In today’s daily we have covered stock research on STW Communications (BUY).









 
The S&P 500 was up by 33.22 points or 1.65%on Thursday to 2046.11 points. U.S. stocks climbed more than 1 percent on Thursday, extending a rally from the previous session as tech shares gained with upbeat results from Oracle. The technology sector up 2.2 percent, helped fuel the advance, buoyed by a gain of over 8 percent in Oracle Corp a day after its quarterly results topped Wall Street expectations. Shares of Apple climbed 1.9 percent.

Sony Corp. climbed 4.8 percent in Japan after its movie production unit, Sony Pictures, canceled plans to release “The Interview” on Dec. 25. The Stoxx Europe 600 Index surged as all 19 industry groups rose. Total SA climbed 2.4 percent and Statoil ASA added 5.5 percent. Switzerland’s Novartis AG and Roche Holding AG contributed the most to the Stoxx 600 advance today and the Swiss Market Index gained 3.5 percent.




APPLE Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 48.9points or0.95% on Thursday and closed at 5210.8 points. ANZ Banking Group added 1.67 per cent to $30.98, Commonwealth Bank jumped 0.96 per cent to $81.80, National Australia Bank gained 1.21 per cent to $31.73 and ­Westpac Banking Corp strengthened 0.80 per cent to $31.58. Flight Centre shares plunged 9.05 per cent to $31.80 after the company posted a profit downgrade. 
Shares in Woolworths edged up 0.89 per cent to $29.40. Wesfarmers rose 0.20 per cent to $40.60. Budget jewellery retailer Lovisa has seen its shares debut at a premium after the company raised $102 million in an initial public offering. Issued at $2.00 each, the shares closed 7 per cent higher at $2.14. Senex rocketed 9.52 per cent to 34.5¢, Drillsearch soared 8.39 per cent to 77.50¢, Woodside lifted 3.10 per cent to $36.60, Santos closed up 5.01 per cent to $7.96, Oil Search rose 4.38 per cent to $7.62, Origin lifted 1.36 per cent to $11.17, Beach Energy edged up 1.62 per cent to 94¢ and Caltex rose 1.31 per cent to $33.29.

Flight Centre Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day - STW Communications (BUY)

STW Communications Group Ltd. (SGN), the largest marketing communications group which is engaged in advertising and diversified communications operations for providing services for clients through various channels, including television, radio, print, etc., is being covered in today’s report. 


Financial Results for Half Year (Source – Company Reports)

Just a few days back, SGN provided an update in relation to its expected result for the year ending 31 December 2014. As per the Company, the first quarter of the year was STW’s profit contributor, as other years. However, SGN stated that weaker 4Q signifies a profit warning wherein CY14 NPAT may most likely not catch-up with the guidance. Specifically, client commitments being low in terms of spending in November and up to Christmas makes the Company suggest to have a softer result for the quarter than what it has budgeted. SGN at the half year results mentioned that its performance in 1H14 was lower than expected. However, the Company reported that there has been an improvement in performance in the second half with momentum in view of getting new work and retaining key client mandates. The Company believed that the final quarter would have provided support towards said direction in order to achieve the earnings guidance. Based on results attained in November 2014, the expectation has gone down a little. The Company anticipates to have NPAT for the year ending 31 December 2014 to be in the range of $47 million to $49 million, compared to NPAT of $49.5 million for the year ended 31 December 2013.


Focused Strategy in Asia (Source – Company Reports)

Nonetheless, SGN thinks that although the year ahead will offer challenging environment given the broader economic conditions, submissive advertising expenditure and soft consumer confidence, the recent new business wins and pitching activities would help SGN to have significant growth. The Company believes to have clarity on its 2015 outlook at the time of 2014 results presentation expected in February 2015.


STW Shopper Marketing Ecosystem (Source – Company Reports)

During 2Q14, sales from SGN totaled $190.45 million depicting an increase of 10.9% from the $171.67 million in sales during 2Q13. During the 12 months ending 30 June 2014, the Company paid dividends totaling $0.09 per share. The company has paid a dividend for 6 straight years.


30 June 2014 Half Year Cashflow (Source – Company Reports)

The Company still emphasizes to drive growth through its leadership positions in Australia and New Zealand; growing and leading position in the evolving areas of services including digital data and shopper marketing; and progress with selective and careful export of business into new markets in Asia and beyond. For instance, the recent acquisition of retail marketing material solutions company Active Display Group accelerates SGN’s leadership position.


SGN Daily Chart (Source - Thomson Reuters)

Accordingly, we still see potential in SGN and reiterate a BUY recommendation for this stock at the current price of $0.945.





 
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