Growth Focus: EQT Holdings Ltd (EQT)

by Patrick Taylor

Date of Data Capture: 16/3/2018


Classification: Investment Management

Current Price: $21.09

Market Capitalisation: $428M

Forecast EBITDA Growth: 15.81%

Yield Estimate: 3.97%

Consensus Price Target: $24.39

# Covering Analysts: 2

Discount at Current Price: 15.65%

Price Target Trend: Increasing

Signal Timeframe: Quarterly-Weekly-Daily

Trend Bias: Up-Flat / Long-Medium

Short-term: Positive-Neutral
Medium-term: Neutral
Long-term: Positive

Recommendation: Buy

Focus: (Dividend Income &) Capital Growth

Set up Notes:
• Moving up within a longer-term uptrend, EQT cleared through linear resistance in September last year and broke through important $20.00 structural resistance in the last few weeks.
• Last year saw sales fall while earnings increased, this year aggregate forecasts predict both to increase and for the price to follow with growth tipped for gains through to 2020.
• Low debt, attractive revenue streams and a decent yield for a growth stock makes this a sort of hybrid growth/yield play.
• Further growth potential is setting up nicely here with positive signalling coming though in multiple timeframes, targeting resistance at $25 and $30 with support layered between $20, $19, $18 and $16.50 if needed.

Growth Focus: EQT Holdings Ltd (EQT)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

In a market with no guarantees it can be good to find a company you can put some faith in. We are doing that here with financial and trust service provider EQT Holdings Ltd (EQT) as we follow strong performance, excellent forecasts and a strong technical picture that carries a lot of confidence.

Set up way back in 1888 and based in Melbourne, EQT provides a diversified range of fiduciary and financial services across wealth management, estate planning, funds management, institutional services and superannuation. Operating in Australia, with recent moves offshore into Europe and Australasia, has seen good organic growth within an expanding sector benefitting from the ageing boomer demographic. The company has an active acquisition strategy, having completed the takeover of a multiple domestic and foreign companies recently, in addition to a major partnership announced last year, all helping to increase market share and diversity.

Performance has been strong with sales, earnings and profits higher last year after a softer 2016, but also has growth forecast to continue ramping up until 2020. This strong fundamental outlook supports a healthy dividend yield of 3.9% (an added bonus for a growth stock) which is seen increasing steadily in the years ahead. This combines well with their high recurring revenue and low debt as they aim to increase exposure to Asian markets showing a lot of promise.

Technically they look exciting with price pushing past $20 last month and while the current uptrend is 6 months old, if long-term signalling is correct it should have a lot further yet to run. Previous highs were reached way back in 2007 and still remain 30% higher from here, though closer structural resistance at $25 is the next obvious target. With the consensus price target sitting more than 15% above current levels (after this aggregate value forecast rose over 13% in the last 2 months) we should feel secure that EQT’s growth potential is the real deal.

While there are some legitimate concerns regarding its low volume stock liquidity, which could exacerbate dips on poor markets or bad news but could also work in shareholders favour if they continue on their ascendance. Securing a firm combination of strong organic and acquisitive growth both in Australia and overseas, coupled with excellent performance makes forecasts for strong capital growth for EQT very credible. With an exciting technical setup building here with momentum signalling turning positive here across multiple timeframes, the timing seems ready to enter here EQT takes its next leap forward.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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