MCPHERSON’S LTD (ASX: MCP)

Better than anticipated result: Consumer Discretionary group McPherson’s stock zoomed up 10.5% on February 01, 2018 despite the group’s unaudited half year sales revenue plunging 7.7% to $106 million against $115 million of prior corresponding period. The underlying profit after tax slipped to $7.3 million from $7.9 million for the same period in the previous year, i.e., a 7.9% drop, while underlying profit before tax remained same at $11 million (including result from Home Appliances Division). This contrasts with the earlier forecasted first half FY18 underlying profit after tax guidance slipping 10 to 15% below the previous year’s results. It would be better to wait and watch for further developments given the retail landscape while the group is highlighting a positive outlook at the back of growth initiatives. We give an “Expensive” recommendation at the current price of $1.32
 

GODFREYS GROUP LTD (ASX: GFY)

Impact on bottom-line result: At the back of soft Christmas trading period and write-downs of goodwill and intangibles, Godfreys expects to report a bottom-line loss of about $59 million for the December half. The stock has plunged by about 16.8% on February 01, 2018 and the group is being impacted by the reducing market share in vacuum cleaning. In December, the group highlighted about volatile like for like sales witnessed during October and November. On the other hand, the group highlighted for positive free cash flow result with reduction of debt from $18.3 million to $16.2 million as at December 29, 2017. The group will reset the outlook based on these shortcomings. At the moment, we give a “Hold” at the current price of $0.32

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