Donaco International Ltd

Growth in FY16 Profit: Donaco International Ltd (ASX: DNA) recently informed about purchase of its shares by Thai Partner (Ham Techatut Sukjaroenkaisri). The group earlier reported a 602.6% growth in revenue to 143,385,778 in FY 16, which reflects the contribution from Star Vegas and accordingly the profit grew 2736.8% to $77,208,54. In addition, Star Paradise efforts to introduce new Thai junkets and players would generate further recurring revenue from FY17. DNA has given the maiden dividend of 1 cents per share in FY 16. There seem to be some market headwinds at the back of the recent trouble witnessed by peer Crown Resorts coming in from the Chinese government. Given the potential that DNA has, we give a “Buy” recommendation on the stock at the current price of – $ 0.41   

Seven West Media Ltd

Transforming the Business: Seven West Media Ltd (ASX: SWM) plans to hold its AGM on November 09, 2016. SWM also announced that Foxtel is set to acquire SWM’s interests in Presto TV joint venture. The group lately got ACCC’s nod for the proposed acquisition of Perth Now and The Sunday Times from News Corporation. SWM had reported a 0.9% fall in underlying net profit after tax (excluding significant items) to $207.3 million in FY 16 and a 3.4% fall in the revenues to $1,713.8 million on FY 15. But, SWM is accelerating the transformation of its business across all platforms. SWM is expanding its presence in the creation of content in international markets with an investment in a British drama production company, expanding the production into New Zealand and is currently progressing several opportunities in other territories. We give a “Hold” recommendation on the stock at the current price of – $ 0.73 

Avjennings Ltd

Decent growth in FY 16: Avjennings Ltd (ASX: AVJ) reported a revenue growth of 32.7% to $421.9 million in FY 16, while generated a growth in profit before tax of 22.0% to $58.8 million and growth in earnings per share of 18.6% to 10.71 cents. The revenue grew on the back of changes in product mix and project share, and AVJ benefitted from the announcements made in prior periods that it would acquire the interests of joint venture partners in the ‘Argyle’, Sydney and ‘St Clair’, Adelaide projects. Meanwhile, AVJ stock rose 19.61% in the last six months (as of October 19, 2016), and still offers a solid dividend yield of 8.2% at a decent P/E. Accordingly, we give a “Buy” recommendation on the stock at the current price of – $ 0.62

Galaxy Resources Limited

Mt Cattlin project is ahead of schedule: Galaxy Resources Limited’s (ASX: GXY) Mt Cattlin lithium and tantalum project, construction and commissioning is ahead of the schedule. The water commissioning of the feed classification, tantalum beneficiation and tailings circuits have completed. This update indicates the group’s control over costs and operations. GXY stock is trading at an attractive P/E while we maintain a “Buy” recommendation on the stock at the current price of –  $ 0.34

Genworth Mortgage Insurance Australia Ltd

Capital management initiative: Genworth Mortgage Insurance Australia Ltd (ASX: GMA) has received an issue of determination from the Australian Taxation Office (ATO) regarding distribution of $0.34 per share paid by the group in June 2016. As per the ATO, the distribution is taken to be unfranked dividend paid out of profits and shall be included in assessable income of the taxpayers for the income year. The group reported a 20.2% growth in the reported statutory net profit after tax (NPAT) to $135.8 million in the first half 2016. However, GWP decreased 33.5 per cent to $189.8 million in the first half 2016 due to the reduced high-LVR penetration in the market, a lower LVR mix of business, and due to the full impact of the changes in customers in 1H15. On the other hand, GMA implemented the capital management initiative through a capital reduction and associated share consolidation. Moreover, in FY 16, GMA expects the house price appreciation to moderate in 2016. It is also expected that 2016 NEP would decline by over 5% and for the full year loss ratio is expected to be in the range of 25% and 35%. Meanwhile, GMA stock rose 15.26% in the last six months (as of October 19, 2016). Considering the long-term potential, we give a “Hold” recommendation on the stock at the current price of – $2.84  

BWP Trust

Re-affirmed the previous market guidance: BWP Trust (ASX: BWP) has re-affirmed the previous market guidance of about three per cent distribution per unit growth for FY 17.  On the other hand, the group has informed BWPML (BWP Management Limited) of its intention to vacate the seven existing Bunnings Warehouse properties owned by BWP. This move is subject to the finalization of arrangements between the Home Investment Consortium Company Pty Ltd and Woolworths Limited, and also with some third-party landlords, for the occupation of ex-Masters sites to replace each of the BWP impacted stores. Moreover, all the three properties have four or more years remaining to lease expiry, while the balance of the leases will expire within a shorter timeframe. BWP stock fell over 17.11% in the last three months (as of October 19, 2016), and we believe this pressure would continue in the coming months. We give an “Expensive” recommendation on the stock at the current price of – $ 3.10

Qantas Airways Limited

QAN Transformation program: Qantas Airways Limited (ASX: QAN) has extended its debt maturity profile after the issuance of the unsecured fixed rate notes. Moreover, QAN in FY 16 has reported 57% increase in the underlying profit before tax to $1.53 billion and the 24% increase in the statutory earnings per share to 49.4 cents. Additionally, QAN Transformation program is set to unlock the total cost and revenue benefits of a further $450 million in FY 17 to reach the QAN’s increased target of $2.1 billion by 30^th June 2017. On the other hand, the possible recovery in the fuel prices could enhance costs for the group. Moreover, the core domestic demand seems to face challenges, which could impact the group’s performance going forward. QAN stock fell 7.49% in the last six months (as of October 19, 2016). Given the prospects, we give an “Expensive” recommendation on the stock at the current price of – $ 3.26 

Villa World Ltd

Resolved the Silverstone litigation as approved by the Court: Villa World Ltd (ASX: VLW) has resolved the Silverstone litigation between all parties for the resolution of the proceedings. The agreement was formally documented, and the Court has approved the settlement on 29^th September 2016. Moreover, VLW in joint venture with Greenfields Development Company, has agreed to the unconditional purchase of a 153-hectare site at Greenbank, south of Brisbane at the purchase price of $50 million (exclusive of GST) with settlement anticipated to occur in stages during FY18 and FY19. Additionally, VLW has reported a 32% increase in the statutory profit after tax to $33.7 million in FY 16 and a 19% increase in the earnings per share to 30.6 cents. In addition, 464 sale contracts carried forward into FY17 with a gross value of $165.6 million and the group gave guidance for FY17 of profit after tax growth of at least 5% to $35.4 million. The group will hold AGM on November 03, 2016. We give a “Hold” recommendation on the stock at the current price of – $ 2.26  

Rural Funds Group

Acquired high security Murrumbidgee River water entitlement: Rural Funds Group (ASX: RFF) has acquired 9,549 megalitre (ML) high security Murrumbidgee River water entitlement for about $34 million which would offer a cornerstone resource for future horticultural developments. In the interim, RFF will generate the revenue from the sale of annual water allocations. Trading near its 52-week high price, we give a “Hold” recommendation on the stock at the current price of – $ 1.61 

Sunland Group Limited

Profit has exceeded the guidance in FY 16: Sunland Group Limited (ASX: SDG) reported a 5% increase in the net profit after tax to $31.5 million in FY 16 exceeding the guidance of between $25 million and $29 million and the earnings per share increased 17% to 19.7 cents. Moreover, the settlement volume has increased from previous years to 14% with 443 settlements and there are potentially up to 9 new projects expected to be launched for FY17 which would depend upon the pending planning approvals and market conditions. The group will hold its AGM on November 24, 2016. We give a “Speculative Buy” recommendation on the stock at the current price of – $ 1.51 

Cedar Woods Properties Limited

Presales secured for settlement in 2017 & 2018: Cedar Woods Properties Limited (ASX: CWP) has reported a 2.4% growth in net profit after tax (NPAT) of $43.6 million in FY 16. This is due to the lot sales from the residential communities in Victoria and Western Australia, contributions from medium density housing and apartment projects, and the town center development at Williams Landing. Moreover, CWP has secured presales of $184 million for settlement in FY2017 and FY2018, against $153 million at the same time last year, representing an increase of 20%. The group will hold AGM on November 10, 2016. We give a “Buy” recommendation on the stock at the current price of – $ 4.60   

Scentre Group

SCG is on track to deliver its FY 16 forecast:  Scentre Group (ASX: SCG) reported the Funds from Operations (FFO) of $617 million in the first half 2016, which represents 11.61 cents per security and the distribution of 10.65 cents per security. SCG is on track to deliver its FY 16 forecast of FFO growth of about 3% with forecast FFO of 23.25 cents per security and forecast distribution of 21.3 cents per security. We give a “Hold” recommendation on the stock at the current price of – $ 4.42  

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