This fund manager is enthusiastic about two small-cap ASX shares.
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Wilson Asset Management (WAM), a financial manager for funds, has discovered two excellent small-cap stocks listed in the Australian Securities Exchange (ASX) from one of its portfolios. These stocks hold potential as investment prospects.
WAM runs a number of investment firms that are publicly traded (LICs). Some of these, like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), have a specific focus on larger businesses.
Another example is WAM Microcap Limited, which concentrates on investing in ASX shares that are considered small-cap and have a market capitalisation of less than $300 million when they are acquired.
According to WAM, their Microcap fund focuses on finding the most promising undervalued prospects for growth in the microcap market of Australia.
In its most recent monthly update, the financial manager highlighted a pair of small-cap Australian Securities Exchange shares.
"Unpacking Tuas Ltd (ASX: TUA): An Insider Look at the Company's Performance"
According to WAM, Tuas has been labeled as a mobile services provider that is shaking things up in Singapore. They emerged from the TPG Telecom Ltd group of companies following the merger of TPG and Vodafone Australia in June 2020.
The person in charge of managing the funds mentioned that Tuas performed exceptionally well during their half-year result for FY23, as evidenced by their financial metrics. This was an indication to those who invest in the company that their subscriber count is increasing and their operating leverage is getting better, which is contributing to their revenue growth.
According to WAM's investment group, they have faith that the small-cap ASX share, established and steered by David Teoh, will persistently amass a larger share of the market at a quick pace. Not only that, but they predict that this company will also venture into novel areas, like broadband and corporate services.
In brief, the investment team clarified their notions on the reasons for the business being underestimated.
Our understanding is that Tuas's capability to create cash is being undervalued by the market despite the significant investment made into its 5G network in Singapore within the last couple of years.
"Analyzing Synlait Milk Ltd's Stock Performance on the ASX (SM1)"
The team in charge of investing said that Synlait Milk is the fourth biggest milk processing company in New Zealand. This company provides dairy ingredients, infant formula products, and lactoferrin to other businesses.
According to the manager in charge of the fund, a report that came out in March indicated that the company's projected net profit after taxes (NPAT) for FY23 would take another year to achieve, extending the timeline for its financial recovery plan.
WAM expressed that Synlait's financial recovery has taken longer than expected, primarily due to challenges within their supply chain, daily operations, and increasing costs of inflation. These factors resulted in a decrease of approximately 30%.
The group who handle investments shared their positive perspective regarding the little-sized Australian Stock Exchange stock by mentioning:
Even though there have been some problems, we remain optimistic that Synlait Milk can meet their updated profit predictions. This is partly due to indications that exports are getting back to regular levels, and also because the company's operations and procedures are enhancing.
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