Enero Group Limited (ASX:EEG)

July 25, 2019 | Price: $1.59

Dividend Portfolio

Overview: Enero Group Limited (“Enero”, “the Company”) is a boutique network of marketing and communications businesses offering clients a full range of marketing and communication services. EGG focuses on integrated marketing and communication services, including strategy, market research, advertising, and corporate communications. The Company consists of 10 marketing and communication s services businesses across seven countries.

Catalysts: Following a period of financial challenges, Enero Group experiences renewed growth across all key metrics, driven by organic expansion and acquisitions in key geographical markets. Continuation of this trend has the potential to deliver shareholder value via a mix of earnings growth and dividends. Enero generates free cash flow from its operations and coupled with a cash balance of $38.4 million we see the potential for further value-added acquisitions and group reinvestment.

Hurdles: There is no guarantee that the recent turnaround will extend and that Enero will continue to deliver revenue and earnings growth. Historically Enero’s business was vulnerable to currency fluctuations and economic sentiment which could have a negative impact on its financial performance. Entry barriers to the industry are low and Enero may be subject to increasing competition.

Investment View: Enero Group offers profitable exposure to advertising and communication trends. We see Enero as a turnaround play as recent growth initiatives have materialised following a period of operational challenges and declining revenues. The Company’s primary geographical markets – Australia, Europe, and the USA – are growing simultaneously and recent acquisitions have been successfully integrated and enhanced the company’s earnings profile. We see the potential for capital management initiatives for shareholders and initiate coverage with a “buy” recommendation.

Disclaimer

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its reports. As a result, investors should be aware that the S3 Consortium may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making any investment decision. The publishers of this report also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this report.

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The information contained in this report is current at the finalised date. The information contained in this report is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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