Equity Strategy
Conviction Insights Report - November 2020
Thu 5th November, 2020

Conviction Insights represents our highest conviction calls from across our coverage universe. This month we add United Malt (UMG) to our Conviction Insights lineup. A large commercial malt producer with processing plants in North America, Australia and the UK, our inclusion of UMG and our overweight recommendation rests on a number of factors:

  • We are attracted to UMG’s quality asset base and reasonably defensive revenue profile.
  • Peer earnings results and associated commentary indicate an improved sales trajectory and re-stocking in the off-premise channel. Our industry feedback suggests ordering patterns have improved further in recent weeks.
  • Valuation is attractive, offering a free cash flow (FCF) yield of ~8% and trading on an FY21 cash price-to-earnings (P/E) ratio of ~12.5x.

    The full report covers recent developments across Conviction insights, unpacks our attraction to each stock, and delves into potential risks and catalysts we have identified.

    Disclaimer and disclosures

    Recommendation structure, definitions and the Financial Services Guide (“FSG”) can be found at www.wilsonsadvisory.com.au/disclosures.


    This document has been prepared by Wilsons Advisory and Stockbroking Limited (AFSL 238375, ABN 68 010 529 665) (“Wilsons”) and its authors without consultation with any third parties, nor is Wilsons authorised to provide any information or make any representation or warranty on behalf of such parties. Any opinions contained in this document are subject to change and do not necessarily reflect the views of Wilsons. This document has not been prepared or reviewed by Wilsons' Research Department and does not constitute investment research. Wilsons makes no representation or warranty, express or implied, as to the accuracy or completeness of the information and opinions contained therein, and no reliance should be placed on this document in making any investment decision. Any projections contained in this communication are estimates only. Such projections are subject to market influences and contingent upon matters outside the control of Wilsons and therefore may not be realised in the future. Past performance is not an indication of future performance.

    In preparing the information in this document Wilsons did not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any advice contained in this document is general advice only. Before making any investment decision, you should consider your own investment needs and objectives and should seek financial advice. You should consider the Product Disclosure Statement or prospectus in deciding whether to acquire a product. The Product Disclosure Statement or Prospectus is available through your financial adviser.

    Wilsons and Wilsons Corporate Finance Limited (ABN 65 057 547 323, AFSL 238 383) and their associates may have received and may continue to receive fees from any company or companies referred to in this document (the “Companies”) in relation to corporate advisory, underwriting or other professional investment services. The directors of Wilsons advise that at the date of this report they and their associates may have relevant interests in the securities of the Companies. Please see relevant Wilsons disclosures at www.wilsonsadvisory.com.au/disclosures.

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    Written by

    James Ferrier , Head of Research

    James is Head of Research and has more than 13 years’ experience as a senior analyst with Wilsons.

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