This story features MCMILLAN SHAKESPEARE LIMITED. For more info SHARE ANALYSIS: MMS
Bottom Line 21/06/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up Support Levels: $13.99 – $13.72 / $10.36
Resistance Levels: $15.54 / $18.64
Technical Discussion
McMillan Shakespeare ((MMS)) is an Australian based provider of salary packaging, novated leasing, asset and fleet management and insurance services. The Company is involved in the delivery of remuneration, asset management and finance services to public and private organizations in Australia. The Company operates in two segments; Group Remuneration Services and Asset Management. The Asset Management section provides financing and ancillary management services associated with motor vehicles, commercial vehicles and equipment. For the year ending the 30th of June 2015 revenues increased 12% to A$389.6M. Net income increased 23% to A$67.5M. Revenues echo the Remuneration Services section increase of 12% to A$176.1M. Broker consensus is “Buy”. The company pays a dividend yield of 3.7%.
Reasons to be more optimistic:
→ Strong earnings continue to be a feature.
→ Regulatory risk is low with both political parties likely retaining FBT law status quo.
→ The acquisition of Anglo Scottish offers diversity.
→ Near-term growth is supported by the latest car financing acquisitions.
→ The UK finance and warranty company Presidian has been acquired following regulatory approval.
→ Earnings have recovered following the FBT fiasco.
We have given MMS a leave of absence from these pages over the past few months though recent strength means it’s time to take another look. In fact, this company has recently broken up through a line of resistance which should now be acting as support. Not only that, but all-time highs aren’t too far above current prices so if traction can be gleaned from here there’s no reason why those higher levels, circa $18.50 can’t be attained. It’s also worth noting that a nice-looking a-b-c correction appears to have concluded last week at the recent pivot low. Following this type of structure price action should be strong and impulsive to the upside and although it’s only early days this appears to be unfolding now.
There was some rejection from intraday highs today though this was only in line with the broader market and therefore isn’t reason for concern. A push up through the recent pivot high at $15.54 would be another step in the right direction and will likely trigger another decent trend higher. Volume is also looking positive as it increases during strength and declines during retracements and consolidation patterns. If we are to see a break higher than we’d expect volume to expand which would suggest it’s not just a few mum and dad investors taking an interest but more so the smart money. Either way, as long as the broader market can hold itself together there’s no reason why the recent turnaround can’t continue.
Trading Strategy
The strategy here is to buy following a push up through the recent pivot high at $15.54 with the initial stop placed just beneath the recent pivot low at $13.98. The wave equality projection sits up at $19.17 and is the initial goal which also coincides with all-time highs, making it a logical target area to concentrate on should strength take hold. It’s difficult to get any more bullish at this juncture though as always we’ll continue to follow the smaller degree patterns and amend targets if/when appropriate.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
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