Six dividend paying mid-cap consumer cyclical stocks

Tatts Group Limited

TTS Details
Merger with Tabcorp: Tatts Group Limited (ASX: TTS) is merging with Tabcorp through a Tatts Scheme of Arrangement in which TTS shareholders would get 0.80 Tabcorp shares plus 42.5 cents cash for each TTS share held at the pro forma enterprise value of about $11.3 billion.

 

Details for the Combined Group (Source: Company Reports)
 
The combined group is expected to form a $11.3 billion enterprise value firm and lead to a long-dated suite of licenses. Meanwhile, TTS stock rose 11.26% in the last one month (as of October 24, 2016), placing them at higher levels. The stock is trading at higher levels and we give an “Expensive” recommendation on the stock at the current price of $ 4.14

 
TTS Daily Chart (Source: Thomson Reuters) 

Orora Ltd

ORA Details
Growth in NPAT: Orora Ltd (ASX: ORA) reported a 13% growth in the sales revenue to $3.8 billion in FY 16. The Net profit after tax (NPAT) grew 28.3% to $168.6 million on the prior corresponding period (pcp); and excluding NPAT on Petrie land sale of $5.9M, the underlying NPAT grew 23.8% to $162.7M on pcp. Moreover, ORA is currently commissioning the new $20.0 million state of the art dairy sack line at Keon Park, Victoria, and the new line is said to be expected to be fully operational in the second quarter of FY17.

 

FY 16 Financial Performance (Source: Company Reports)
 
Additionally, ORA expects the earnings in FY 17 to be higher than reported in FY16, but would be subject to global economic conditions. The general economic condition in Australia and New Zealand is flat and the macro environment in the US is subdued although with a slightly positive bias. Meanwhile, ORA stock rose 17.79% in the last six months (as of October 24, 2016), placing the stock at a higher P/E. Accordingly, we give an “Expensive” recommendation on the stock at the current price of $ 2.99

 
ORA Daily Chart (Source: Thomson Reuters) 

Tabcorp Holdings Limited

TAH Details
Merger with Tatts: Tabcorp Holdings Limited (ASX: TAH) reported 8.5% growth in NPAT before significant items while statutory NPAT slipped 49.3% for FY16 while the full year ordinary dividends were raised 20%. TAH and Tatts are merging to create a world-class, diversified gambling entertainment group leading to a revenue of over $5 billion and the EBITDA of over $1 billion. Moreover, the combined group are expected to undertake a $500 million share buyback, after the implementation of the transaction and after getting the approval from the Board and market conditions. Meanwhile, TAH stock rose 12.44% in the last six months (as of October 24, 2016) and currently trading at a higher P/E. We give an “Expensive” recommendation on the stock at the current price of $ 4.91

 
TAH Daily Chart (Source: Thomson Reuters) 

Ardent Leisure Group

AAD Details
Sale of Health Clubs division: Ardent Leisure Group (ASX: AAD) reported a core earnings growth of 11% to $62.4 million in FY16 and the revenue increased 15.6% to $687.6 million driven by rise in across every division. Moreover, AAD has now completed the sale of Health Clubs. Earlier the group reported about entering into a binding agreement to sell its Health Clubs division comprising Goodlife Health Clubs and Hypoxi to funds advised by Quadrant for the gross proceeds of A$260 million on a cash?free and debt?free basis.

 

FY 16 Financial Performance (Source: Company Reports)
 
AAD stock rose 19.72% in the last three months (as of October 24, 2016) and the company is having a decent dividend yield. We give a “Hold” recommendation on the stock at the current price of $ 2.35

 
AAD Daily Chart (Source: Thomson Reuters) 

Village Roadshow Ltd

VRL Details
Strong cash flow FY 16: Village Roadshow Ltd (ASX: VRL) is set to hold its AGM in November 2016, and had posted an attributable net profit after tax before material items and discontinued operations of $50.9 million in FY16, which marginally increased over that of FY15. The earnings before interest, tax, depreciation and amortization, excluding material items and discontinued operations is of $168.8 million, up 1.8% from $165.7 million in FY15. Moreover, VRL has reported growth for fifth consecutive year of the Cinema Exhibition division in FY 16, growth from the Gold Coast Theme Parks and the inclusion of about six months of Opia in the Marketing Solutions division. These results have offset disappointment at Wet’n’Wild Sydney and the Film Distribution division.

 

FY 16 Financial Performance (Source: Company Reports)
 
VRL has strong cashflows, and consideration of special dividend for the future along with growth initiative among all the divisions give the strong future visibility. We maintain a “Buy” recommendation on the stock at the current price of $ 5.25 

 
VRL Daily Chart (Source: Thomson Reuters) 

Sealink Travel Group Ltd

SLK Details
Strong Growth in underlying NPAT: Sealink Travel Group Ltd (ASX: SLK) held its AGM on October 25, 2016 and focused on the 141% increase in underlying NPAT from $9.6 million to $23.1 million in FY 16 before the expenses related to acquisitions. The growth is due to the acquisition of the Gladstone and South East Queensland and organic growth in pre-acquisition businesses. The underlying basic earnings per share of 24.4 cents is a big jump on 2015 earnings per share of 12.6 cents. The revenue grew by 5.4% from $111.7 million to $117.8 million for the pre-acquisition business units, with the key drivers being higher tourism sales for Captain Cook Cruises NSW, growth in SeaLink’s Kangaroo Island ferry and tour operations, and new ferry route services and increased Hop-On Hop-Off sales on Sydney Harbor.

 

Tourism Statistics (Source: Company Reports)
 
Moreover, SLK expects FY 2017 EBIT from its Gladstone operations to be about $2 million lower than FY 2016 due to the continuing transition from construction to operational phase of the LNG plants, which is expected to be completed by March 2017. The group further highlighted towards positive market conditions. We give a “Hold” recommendation on the stock at the current price of $ 4.29

 
SLK Daily Chart (Source: Thomson Reuters)

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