Retail Food Group Ltd
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RFG Details
Impressive Earnings Growth in first half despite volatile conditions: Retail Food Group Limited (ASX: RFG) has resorted to multi-brand & multi-revenue business for the growth by reinvesting in long term acquisitive & organic growth platforms. But the group is making its acquisitions cautiously and this is reflected in their recent update, where the group denied Eagle boys acquisition. Additionally, RFG has exceeded the EBITDA target in 1H 16 through 16.8% contribution from International and 37.8% from Commercial. The company has forecasted 20% growth in NPAT in FY16 to $66m on prior corresponding period (pcp) basis.
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EBITDA Performance in 1H 16 (Source: Company Reports)
Moreover, RFG is expecting coffee and allied beverage will form 40% of the group EBITDA by FY 18. International business is expected to form 25% of the Group EBITDA by FY 18. Meanwhile, stock has risen 34.63% in the six months (as of August 08, 2016), and the has a decent dividend yield. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $5.78
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RFG Daily Chart (Source: Thomson Reuters)
Ainsworth Game Technology Limited
AGI Details
Approval on Novomatic’s majority shareholding: Ainsworth Game Technology Limited (ASX: AGI) recently announced for the sale of 52.2% stake of Mr. Ainsworth to Novomatic as per the resolution passed by the shareholders.
The management believes that from this move they would be able to generate long term shareholder wealth creation. Moreover, the stock has a solid dividend yield and is trading at a lower P/E. We believe that the stock would recover in the coming months and has risen 5.37% in the last one month (as at August 08, 2016) and hence we give a “Buy” recommendation on the stock at the current price of $2.17
AGI Daily Chart (Source: Thomson Reuters)
Woolworths Limited
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WOW Details
Restructuring efforts to generate benefits: Woolworths Limited (ASX: WOW) undertook turnaround measures in its operating model. WOW gave the clear signs of progress in Australian Supermarkets due to the record voice of the customer scores, improvement in the team engagement scores and the continuous growth in the transactions along with items growth, which is now positive.
WOW has lately selected Bega Cheese as the new supplier for private label products including cheese, UHT etc., over Murray Goulburn. WOW stock recovered over 13.54% in the last four weeks (as of August 08, 2016) and we believe this positive momentum in the stock would continue in the coming months. Still, WOW has a reasonable dividend yield and is trading at attractive levels. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $23.20
WOW Daily Chart (Source: Thomson Reuters)
Flight Centre Travel Group Ltd
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FLT Details
Deal with interest free partner: Flight Centre Travel Group Ltd (ASX: FLT) recently signed a deal with FlexiGroup which will invest $3 million to commence operations in order to provide interest-free finance to the FLT’s customers through the subsidiary, Lombard Finance. FLT is issuing Unsecured Notes to the company’s shop managers or other senior managers (or their nominees) and inviting investors to participate in the Business Ownership Scheme. The funds raised under this prospectus would be used for working capital requirements of FLT. Moreover, FLT is expected to exceed its annual sales record by $1.4billion in FY 16 as all countries/regions track towards new milestones. However, the underlying profit before tax (PBT) would be below the initial target for FY 16 as profits from a stronger second half was offset by factors including Australia’s Federal election, Brexit referendum in the UK and poor US leisure trading results.
Therefore, FLT stock has fallen 15.46% in the last six months (as of August 08, 2016). On the other hand, the stock has a good dividend yield and is trading at a low P/E, as compared to its peers. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $33.32
FLT Daily Chart (Source: Thomson Reuters)
Automotive Holdings Group Ltd
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AHG Details
Continuing Expansions in Dealerships: Automotive Holdings Group Ltd (ASX: AHG) has acquired the City Mazda dealership in South Melbourne. This dealership is in addition to its current franchises in Brisbane, Sydney, Newcastle, Perth and Auckland. Moreover, AHG would acquire Mercedes-Benz commercial vehicle dealership in Laverton, Victoria. With this acquisition AHG automotive portfolio would increase to 188 franchises at 108 dealership locations in Australia & New Zealand.
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AHG financial performance (Source: Company Reports)
Meanwhile, stock has fallen 3.77% this year to date (as of August 08, 2016) due to volatile economic conditions and weak financial performance, but recovered over 12.44% in the last four weeks on easing Brexit fears. Moreover, the stock has a good dividend yield and is trading at a reasonable P/E. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $4.31
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AHG Daily Chart (Source: Thomson Reuters)
Challenger Limited
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CGF Details
Leveraging from the demand for lifetime retirement annuities: Challenger Ltd (ASX: CGF) stock rose 6.16% in last one month (as on August 08, 2016) as subdued interest rates across the globe seem to enable Challenger leverage the opportunity. The company has built solid relationships with sovereign wealth funds and leading superannuation funds. CGF’s Funds under Management reached $55 billion as of March 2016 as compared to $19 billion five years ago. Challenger Investment Partners (CIP) built a solid track record in asset origination and investment performance and continues to deliver an ongoing growth in third party client base.
CGF is also a provider of annuities in Australia and going forward there can be an uptrend in use of annuities by Australians in retirement. The company reported for a step-up in lifetime annuity sales for March quarter contributing to 23% of sales. We give a “Hold” recommendation on the stock at the current price of $9.07
CGF Daily Chart (Source: Thomson Reuters)
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