February 2024 Employment Data Bodes Well for Commercial & Professional Services Sector

This report is an updated version of the report published on 21 March 2024 at 3.55 pm AEDT.

Company Overview

Company Overview: McMillan Shakespeare Limited (ASX: MMS) is an ASX listed firm that provides fleet financing and asset leasing services. The company operates in three segments: Group Remuneration Services (GRS), Asset Management Services (AMS) and Plan and Support Services (PSS). Peoplein Limited (ASX: PPE) is a workforce management and staffing business, which operates in Australia and New Zealand. The company renders staffing business services and operational services. Kalkine’s Sector Report covers the Investment Summary, Sector Overview & Supporting Catalysts, Data Insights & Analysis, Financial Metrics, Financial Commentary, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on selected stocks.

Investment Summary

Sector Overview and Supporting Catalysts

Data Insights and Analysis

Index Performance

Key Drivers versus Key Constraints

Investment theme and stocks under discussion (MMS, PPE)

After understanding the sector, let us now look at two companies from the Commercial & Professional Services Sector listed on the ASX. The price potential of the companies under discussion have been analysed based on the EV/EBITDA valuation multiple method.

1.ASX: MMS (McMillan Shakespeare Limited)

(Recommendation: ‘Speculative Buy’ at AUD 19.660; Potential Upside: Low Double-Digit; Mcap: AUD 1.34bn)

MMS is an ASX listed firm that provides fleet financing and asset leasing services. The company operates in three segments: Group Remuneration Services (GRS), Asset Management Services (AMS) and Plan and Support Services (PSS).

Insights & Outlook

The stock has moved up by ~1.49% in the last one month, and over the last 9 months, it has increased by ~18.15%. The stock has a 52-week low and 52-week high of AUD 13.705 and AUD 22.750, respectively, and is currently trading above the 52-week high-low average. MMS was last covered in a report dated ’8 January 2024’.

2) ASX: PPE (Peoplein Limited)

(Recommendation: ‘Speculative Buy’ at AUD 1.090; Potential Upside: Low Double-Digit; M-cap: AUD 113.31mn)

Company Overview: PPE is a workforce management and staffing business, which operates in Australia and New Zealand. The company renders staffing business services and operational services.

Insights & Outlook

The stock has witnessed correction of ~10.89% in last 3 months, and over the last one year, it has decreased by ~59.07%. The stock has a 52-week low and 52-week high of AUD 0.965 and AUD 3.160, respectively and is currently trading below the 52-week high-low average. PPE was last covered in a report dated ‘15 February 2024’.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 21 March 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual’s appetite for upside potential, risks, holding duration, and any previous holdings. An ‘Exit’ from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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