Australian Pharmaceutical Industries Ltd
API Details
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Improvement in debt metrics during second half: Australian Pharmaceutical Industries Ltd (ASX: API) stock rose 6.3% on June 29, 2016 even though there is no specific update from the company. But, news of the Mayne Pharma’s potential acquisition of Teva for over $600 million has been driving the pharmacy stocks during the day. Meanwhile, API intends to improve its debt metrics during 2H2016 with net debt target of $70m at end of FY16. In addition, API estimated to expand to 440 stores by FY 16.
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Recommendation: We believe that the stock has potential to rally in the coming months and accordingly give a “Speculative Buy” recommendation on the stock at the current price of $1.69
Saracen Mineral Holdings Limited
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SAR Details
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Aggressive Exploration activities: Saracen Mineral Holdings Limited (ASX: SAR) stock rose 5.76% on June 29, 2016 driven by the recent rally in the gold prices. SAR is seeking to enhance its free cash flow from A$16m to A$100m in FY 17. Moreover, SAR is planning intense drilling in the next six months and targeting to double its production to over 300koz at AISC less than A$1075/oz (<US$795/oz). The company has reported for ramp up of deep South underpinning Carosue Dam production outlook (150-160,000ozpa in FY16 and FY17). On the other hand, SAR stock has risen 110.6% (as of June 28, 2016) in the last six months driven by its positive outlook and recent rally in gold prices. Consequently, the stock is trading at very unreasonable valuations with a higher P/E. The group expects a relatively flat production after FY17.
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Recommendation: Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $1.47
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Production Delivery (Source: Company Reports)
Iress Limited
IRE Details
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Agreement with NSX: Iress Ltd (ASX: IRE) stock rose 5.1% on June 29, 2016 as National Stock Exchange of Australia has signed a deal with the company for entering market orders via the IRESS interfaces and platforms. On the other hand, IRE stock has fallen over 16.4% (as of June 28, 2016) in the last four weeks on the event of Brexit’s impact on the stock. Moreover, IRE is trading at a relatively high P/E.
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Recommendation: We give an “Expensive” recommendation on IRE at the current price of $10.90
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