistic to Paragon’s current operations (both in the context of Paragon’s ability to leverage its own range further into the NZ market, and in the context of the cultural characteristics of the two companies), is >10% EPS accretive in FY-19 and beyond, and will meaningfully increase Paragon’s scale.

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Threat Protect provided earnings guidance for FY-19.  It is expecting EBITDA between $3.8m and $4.0m.  This is meaningful growth as compared to FY-18 EBITDA of $2.7m, and affirms the success the company has had acquiring and gaining scale (which we expect to continue).

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Challenger Financial held their Investor Day.  The company noted the government’s focus on sustainable income streams in the recent budget and in regulatory reforms. Such developments bode well in relation to the demand outlook for Challenger’s annuity products in the medium term.  The company also advised that it is going to de-risk its investment book a little – with a decreased focus on property and an increased focus on fixed income.  Additionally, the company reaffirmed FY-18 guidance for normalised (excludes the impact of market movements) NPBT (net profit before tax) growth of 8% to 12% over FY-17.

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MMA Offshore entered into a three year contract for the charter of the vessel MMA Pinnacle to an offshore maintenance, inspection and repair services company.  It is a meaningful contract for MMA with a highly credible company in the offshore oil and gas sector.