Resolute Mining Limited

RSG Details
·         Recovering sentiment: Resolute Mining Limited (ASX: RSG) stock rallied over 2.6% on May 09, 2017 post the release of their investor presentation coupled with stability in gold prices. The group is targeting 500kozpa by 2020 and the organic production comprises Syama Underground Mine having up to 250kozpa @ AISC of US$881/oz and Ravenswood Expansion Project producing up to 140kozpa @ AISC of US$880/oz. Bibiani Gold Mine is aiming for more than 100kozpa @ AISC of US$858/oz.  

RSG gold production CAGR over the next 5 years (Source: Company reports)

·         Recommendation: RSG stock corrected over 30.9% in the last three months (as of May 08, 2017) and we believe this pressure to continue in the coming months, given the volatile gold prices. Despite temporary rise in the stock, we maintain our “Expensive” recommendation on the stock at the current price of $ 1.18

Incitec Pivot Ltd

IPL Details
·         Decent bottom line growth: Incitec Pivot Ltd (ASX: IPL) stock rallied over 2.98% on May 09, 2017 post their half year results’ release. The group’s Net Profit after Tax excluding individually material items (ex IMIs) rose 11% year on year (yoy) to $152.1 million in the first half of 2017 against the prior corresponding period (pcp). EBIT ex IMIs rose 23% during the period boosted by solid Explosives earnings and initial Waggaman contribution, offsetting fertilizer prices pressure. The group’s Business Excellence efforts enabled them to generate $63.9 million in net productivity benefits. As per the segment performance, Explosives reported a rise of 10% in Earnings. Americas EBIT surged 24% driven by sustained Quarry & Construction growth and BEx initiatives. Asia Pacific enhanced 4% driven by resilient Coal and Base & Precious metals demand. With regards to the Industrial Chemicals performance, EBIT surged $60.0m, driven by initial Waggaman operational earnings of US$10.8m despite delay damages of US$35.1m as disclosed on 18 January 2017. But Fertilisers segment’s earnings lost 67% in concert with global fertiliser prices which were well below long-term trend.

·         Recommendation: IPL generated over 24.7% returns in the last six months (as of May 08, 2017) and we give a “Hold” recommendation on the stock at the current price of $ 3.80

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