Growth Focus: Mitula Group Ltd (MUA)

by Patrick Taylor

Date of Data Capture: 29/6/2017


Classification: Software & IT Services

Current Price: $0.94

Market Capitalisation: $201M

Forecast EBITDA Growth: 42.52%

Gross Yield: 0%

Consensus Price Target: $1.30

# Covering Analysts: 1

Discount at Current Price: 38.30%

Price Target Trend: Increasing Flat

Signal Timeframe: Monthly-Weekly-Daily

Trend Bias: Up Flat Long-Short

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

Recommendation: Buy
Focus: Capital Growth

Set up Notes:
• MUA is capable of aggressive moves – here we find them working against major resistance which is so far holding down a potential rally backed by good fundamental performance and forecasting that combines well with an exciting, highly-correlated technical setup.
• With earnings growth above 30% last year and even greater growth predicted for the year ahead, MUA should have good newsflow on top of a price target above old highs at $1.30.
• Technically strong with positive multi-timeframe signalling coming through underneath overhead resistance at $1.00, $1.10 and $1.20 - with good support layered down from 90c, 85c and 80c.

Growth Focus: Mitula Group Ltd. (MUA)

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

An investment in patience is normally well rewarded, we hope this will be the case with Mitula Group Ltd (MUA) whose Sanskrit meaning is moderate, meticulous or patient. We think this reflects the situation well and after waiting for the last pullback to complete we are ready to strike as they look poised to run once more.

This Spanish technology company is headquartered in Madrid and took its first steps forward in 2009 before listing on the ASX in 2015. Holding an Australian office in Melbourne, the company operates 104 vertical search websites across 51 countries for clients including Real Estate, Motoring, Cars, Jobs, Holiday Rentals and Fashion. Their global span provides them with good exposure to developing markets across Europe and South America, offering excellent grounds for continued strong growth as they look to raise their stakes.

Following a high margin, low recurring cost business model has allowed them to build a strong cash position and is backed by very strong growth seen across sales, earnings and profits. Last year saw an impressive EBITDA growth rate over 33% and this is forecast to increase a further 40%+ into 2018. One red flag on the fundamental side is their very limited single broker coverage - though this has only just reduced from two and didn’t change aggregate targets significantly. Steering the company we have Chairman Simon Baker taking charge and based on previous experience - and declared acquisition strategy - might be able to turn this debt-free cash cow into a proverbial bull in a China shop.

Technically, they are somewhat erratic in the weekly timeframe we have pictured (their lack of trading time on the ASX reduced the depth of our longer-term signalling too much to use here) but they do show good correlation and positive momentum developing in the medium-term with positive signalling in the long and shorter-termed timeframes. The obvious barrier is overhead resistance at $1.00 and while this sort of round-numbered psychological structure normally represents a significant hurdle, with MUA this may not prove to be a resilient barrier due to the sheer volatility and aggressive nature of the stock. If prices remain penned we have good support layered down to 90 and 85c here, but we would expect pricing to stretch its legs beyond that fence once it is cleared.

With excellent past performance, extremely bullish fundamental forecasts and exciting technical setup we may not have to rely on patience over much after all, if Mitula can keep on doing what it is already doing their pedigree should come to the attention of the greater market faster than you can say vamanos rapido!


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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