Petra Capital’s research team includes qualified and experienced individuals with a variety of specialties, providing the diversity and flexibility to cover companies in the resources, property and industrial sectors. For specific information on analysts’ experience and qualifications please see our Team Profiles
A broad range of tools are utilised to screen companies for coverage. Such screening mechanisms include quantitative methods, peer multiple comparisons, share price performance based measures, or identifying superior businesses in favourable sectors.
Analysts may consider other factors including but not limited to credible and experienced management teams, clean equity structures, market dynamics, technological developments, exploration potential and discoveries.
Primarily Petra Capital’s aim is to focus on covering companies that are under researched and that appear to be under-valued in the market place, with a particular focus on the resources, industrial and property sectors. Often these companies exhibit unique or niche growth characteristics which enable them to ‘outperform’ the market.
Petra Capital’s analysts cover companies listed on the Australian Securities Exchange. Generally, the focus is small to mid-cap companies (ex-ASX100).
Petra Capital will cease covering a company when it is delisted, taken over or merged, it no longer fits Petra Capital’s coverage criteria, its principal business is materially changed or, in the opinion of the analyst, it does not provide sufficient access to enable the analyst to form a properly informed view of the company.
Petra Capital’s experienced analysts utilise research methodology which will generally include:
– analysis of company ASX releases and company annual reports;
– analysis of a range of industry reports published by various organisations/industry bodies;
– interviewing company management;
– company site visits;
– analysis of industry competition and barriers to market entry; and
– valuation of the company using one or more valuation methods including but not limited to price to earnings ratio (P/E ratio); price to earnings before interest, taxes, depreciation and amortisation (P/EBITDA); price to sales (P/Sales); price to cash flow (P/CF); discounted cash flow (DCF); or adjusted present value (APV).
Petra Capital uses the following ratings system and definitions:
|Buy||Forecast to re-rate by more than 5% in 12 months|
|Hold||Forecast to perform up to 5% above or below the current market price in 12 months, or alternatively, where a share price exceeds Petra Capital’s valuation but there is a belief that business growth opportunities or commodity price moves, may result in material valuation and share price upside within 12 months|
|Sell||Forecast to underperform by more than 5% in 12 months|
|Speculative Buy||Speculative Investment|
|Take Profits||Recommend taking short term profits in a stock we remain fundamentally positive on a medium term view|
|Accept Offer||For a company under takeover where we see the offer as a fair price with low risk of a competing offer|
|No Rating||No rating at this time|
Market performance is relative to the S&P/ASX Small Ordinaries Index which we assume generates a neutral return on a 12 month basis.
Petra Capital’s ratings distribution as at 30 September 2023 is listed below. The high proportion of ‘Buy’ ratings relates to the ‘Research and Coverage Filters’ outlined above. The focus on undervalued and growth opportunities implies financial upside and therefore is likely to result in a ‘Buy’ rating.
|Rating||As % of Total Stock Covered|
Petra Capital must take all reasonable steps to identify and manage conflicts of interest. A conflict of interest arises in circumstances where some or all of Petra Capital’s or its employees’ interests are inconsistent with, or divergent from, some or all of a client’s interest. Conflicts of interests may also arise between one client and another client’s interests.
Conflicts of interest are dealt with at Petra Capital in accordance with Petra Capital’s Policy on the Management of Conflicts of Interest (Policy). Pursuant to the Policy, options for the management of conflicts of interest include controlling the conflict of interest (e.g. the use of information barriers), disclosing the conflict of interest (e.g. where permissible, disclosure of the nature and source of the conflict) and/or avoiding the conflict of interest (e.g. declining to act for a client or on a specific matter).
Employees are regularly reminded of applicable policies and procedures during training sessions and the distribution of updates. In addition, policies and procedures are reviewed as the need occurs and as a matter of policy.
Petra Capital Pty Ltd (Petra Capital) and its associates, officers, directors, employees and agents, from time to time, may hold securities in companies researched by Petra Capital’s analysts and may trade in these securities either as principal or agent in accordance with applicable Petra Capital compliance controls.
Specific disclosures in relation to a particular company that is the subject of research by a Petra Capital analyst are contained in the relevant research report.