This is an excerpt from the latest updates for the Australian equity strategies in the TAMIM Fund, you can access the full reports here:

TAMIM Fund: Australia All Cap

TAMIM Fund: Australia Small Cap Income

We believe a reasonable resolution with the CBI, both in terms of timing and materiality, will be announced in the next few weeks and FY22 remains exposed to several positive trends as well as an encouraging pipeline of new business. We see a recovery in high margin multi-currency card volumes in Europe and gift card mall volumes should underwrite strong FY22 EBITDA growth.

Additionally, the PFS processing synergies should be delivered and the recently announced acquisition of Sentenial (pending final approval) will start contributing to the open banking opportunity. Finally, we have seen Marqeta IPO in the US with a valuation of 49x Gross Profit in 2023, compared to 6x for EML. Our valuation remains in line with previous estimates.

​People Infrastructure (PPE.ASX) announced two acquisitions, the first a leading staffing business and the second a surveying business in Queensland. EBITDA across both acquisitions is expected at $8.2m and earnings per share accretion of approximately 19%. PPE will pay $31m, funded from cash and debt facility. Management continues to execute well on their strategy and the business is growing both organically and through acquisitions. With a pipeline of possible deals and further $50m in capacity, we see PPE as well positioned.

​Empired (EPD.ASX) has secured a digital services contract with the Department of Innovation and Skills (DIS) in South Australia. The contract is for an initial term of two years. Work is scheduled to commence in July 2021 at an estimated value of $9m and a split across FY22 and FY23 of approximately $5.5m and $3.5m respectively. This contract represents a material win for EPD and demonstrates the progress management is making in executing on its Australian East Coast expansion strategy. We are expecting a strong result in August, showing improvement in all metrics and dividends. [Since this piece was originally written EPD has received a take over bid from Capgemini]

We believe that CDD’s largest private equity owner, Crescent Capital, has decided that it may be time to realise their investment in CDD and Intega (ITG.ASX). We first took our position in CDD at around 30 cents and we forecast cash EPS of 7-8 cents in FY21. Assuming a takeover premium and a conservative multiple of 15x, we expect any takeover offer to be $1.20+. Watch this space!

More importantly, management noted that ITG is performing well and is well positioned to benefit from the strong pipeline of infrastructure investment in both the US and Australia. The business has significant organic and inorganic growth potential, particularly in the US markets, as well as adjacencies.

The Board believes that the business is undervalued by the market and we tend to agree. We bought ITG at around 32 cents and we see cash EPS of 4-5 cents in FY22. We see any takeover premium landing around the 60-70 cents range.

Disclaimer: EML, PPE, EPD, CDD and ITG are all currently held in TAMIM portfolios.