• HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT
Tamim Asset Management
  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT

Stock Insights

Top 3 Defensive (yet growing) Stocks for 2021

24/1/2021

1 Comment

 
This week we take a look at three stocks that are both defensive in nature but still in their high growth emerging phase of their business evolution. All stocks are high conviction holdings in the TAMIM Fund: Australia All Cap portfolio.
PictureAuthor: Ron Shamgar
Unity group (UWL.ASX) is our top pick for 2021 and not so coincidentally one of our largest holdings. In our mind, owning UWL is like owning a mini version of the NBN but with better growth prospects. 75% of group revenues come from fibre services to residential Greenfield developments. We believe fibre should be viewed as a core infrastructure service by investors, one that is defensive and has a very long use life.

Picture
Picture
Source: UWL company filings
Since UWL has 18% market share versus NBN in its sector, we think the stock should be valued more like a core infrastructure asset rather than a telco. UWL recently acquired the Telstra Velocity fibre asset for $180m. This will add Telstra as an internet service provider on the network and will increase group EBITDA to $120m. UWL is currently trading on a one-year forward EBITDA multiple of 12x but we believe it should be closer to 15x. Our valuation is approximately $2.50, so we see another 30% of potential upside.
Smartpay (SMP.ASX) is a high growth payments and terminal provider. By now we all know that Covid-19 further accelerated the take up of electronic payments and, like its bigger competitor Tyro (TYR.ASX), SMP has benefited accordingly. The merchant terminal market in Australia is around one million terminals and growing at 3% p.a.. About 30,000 new terminals are added each year and the banks dominate 90% of the market, followed by TYR (approximately 5%) and then SMP with about 5000 terminals of their own. 
Picture
Source: SMP company filings
There is a pool of about 300 000 small merchants that SMP is targeting. On their current run rate SMP is adding over 5,000 terminals p.a.. Every 5000 terminals equates to approximately $20m of annual recurring revenue. Recently TYR has been having a serious connectivity issue with its terminals and this provides SMP with a unique opportunity to grab market share. At the moment SMP’s market cap is ~$200m and, based on current growth rates, we believe that SMP can add up to $150m of value to shareholders each year. With the sector consolidating, SMP is a takeover target and we think the stock will double over the course of 2021.
Healthia (HLA.ASX) is an allied health rollup of podiatry, physiotherapy and optometry clinics around Australia. The business plays into thematic focused on the aging demographic around the country with 650 Australians turning 60+ every day. Accordingly, we see further increased demand for HLA services. We estimate that HLA is on track for $180m revenue and $40m of EBITDA in Financial Year 2022.
Picture
Source: HLA company filings
So why do we like HLA:

  • Management are ex-Greencross (GXL, now privately held), which was a very successful vet clinics roll up that eventually got acquired and delivered significant value to shareholders.
  • HLA has now hit scale financially and has delivered a track record of execution since listing over two years ago.
  • The sector is consolidating. We see HLA as interesting because they could be both an acquirer and/or a potential takeover target in future.
  • Lastly but most importantly, HLA is cheap. Trading on 11.5x PE multiple, 6x EV/EBITDA multiple, and offering a 5% gross dividend yield. We value HLA at approximately $2.50
1 Comment
George Papazov link
10/8/2021 07:55:00 pm

Thanks Ron you have discussed so well. I just loved it. This is really great & helpful. I understand it very smoothly. I enjoy it reading. Great.

Reply

Your comment will be posted after it is approved.


Leave a Reply.

    Stock Commentary

    At TAMIM we are committed to educating investors on how best to manage their retirement futures.

    Sign up to receive our weekly newsletter:

    * indicates required

    TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.

    Archives

    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    December 2015

    Categories

    All
    2016 Presidential Election
    5G
    AGM Season
    Apple (AAPL.NASDAQ)
    Asia Small Companies
    ASX
    ATL.AX
    Aus Equity All Cap Portfolio
    Aus Equity All Cap Value Portfolio
    Aus Equity Growth Portfolio
    Aus Equity Income Portfolio
    Aus Equity Small Cap Portfolio
    Australian Stocks
    Autonomous Vehicles
    Big Four Banks
    Brexit
    Electric Vehicles
    Emerging Markets
    Energy
    ENN.AX
    FAANG
    Financials
    Fintech
    Global Equity High Conviction Portfolio
    Global Mobility
    Gmg.ax
    Gold
    Growth Stocks
    Guy Carson
    Healthcare
    Income Investing
    Infrastructure
    International Stocks
    Investment Thematics
    IT Services
    Mergers & Acquisitions
    Mobility
    Pharma
    Property
    Rare Earths
    REITs
    Reporting Season
    Retail
    Robert Swift
    Ron Shamgar
    SLK.AX
    Small Cap Income Portfolio
    Small Caps
    Stock Report
    Takeovers
    Technology
    Telco Stocks
    Telstra (TLS.ASX)
    Tourism
    TPG
    Utilities
    Value Investing
    Video
    Wesfarmers (WES.ASX)

    RSS Feed

TAMIM | Equities | Property | Credit
​

TAMIM Fund
Australia All Cap
Australia Small Cap Income
Global Mobility
Global High Conviction
Credit

Listed Property
TAMIM Property
Company
About
Contact
Insights
Invest Online
Login
Other
Privacy Policy
Terms & 
Conditions
​Disclaimer
Contact
Level 4, 55 Grafton Street
Bondi Junction, Sydney NSW, 2022

1300 750 007

ima@tamim.com.au

DISCLAIMER

​The information provided on this website should not be considered financial or investment advice and is general information intended only for wholesale clients ( as defined in the Corporations Act). If you are not a wholesale client, you should exit the website. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions. Where the website refers to a particular financial product, you should obtain a copy of the relevant product services guide or offer document for wholesale investors before making any decision in relation to the product. Investment returns are not guaranteed as all investments carry some risk. The value of an investment may rise or fall with the changes in the market. Past performance is no guarantee of future performance. This statement relates to any claims made regarding past performance of any Tamim (or associated companies) products. Tamim does not guarantee the accuracy of any information in this website, including information provided by third parties. Information can change without notice and Tamim will endeavour to update this website as soon as practicable after changes. Tamim Funds Management Pty Limited and CTSP Funds Management Pty Ltd trading as Tamim Asset Management and its related entities do not accept responsibility for any inaccuracy or any actions taken in reliance upon this advice. All information provided on this website is correct at the time of writing and is subject to change due to changes in legislation. Please contact Tamim if you wish to confirm the currency of any information on the website.  

magellen, kosec, clime, wilson, wam, montgomery, platinum, commsec, caledonia, pengana, tamim

  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT