In today’s daily we have covered stock research on Adelaide Brighton (Expensive). To view list of dividends click here
 
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S&P 500 was up 6.05points or 0.31%on Friday and closed at 1936.16.   U.S. stocks ended higher, though all three major indexes posted losses for the week, with the S&P 500 snapping three straight weeks of gains. Intel jumped the most in three years after raising its sales forecasts for the second quarter and the full year. Express Inc. surged 21 percent after Sycamore Partners said it plans to buy the clothing chain. 


Intel Daily Chart (Source – Thomson Reuters)

The CBOE Vix volatility index was down 1.4% in late trade but was well up from the seven year low struck a week earlier. UK stocks sharply underperformed on Friday as short sterling futures moved to price in an interest rate rise by the end of this year against previous expectations for the first quarter of 2015. Gold a traditional choice in times of turbulence, gained ground. The metal was up $3 at $1276 an ounce on Friday.


S&P ASX 200was down by 23.7points or 0.44% on Friday and closed at 5405.1 points. CBA has become a substantial shareholder in Downer EDI with a voting power of 5.06%. Morgan Stanley has become a substantial shareholder in Australand Property Group with a voting power of 6.62%. Contractor UGL may be looking to buy Leighton Holding’s John Holland business after finalizing a deal to sell property arm DTZ to private equity firm TPG for $1.215 billion. The Sydney Morning Herald has retained its position as Australia’s best read publication with a readership of 5.37 million readers according to the latest figures released.


ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Adelaide Brighton Cement (ABC)
 
In the medium term we expect Adelaide Brighton being one of the beneficiaries of the federal government’s increased spending on infrastructure. Nonetheless the new CEO (Martin Brydon) expects Adelaide Brighton’s net profit after tax or NPAT for fiscal 2014 to be similar to last year’s NPAT of AUD 151 million. Lower than expected lime sales appear to be the main culprit, though demand for cement and clinker looks set to be subdued for most of 2014.


ABC Financial Highlights (Source – Company Reports)

Adelaide Brighton still expects the benefits of restructuring initiatives to come through in second half fiscal 2014 and fiscal 2015. At current levels Adelaide Brighton’s shares are slightly overvalued with the market placing too much focus on the improving residential construction sector. While exposed to volatile construction and commodity markets, we believe that Adelaide Brighton will maintain its strong competitive position.


ABC Map of operations (Source – Company Reports)

Competitive advantages stem from efficient clinker and cement plants, cement plants closely located to quarries and energy sources and access to cheap imports of clinker. Unlike other commoditized building products the low value to weight ratio limits pricing pressure from global competitors. Lime sales are now expected to be 5% lower in fiscal 2014 than last year, reflecting the temporary suspension of operations by a major customer in Northern Territory.


ABC share price performance (Source – Company Reports)

The impact of gold mine closures in the second half of fiscal 2013 also continues to weigh on lime sales. A recent positive was the improved pricing result from the renewal of a lime supply contract with a major alumina producer. Operational problems following the planned shut-down at the Birkenhead facilities in March will cost Adelaide Brighton about AUD 4 million in pretax profits. We believe the stock is slightly expensive at its current price and would review the stock at a later date.

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