Crown Resorts Ltd
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CWN Details
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Demerging international investments: Crown Resorts Ltd (ASX: CWN) stock surged over 13.2% on June 16, 2016 driven by the group’s intentions of demerging some of their international assets (investments) to form a distinct listed holding company. CWN stock has fell over 6.4% in the last four weeks (as of June 15, 2016) and lost by 9.6% during this year to date as its Macau investment, Melco Crown has been facing challenges due to slowdown in the Chinese economy. Hence, the group is planning to form a separate entity to leverage the benefits from its high quality Australian resorts. Earlier, CWN has already cut its stake to 27.4% in Melco Crown as compared to their 34.3% investments. CWN is also making several capital management initiatives to generate value to its shareholders. The group is adopting a new dividend policy to pay 100% of normalized net profit after tax (before minorities and excluding profits from associates but including dividends received from associates) and considering a possible IPO of a 49% interest in a property trust which would comprise Crown Resorts’ Australian hotels (excluding Crown Towers Melbourne), while retain a 51% interest in Crown Resorts.
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Recommendation: We believe that Crown stock would have more potential to grow in the coming months and accordingly recommend investors to “Hold” the stock at the current price of $12.75
Northern Star Resources Ltd
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NST Details
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Positive exploration results: Northern Star Resources Ltd (ASX: NST) continued to rally by 5.2% on June 16, 2016 driven by the ongoing surge in the gold prices ahead of FOMC and Brexit outcome. Moreover, earlier the group’s joint venture project Tanami Gold reported positive exploration from the final stage of drilling at the Groundrush Deposit. Tanami finished drilling of 118 holes having around 27,000 meters of Diamond Drilling and 11,000 meters of RC Drilling. Accordingly, Tanami is undertaking geological interpretation and resource modelling is currently underway with an updated resource expected to be completed in July 2016. On the other hand, NST stock has already rallied over 133.8% in the last one year (as of June 16, 2016) placing the stock at higher levels. NST is trading a very high P/E as compared to most of its peers such as Sandfire Resources NL (ASX: SFR) and Fortescue Metals Group Limited (ASX: FMG).
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Recommendation: We put an “Expensive” recommendation on this stock at the current price of $5.09
Gold mining locations (Source: Company Reports)
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