Is now the time to buy these stocks?

Village roadshow Ltd

 

          VRL Dividend Details
 
Diversifying future earnings channels: Village Roadshow Ltd (ASX:VRL) stock fell over 6.26% in the last three months (as of December 15, 2015) as adverse weather conditions impacted the group’s Australian Theme Park division. As a result, VRL reported an attributable net profit of $43.9 million for the fiscal year of 2015. On the other hand, the group reported an improved performance for fiscal year of 2016, and its Gold Coast theme parks are performing on track driven by new memberships program coupled with better annual pass programs. The group is also expanding its Asian opportunities and made an agreement to manage the proposed marine theme park development in China on Hainan Island. VRL’s Australian Cinema Exhibition continued to deliver solid performance during FY16, boosted by better admissions and rising spend per customer.
 

New Sites under Construction_Cinema Exhibition (Source: Company Reports)
 
Moreover, block buster movies so far released or yet to release during fiscal year of 2016 like Spectre, Hunger Games, Mockingjay Part 2, Star Wars: The Force Awakens, Batman vs. Superman: Dawn of Justice, Marvel’s Captain America: Civil War and the next X-Men: Apocalypse, are expected to boost the division’s performance. Meanwhile, VRL acquired of 31% of FilmNation Entertainment after delivering a weak FY15 performance to broaden its earnings channels for the future. Village Roadshow Entertainment Group finished its restructure of its capital base as well as renewed its film financing facilities until 2021. We believe that investors can leverage the recent correction as an entry opportunity and based on the foregoing, we reiterate our “BUY” recommendation on this stock at the current price of  $6.48
 

VRL Daily Chart (Source: Thomson Reuters)
 

Amalgamated Holdings Ltd

 

      AHD Dividend Details
 
Strong FY15 drove the stock performance: Amalgamated Holdings Ltd (ASX: AHD) shares surged over 36.59% (as of December 15, 2015) during this year to date, driven by its strong FY15 performance which reported a net profit increase of 39% yoy to $108.9 million. This increase was driven by its better performance of Exhibition circuits, especially during second half boosted by the blockbuster releases like Jurassic World, Fast & Furious 7 and Avengers: Age of Ultron.
 

Fiscal year of 2015 performance (Source: Company Reports)
 
Entertainment segment rose over 31% yoy to $112.0 million during the year, boosted by Box Office growth of 7% on a year over year basis. Hotels division surged by 26% yoy to $8.6 million. AHD witnessed strong trading in the September quarter with Entertainment division’s momentum continuing into fiscal 2016 and hotels and resorts business reaffirming growth. On the other hand, AHD’s strong increase in stock placed the shares at very expensive valuations, which is trading at a relatively high P/E as compared to its peers. We give an “Expensive” recommendation on the stock at the current price of  $15.38
 
 
AHD Daily Chart (Source: Thomson Reuters)
 

BigAir Group Ltd

          BGL Dividend Details
 
Boosting Cloud Managed Services to leverage opportunity: BigAir Group Limited (ASX: BGL) delivered a strong 50% increase in revenues to $62.7 million for fiscal year of 2015 while total underlying EBITDA surged 25% yoy to $18.9 million leading to an underlying NPAT growth of 34% yoy to $8.5 million. The group is strengthening its Cloud Managed Services and even acquired Oriel Technologies and integrated Data Labs to further enhance its FY16 performance.
 

  FY15 income statement (Source: Company Reports)
 
BigAir Group’s shares corrected over 10.47% (as of December 15, 2015) in the last four weeks offering an attractive entry opportunity. We give a “BUY” recommendation on the stock at the current price of  $0.79
 
 
BGL Daily Chart (Source: Thomson Reuters)
 

G8 Education Ltd

 

               GEM Dividend Details
 
Acquisition and settlements to drive growth: G8 Education Ltd (ASX: GEM) stock corrected about 22.54% this year to date (as at December 15, 2015). The company announced that all the acquisitions announced prior to November 12, 2015 have been settled. GEM also announced about entering into contractual arrangements to acquire 13 premium childcare and education centres from a number of different vendors. The contracts are conditional upon the usual licensing and landlord approvals, and subject to these being satisfied, the acquisitions will be funded from existing cash reserves and are expected to settle before the end of February 2016. The total purchase price is $ 29.7 million excluding transaction costs and the purchase price is 4.1 times anticipated EBIT for the 12 months post settlement. The centres are expected to contribute to EBIT immediately on settlement. Impact from the recent introduction of the Jobs for Families Childcare Package to Parliament by the government is yet to be seen on GEM. We think that this company has successfully showed that its strategy of acquisition and consolidation of the many fragmented businesses in this field of operation has worked successfully and accordingly rate the stock as a “Buy” at the current price of  $3.32
 
 
GEM Daily Chart (Source: Thomson Reuters)
 

Healthscope Ltd

    HSO Dividend Details
 
Robust earnings growth in FY15 but guidance uncertain: Healthscope Ltd (ASX: HSO) reported a successful FY 2015 with International Pathology business winning an exciting contract to provide pathology services to the greater Wellington region in New Zealand. This means that the company is now providing services to 13 of the 20 District Health Boards in New Zealand. The underperforming non-core Australian Pathology business was exited, allowing management time and resources to be focused on the core business and allowing the reinvestment of sale proceeds in the hospital expansion programme. With regards to performance, the company delivered on its prospectus earnings forecasts for FY 2015 and generated robust earnings growth with the operating EBITDA growing by 8.7% and operating EBIT by 9.4%. With the exclusion of the Australian Pathology operations, the increase in operating EBITDA was 10%. The balance sheet is strong with gearing at 2.47x net debt to group operating EBITDA at 30 June 2015 and this excludes the benefit of the $ 92.5 million cash proceeds received from the divestment of the Australian Pathology operations. The company also completed the refinancing of its $ 1.3 billion senior debt facility with facilities which will have maturities split over three, four and five years to minimise any potential refinancing risk.
 

Projects under Construction (Source: Company Reports)
 
The new intensive care unit at Geelong Private Hospitals has recently opened; and in early 2016, 60 additional beds will open at Knox Private Hospital along with 41 new beds and three new operating theatres at National Capital Private Hospital. Nepean Private Hospitals in New South Wales and Darwin Private Hospital in the Northern Territory are also scheduled for completion in FY 2016. Despite the above, we noted that no formal quantitative guidance has been provided. Further, the stock plunged 12.41% in the last one month (as at December 15, 2015). We believe that the current stock price is overvalued. The stock does not seem to justify the current price at the moment.
 
 
HSO Daily Chart (Source: Thomson Reuters)

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