JB Hi-Fi Limited

Trading Update & Lowering of 2018 Net profit guidance: JB Hi-Fi Limited’s (ASX: JBH) stock plunged 8.95% on May 02, 2018 after the company lowered the FY 18 net profit after tax guidance to $230 million. The company was previously expecting the 2018 net profit after tax to be in the range of $235 million to $240 million. In the third quarter 2018, JBH has delivered 6.8% growth in the total sales (against 10.8 per cent noted in the prior corresponding period) and comparable sales growth of 4% (down from 8.2 per cent of last year). However, The Good Guys’ total sales fell by 1.3% and the comparable sales fell by 2.9%. The Good Guys’ performance has been impacted due to the challenging conditions in the Home Appliance Market. This will affect the gross margins in the 2H 2018. These shortcomings have added to the woes of the company that has otherwise fallen 11.92% in three months as on May 01, 2018. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 23.280.
 

Fairfax Media Limited

First 17 weeks of FY18 H2 Trading Update: Fairfax Media Limited’s (ASX: FXJ) stock surged 5.63% on May 02, 2018 while the company in the first 17 weeks of FY18 H2 has delivered around 1% growth below last year in the overall Group revenues. During this period, Domain’s digital revenue grew 21% and total revenue grew 13%, Australian Metro Media revenue fell around 2%, Australian Community Media revenue fell around 9%, Stuff (New Zealand Media) revenue fell around 8% including currency impact and Macquarie Media revenue is up around 4% (up 6% excluding disposals). The company continues to implement cost savings measures. Overall, FXJ’s Print is generating strong cash flows, that is expected to continue for some time given the industry back-end cost initiatives underway. The company’s strategy to transform has delivered net debt reduction of close to $1 billion, which resulted in a strong balance sheet with a net cash position for Fairfax’s 100%-owned entities. The company’s strategy to build value has delivered Fairfax shareholders $1.6 billion in value creation. FXJ stock has risen 4.41% in one month as on May 01, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 0.750.

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