Fortescue Metals Group Limited
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FMG Details
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Stable outlook from Moody’s: Fortescue Metals Group Limited (ASX: FMG) stock surged over 7.9% on June 27, 2016 driven by the Moody’s Investors Service stable outlook on the group. Moody’s issued a rating of Ba3. Moreover, Moody’s stated that the group decreased breakeven costs in the second half of fiscal 2016 and has sufficient room to maintain leverage metrics at adequate level even during low iron ore prices. Generating solid cash flow, the group announced a further US$500 million repayment for the 2019 Senior Secured Term Loan, which would deliver an interest savings of US$21 million per annum. FMG is also having solid contracts on hand, and recently its subsidiary Pilbara Marine, won the tender for the second towage license at the Port of Port Hedland. The stock generated over 74.9% (as of June 24, 2016) returns during this year to date.
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Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $3.53
Orora Ltd
ORA Details
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Higher levels: Orora Ltd (ASX: ORA) stock surged over 5.4% on June 27, 2016 driven by the update that the National Australia Bank has 5% voting power with 60.88 million shares. On the other side, the group even partnered with YPB Group to leverage YPB’s patented anti-counterfeit technology, security packaging solutions, consulting and forensic services. Orora invested over $220 million in growth from its listing in December 2013. The group issued a positive outlook and expects to generate organic growth, via innovation during the FY16, and accordingly, the stock rallied over 14.7% (as of June 24, 2016) during this year to date. On the other hand, ORA has been correcting over 5.5% in the last four weeks (as of June 24, 2016) on investors’ fears over the impact on the group’s performance due to turmoil in the markets created from Brexit. Moreover, the earlier rally in the stock placed ORA at reasonably higher levels, trading at a high P/E.
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Recommendation: We give an “Expensive” recommendation on this dividend yield stock at the current price of $2.72
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ORA investments since listing (Source: Company Reports)
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