Rhipe for the Picking

Rhipe for the Picking

Bell Potter rates ((RHP)) as Buy (1) –

Rhipe delivered a first-half operating profit of $8.8m, up 34% versus last year and in-line with pre-released figures.

Despite cycling a strong result last year, Bell Potter notes Rhipe delivered top-line growth of 15% reflecting strong growth in Microsoft public cloud revenue streams and services revenue. An interim dividend of 1.5c was announced versus Bell Potter's expected 1c.

On the flip side, these positives were offset by soft operating conditions seen by Rhipe's SMB client base which, in the broker's view, has remained in cash conservation mode since the beginning of the pandemic.

Bell Potter retains its Buy rating with the target price unchanged at $2.50.

Target price is $2.50 Current Price is $1.73 Difference: $0.77

Shaw and Partners rates ((RHP)) as Buy (1) –

Rhipe pre-released some numbers pertaining to the first half including operating profit of $8.8m, up 34% versus last year and 6% ahead of Shaw and Partners' forecast.

The company has guided to higher investment in the second half although its operating profit guidance at $17.5m is regarded as conservative by the broker.

Also, with second halves always stronger for the group and with APAC restrictions loosening, the broker expects an increase in Rhipe's re-seller activity.

Buy with a $3.02 target price.

Ord Minnett

17/02/2021

2

Accumulate

$2.35

39.88%

COMMENTARY

Rhipe reported first-half FY21 operating earnings (EBITDA) of $8.2m, up 17% on the pcp and slightly ahead of Ord Minnett’s $7.7m forecast, though this included a number of one-off items. The result was largely pre-released in the January trading update.

The business continues to track in-line with the broker's expectations and stronger organic revenue growth is expected to return post covid-19. A fully franked interim dividend of 1.5 cents was declared.

The Accumulate rating and $2.35 target are maintained.