Australian Pharmaceutical Industries Ltd

API Details

Revised profit guidance due to a further decline in consumer sentiment: Australian Pharmaceutical Industries Limited (API) announced revised profit guidance for the financial year ending 31 August 2017, due to a further decline in consumer sentiment and despite the company maintaining retail market share in the period. API now expects full year net profit after tax to be approximately 5% up on FY16. Although trading in retail was weaker than anticipated, API’s pharmacy distribution business remains on track to meet expectations for the year and the company also expects reported net debt to be positive before December 2017. While it continues to see good market share results, solid growth in transactions across network at 4% up on FY16 and the roll-out of new stores has remained on track. However, overall like-for-like sales has weakened due to consumers spending less per basket and on lower value items. Despite conditions in the second half being challenging, the company is holding its share of the available market and have significant new product launches to help stimulate demand in coming months. It will also continue to build on the newly enhanced Sister Club loyalty program to further personalize the shopping experience. We give a “Hold” recommendation on the stock at the current market price of $1.53


API Daily chart; (Source: Thomson Reuters)

Mantra Group Ltd

MTR Details

Commonwealth Games to boost the earnings: The Commonwealth Games will be the largest sporting event that Australia will see this decade and is estimated to have a $2 billion of economic impact. The event is scheduled for April 2018, will see participation from 6,600 athletes and team officials from 70 nations. The group would benefit as it is the largest accommodation provider on the Gold Coast. Meanwhile, the group has completed 1,138 accommodation refurbishments, 10 hotel projects including 2 restaurants and 7 foyers. The 18 foyer and hotel guest spaces are currently underway and 5 major projects are to be completed in FY17. The shares of MTR have declined 15% in the last twelve months (as of July 28, 2017) owing to subdued performance in CBD segment. We expect the bullish momentum in the stock as the group is strengthening its leisure market while the CBD segment is performing rationally, and give a “Hold” recommendation on the stock at the current price of $2.74


MTR Daily chart; (Source: Thomson Reuters)

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