Stocks’ Details

Bellamy’s Australia Ltd (ASX: BAL)

Stabilisation Plan in Progress: Bellamy’s turnaround is on track but still there are few challenges to navigate through. It was seen that sales have stabilised, and operating cash flows have been positive since March 2017 and second half of 2017 results exceeded top-end of guidance for Revenue and Normalised EBIT. After the acquisition of Camperdown, CNCA license suspension was lifted and focus was only on Camperdown. The reason for suspension was that the Chinese authorities determined that the milk products exported to China were different from those used for their local consumption. BAL later indicated about registration of CFDA in China. The group also had a change in its board which helped BAL to increase its earnings and sales and their turnaround plan is on track which resulted into restructuring costs. The overall sales decreased by 10.4% as compared to last year but this decline was partially off-set by increase in sales in China/ Hong Kong. The infant formula and baby food company has a target of achieving revenue growth of 15-20% and EBIDTA margin of 17-20% for FY18.
 

Stabilisation Plan (Source: Company Reports)
 
Stock Performance: It was seen that share price has increased in the last six months by 59%; but in the last week, stock price dipped by 8%.BAL was again up over 2% on December 13, 2017. We give a “Hold” on the stock at the current price of $10.55
 

RXP Services Ltd (ASX: RXP)

Positive Impact of digital technologies: RXP is progressing well in its digital business while driving a change in the Technology Service industry and emerging as a great local alternative to the multi-nationals as a Digital Partner. The acquisition of the Works which is a digital Partner, is performing well across all the fronts. With the expansion of The Work capabilities into Melbourne in the second half of the year, RXP is expecting additional benefits going forward. In 2017, RXP’s total revenue increased to $140.5 million (which is an 11% increase from prior year) and EBIDTA also increased to $19.5 million (which is a 7% of increase as compared to last year).

In the recent update, the group signalled for a growth at circa 6% which is below the original expectations of 10% growth, at the back of faster than anticipated trail off in business owing to commoditised work. RXP now expects FY 18 revenue to be in range of $162 million to $167 million (from earlier stated $174.7 million), with EBIDTA margin in the range of 14.6%-15.1%. RXP, on the other hand, highlighted that the recent significant wins within the banking and finance and government sector in their traditional business, combined with all the renewals and digital services will result to an accelerated financial performance in the second half of 2018.
 

Revenue Shift (Source: Company Reports)
 
Stock Performance: It was seen that in the last six months the price has decreased by 15.8% and with recent update, we give a “Hold” recommendation at the current market price $0.65

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.