Coronado Global Resources Inc

CRN Details

Revised Profit Guidance for Financial Year 2019:Coronado Global Resources Inc (ASX: CRN) is in the development and operation of premium quality metallurgical coal mines in Queensland, Australia (Curragh) and states in states of Pennsylvania, Virginia and West Virginia (Buchanan, Logan, Greenbrier) in the USA. The market capitalisation of the company stood at A$2.35Bn as on 25^th September 2019. Recently, the company announced its revised guidance for the financial year ending 31^st December 2019. The company reaffirmed its production, operating cost and capital expenditure guidance for FY19, reflecting continuing improvements in the operating performance of its assets. It has revised its EBITDA guidance range of $687 Mn to $737 Mn from the previous the guidance range of $737 Mn - $807 Mn, because of the current weakness in benchmark prices for metallurgical coal.

It added that the revised EBITDA guidance range is based on various assumptions, which include a spot price of around $140 per tonne for the remainder of the year.The company further stated that the revised guidance also assumes higher than normal inventory levels in the US, for coal being reserved to generate higher margins in the event there is a recovery in prices in the short term.


Updated FY19 Guidance (Source: Company Reports)

What to Expect:The company stated that it has achieved significant operating efficiencies at its Curragh mine since its acquisition in March 2018 and will continue to benefit from decreased operating costs. Given the low-cost operating structure and balance sheet capacity, the company is betterplaced against its peers to weather a softer price environment without the need to reduce critical investment in its assets. CRN remains positive for its long-term growth prospects on the back of a competitive and low-cost operating structure, low gearing and suite of highly sought-after, quality metallurgical coal products from the US domestic and global seaborne markets.

Stock Recommendation:The net margin of the company stood at 17.4% in 1H FY19 as compared to the industry median of 15.7%. This implies that CRN has better capabilities to convert its topline into the bottom line against the peer group. It posted a return on equity of 17.7% in 1H FY19 against the industry median of 5.8%, which represents that the company is providing better returns to its shareholders. Currently, the stock is trading close to its 52-week low price of $2.11 with reasonable PE multiple of 7.69x. Hence, considering the above-stated facts and current trading levels, we give a “Buy” recommendation on the stock at the current market price of A$2.310 per share (down 4.938% on 25^th September 2019, owing to the release of revised profit guidance for financial year 2019).

 
CRN Daily Technical Chart (Source: Thomson Reuters)
 

1300SMILES Limited

ONT Details

Response to Press Speculation: 1300SMILES Limited (ASX: ONT) is into the provisioning of dental surgeries and practice management to self-employed dentists. It has a market capitalisation of A$142.07 Mn as on 25^th September 2019. Recently, the company has noted the comments in the Australian Financial Review online in relation to its interest in acquiring the Maven Dental Group from NZX listed Abano Healthcare Group Limited and Abano’s response. The company confirmedthat it is in confidential discussions with Abano Healthcare Group Limited and it is conducting due diligence investigations. It added that the result of the due diligence and negotiations is speculative. Shareholders should note that there is no certainty that any agreement would be reached or that any transaction would eventuate from the current or any future discussions or diligence investigations. For the full year ended 30^th June 2019, the company reported revenue (Statutory) amounting to $42.0 Mn, reflecting a rise of 6.6% and EBITDA stood at $13.3Mn with a rise of 1.4%. The following picture provides an idea of the dividend history:


Franked Dividends (Source: Company Reports)

Future Developments:The company stated that its core objective is to continue to increase profits and shareholder returns while providing a rewarding environment for its staff and the dentists using its facilities. It targets to achieve a combination of organic growth in its existing locations and the addition of new practice management facilities. The key drivers for the future growth of ONT mainly includes (1) increasing profits by attracting more dentists to its existing facilities and expanding those facilities which are already at full capacity, (2) establishing new practices in existing and new regions (greenfield sites), and (3) managing dental facilities owned by others.

Stock Recommendation:  The return on equity of the company stood at 19.9% in FY19 as compared to the industry median of 11.9%. This implies that the company is providing better returns to its shareholders against the broader industry. As per ASX, the stock of ONT is trading towards its 52-week lower levels of $5.85 with PE multiple of 18.29x. Hence, considering the above-stated facts and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$5.980 per share (down 0.333% on 25^th September 2019).

 
ONT Daily Technical Chart (Source: Thomson Reuters)

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