Full steam ahead for Dominic Stevens as new stockmarket chief

The bourse has barely missed a beat despite not having a CEO since Elmer Funke Kupper’s shock exit in March.

Intecq’s rise

ASX (ASX) $49.82

Just as the country’s wheels of bureaucracy keep turning under caretaker governments — probably more efficiently — the bourse has barely missed a beat despite not having a CEO since Elmer Funke Kupper’s shock exit in March.

Since then, ASX shares have surged 20 per cent while the ASX 200 index has gained a mere 8 per cent.

Graciously, newly anointed chief Dominic Stevens attributed the well-oiled machinery to Elmer’s good works, sadly truncated by the corruption probe at Tabcorp that forced his resignation.

That’s not to say it will be business as usual at the bourse, with Stevens promising his “nuances and views and changes” will only be felt towards the end of calendar 2016.

Unlike a visiting celeb asked what he thinks of Australia having only seen a customs queue, Stevens has the inside knowledge of having been an ASX director since 2013.

For a start, the adoption of blockchain ledgers — Elmer’s pet project — will be far more nuanced.

“Digital ledger is a business model we have to understand carefully,’’ he says.

“I think it will be very interesting for us, but we have to move very clearly and slowly with the regulators and the market.’’

While the German and London exchanges are planning a merger, the ASX looks like being an interested observer on the M&A scene — not that any CEO new or old would spill the beans on a board’s real intentions.

Stevens’ appointment comes in time for him to preside over the ASX’s August 18 results, which will still bear Elmer’s stamp. Hold.

Tabcorp Holdings (TAH) $4.87; Intecq (ITQ) $7.03

Speaking of the devil, Tabcorp looks to have Intecq all tied up with its $128m offer after Spanish interests sniffed around the obscure gaming technology provider last year.

In an agreed tilt, Tabcorp is paying $7.15 a share for Intecq, which services 70,000 electronic gaming machines, mainly in NSW.

Intecq’s eBet arm recently won a contract to supply gaming systems to Hobart’s ageing Wrest Point and Launceston’s Country Club Tasmania.

The back office pokies stuff isn’t as exciting as owning the flashing machines, but Tabcorp Gaming Solutions has helped plug the earnings gap flowing from Tabcorp’s loss of its Victorian pokies franchise.

TGS contributed $34m of EBITDA in the first half, 13 per cent of Tabcorp’s total earnings. Tabcorp expects Intecq to contribute $20m of EBITDA in the first full year, which implies a meaningful uplift.

Flagging further corporate action, Criterion rated Intecq a hold at $5 in March. Overly conservative, but we were on the right track.

Impatient Intecq holders should sell on market.

Meanwhile, Tabcorp is a hold ahead of its full-year prezzo, when management will be asked more about greyhound bans, money laundering allegations and Cambodian corruption than the actual numbers.

MYOB (MYO) $3.78

To a background of chirping cicadas and the gentle knock of leather on willow, holidaying MYOB CFO Richard Moore in January told your columnist the accounting software house was scouring for acquisitions to fill product gaps.

Moore’s high summer guidance was spot on: after six months of scouring, MYOB has acquired NZ “enterprise solutions” house Greentree for $NZ28.5m. The headline value isn’t huge in the context of MYOB’s $2.2 billion market cap, but it exposes MYOB to clients bigger than its traditional SME base.

Moore says MYOB’s current enterprise solutions division caters for clients with 300 to 400 employees — bigger than an SME.

Greentree caters for clients with up to 1000 employees on both sides of the ditch.

Moore says enterprise software remains a fragmented market, which means investors should expect further acquisitions. “There are no large international players and no one has more than 15 to 20 per cent market share,’’ he says.

Enterprise is living long and prospering, having delivered 13 per cent of MYOB’s group revenue last year on the back of the new MYOB Advanced and acquired PayGlobal.

Meanwhile MYOB’s half year results on August 25 will be more interesting because Bain Capital’s 57 per cent holding comes out of escrow at 4.15pm that day.

Bain relisted MYOB in April last year, having raised $830m at $3.65c a piece in the year’s biggest IPO. MYOB is the exchange’s ninth most short-sold stock, with 8 per cent of the register outstanding. But the stock has spurted 10 per cent in the past month, with fundies Fidelity and Goldman Sachs Asset Management joining the register.

The short sellers assume Bain will dump the lot. But MYOB is Bain’s first Australian IPO and its US reputation suggests a more staged approach. Long-term buy.

The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author owns Tabcorp shares.