Vocus Group Limited (ASX: VOC)

Regaining Momentum: While Telstra was seen to witness the impact from mobile outages in Melbourne and other cities, Vocus Group Limited (ASX: VOC) moved up 6.47% on June 19, 2018. As per media reports, the group seems to have bagged a $136.6 million contract from the Australian Government for developing an international sub-marine cable between Solomon Islands, Papua New Guinea and Australia. The group is reported to use advanced multi-terabit technology for establishing the international connectivity. Lately, Vocus appointed Kevin Russell as its Group MD & CEO. Meanwhile, VOC retained its New Zealand business and scraped the sale process. Its syndicate has consented to amending its covenants under existing debt facilities. It appears that the group is dodging the headwinds that hovered around the stock in the past 2 years. We maintain a “Hold” on the stock at the current price of $ 2.63.
 

Insurance Australia Group Limited (ASX: IAG)

Expecting minimum $200 Mn profit from sale agreements: Insurance Australia Group Limited’s (ASX: IAG) stock climbed up 2.433 per cent on June 19, 2018 after the announcement of selling its Thai and Indonesian operations to Japanese insurer Tokio Marine Holdings for $525 Mn.Following this, Tokio Marine will purchase IAG’s 98.6% stake in Thailand’s Safety Insurance and 80% of PT Asuransi Parolamas in Indonesia. In separate deal, the group has reached an agreement to sell its 73.07% interest in AAA Assurance Corporation. These deals are expected to conclude in the financial year ended 30 June 2019, subject to regulatory approvals or notifications. Further, the group expects an after-tax profit of minimum $200 Mn in its fiscal 2019 results from the combined transactions, after certain deductions related to allowance costs and foreign currency translation reserve effects. Because of the sale agreement, the group will report its disposed entity as a discontinued operation in FY18 earning report and comparative figures for FY17 and 1H18 will be restated accordingly. IAG’s interests in Malaysia and India will continue to be treated as associates. The group said that the exclusion of Thailand, Indonesia, and Vietnam from IAG’s continuing business will have a negligible impact on gross written premium (GWP) growth for FY18 but will improve its insurance margin by approximately 0.50 basis point. Its capital buffer, or CET1 ratio, will increase by at least 0.13 basis point. Meanwhile, IAG stock has risen 5.12 per cent in the past three months as at June 18, 2018 and is trading close to 52-week high level ($8.485). Hence, we maintain our “Hold” recommendation on the stock at the current price of $ 8.010, in view of the expected full financial year result due on 15 August 2018.

 
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