St Barbara Ltd
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SBM Details
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Higher levels: St Barbara Ltd (ASX: SBM) stock plunged over 8.01% on June 17, 2016 as a favorable FOMC outcome led to the fall in gold prices which consequently hurt the stock sentiment. On the other hand, Moody’s had enhanced their rating on the stock from ‘Caa1’ to ‘B3’ for its senior secured debt and gave a stable outlook at the end of April 2016. SBM also enhanced its FY16 gold production outlook to between 369 to 384 koz as compared to 354 to 379 koz. The group delivered a third quarter gold production of 92 koz which was above expectation. SBM’s exploration are now aiming new Northern Extension. Its Sulphide PFS indicate further 8 year mine life. On the balance sheet front, the cash contribution rose to A$71 million for the third quarter as compared to the second quarter of A$57 million.
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Recommendation: Given such positive drivers, the stock rallied over 126.1% (as of June 16, 2016) in the last six months placing the stock at higher levels and given the ongoing volatility in the commodity markets, we give a “Expensive” on the stock at the current price of $2.87
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Production performance (Source: Company Reports)
Sims Metal Management Ltd
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SGM Details
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Buyback initiatives: Sims Metal Management Ltd (ASX: SGM) plunged over 5.8% on June 17, 2016 even though there is no update from the group. The group bought 3.2 million shares as of first half of 2016 and is buying more 17.3 million shares under the buyback program. The group is also making efforts to enhance its operational efficiency and generated $57 million in controllable costs savings during first half of 2016. The group’s Resetting business would deliver better underlying EBIT profit for second half of FY16 while management reconfirmed their return on capital target of above 10% for FY18.
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Recommendation: We give a “Buy” on the stock at the current price of $7.65
Strategic objectives (Source: Company Reports)
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