In today’s daily we have covered stock research on Bradken (Expensive). To view list of dividends click here
 
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S&P 500 was up 1.62 points or 0.08%on Monday and closed at 1937.78.    U.S. stocks edged higher on Monday, reversing a midday dip, supported by a flurry of merger news, but the advance was limited as investors kept a close watch on rising oil prices caused by turmoil in Iraq. Covidien Plc surged 20 percent after Medtronic Inc. agreed to buy the Irish company for $42.9 billion. Ukraine said Russia has cut natural gas supplies after demanding fuel payments be made in advance, the first time shipments have been affected in this year’s crisis in relations between the two countries.

The CBOE Vix volatility index was up more than 3.5% in late trade. The June Empire State Index of manufacturing activity in New York region edged up to a four year high, while home builder sentiment improved more than had been expected this month. Sterling remained buoyant amid continued speculation that UK interest rates could be raised before the end of the year.



S&P 500 Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200was up by 7.2points or 0.13%on Monday and closed at 5412.3 points. Iron ore has fallen below $US90 a metric ton for the first time since 2012, after tumbling a further 2.1 per cent overnight amid slowing demand from China. Macquarie Group (MQG) has become a substantial holder in Industria REIT with a voting power of 5.14%. QBE has announced the creation of a emerging markets division.

Wesfarmers announced that the sale of its insurance broking and premium funding business to Arthur J. Gallagher (NYSE: AJG) has now been completed. NAB has become a substantial shareholder of Isentia group with a voting power of 5.55%. Fletcher building is selling its building materials distribution business, Hudson Building Supplies to HTH Stores.



ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Stock of the Day – Bradken (BKN)
 
Bradken Limited is engaged in the supply and service of wear components for mining and earthmoving equipment; supply of equipment and consumables to the mineral processing, quarrying and power markets; supply of cast, machined and fabricated components and engineered steel castings to the energy, industrial and rail transport industries; manufacture and maintenance of freight rollingstock products, and supply of foundry consumables.


BKN Financial Highlights (Source – Company Reports)

In this environment having higher cost domestic facilities operating at well below full capacity makes little economic sense when the company has the option of transferring production to the lower cost China facility with available capacity. The company expects the reorganization to deliver annualized cost savings at the EBITDA level of $22m and pretax savings of $27m after incurring on off reorganization costs of $51.4m. Further it is expected that over 60% of the savings will be achieved in FY15.


BKN Map of operations (Source – Company Reports)

In this environment having higher cost domestic facilities operating at well below full capacity makes little economic sense when the company has the option of transferring production to the lower cost China facility with available capacity. The company expects the reorganization to deliver annualized cost savings at the EBITDA level of $22m and pretax savings of $27m after incurring on off reorganization costs of $51.4m. Further it is expected that over 60% of the savings will be achieved in FY15.


BKN daily chart (Source – Thomson Reuters)

The manufacturing re organization highlighted the fact that the company believes that a recovery in capital products revenue appears unlikely in the short term. The company appears resigned to the fact  that a recovery in demand  for Industrial Products within the engineered products division is unlikely during CY14.We believe the stock is slightly expensive at its current price and would review the stock at a later date.
 

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