Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.
WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).
There’s also one called WAM Research Limited (ASX: WAX) which looks at smaller businesses on the ASX.
WAM says WAM Research invests in the most compelling undervalued growth opportunities in the Australian market.
The WAM Research portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 15.8% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 8.8% per annum.
These are the two ASX shares that WAM outlined in its most recent monthly update:
According to the ASX, Infomedia has a market capitalisation of $719 million.
WAM describes Infomedia as a leading provider of parts, services and data insights to the global automotive industry.
During November, the Infomedia secured a strategic contract with Ford Europe which had a value of $14 million over five years. The contract is for providing the next generation of Ford’s electronic parts catalogue in the European region. The fund manager explained the contract allows the ASX share to continue to focus on the parts and services element of the value chain, expanding usage of its integrated parts selling platform and taking advantage of the trend towards innovative technology solutions in the automotive industry.
Infomedia management has provided an aspirational target to grow revenue by more than 100% over the next five years, and the fund manager is positive about Infomedia’s ability to increase its current 0.5% market share in the global automotive dealership software market in the future.
Looking at Commsec earnings projections and the Infomedia share price, it’s valued at 25x FY23’s estimated earnings.
Corporate Travel Management Ltd (ASX: CTD)
Corporate Travel has a market capitalisation of $2.3 billion.
WAM Research describes Corporate Travel as a business that provides customer service and business travel management solutions for companies.
In November, the company completed its acquisition of Travel & Transport, a US travel firm based in Nebraska for US$200 million. It was founded in 1946.
According to Corporate Travel, in the 2019 calendar year Transport & Travel generated US$2.8 billion of total transaction value (TTV) with pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) of US$29 million. Over 90% of the 2019 TTV was generated by Travel & Transport’s US business, with its European business contributing the balance. Over 60% of the 2019 calendar year TTV was generated from corporate air travel and approximately 30% from hotels.
In terms of clients, Travel & Transport’s customer mix has a focus on professional services and healthcare clients. The business has low customer concentration, with the largest customer representing only 2.5% of the 2019 calendar year’s air volumes and top 50 customers representing less than 45% of the air volumes.
The acquisition also comes with a business called Radius Travel, which operates a large hotel program. Corporate Travel said that Radius is one of the leading programs of its kind globally, with partnerships with prominent global hotel brands in 160 countries.
Management said that the acquisition has compelling strategic rationale, with scope for material combination benefits. It’s expected to add approximately 10% to earnings per share (EPS) on a pro-forma 2019 calendar year basis excluding synergies, and add approximately 30% to EPS including synergies.
The fund manager said that Corporate Travel has employed an effective cost savings program, providing ample liquidity to navigate effects of the COVID-19 pandemic over the next two years.
WAM Research said that it’s positive on the outlook for Corporate Travel as recent vaccine developments have pulled forward the company’s future revenue profile.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Infomedia. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Infomedia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.