Stocks’ Details

Cromwell Property Group

Dividend to be paid on 22 Feb.:Cromwell Property Group (ASX: CMW) is an Australia-based Real estate investment management company. It invests and manages commercial properties. Recently, the company has announced to pay quarterly dividend of A$0.018125 per share on 22 February 2019. Further, it has extended its buyback period to 17 January 2020. The company expects operating earnings of more than 8 cents per share with a distribution of not less than 7.25 cents per share in FY19.


FY18 Financial Highlights (Source: Company Reports)

During FY18,the company reported higher margins. It reportedGross and Net margin of 88.2% and 63.0% respectively. It reported an occupancy rate of 94.5% in FY18. Further, the returns generated for the shareholders are in line with the industry as the ROE was reported at 11.4% in FY18 as compared to the industry median of 11.3%. It has a favourable capital structure with a Debt/Equity ratio of 0.74x in FY18.

It reported a higher dividend yield of 7.25% as compared to the residential and commercial REIT industry median of 5.6% representingmore income for its shareholders. Over the past three months, the stock has generated a positive yield of 7.66%. With the payment of dividend on 22 Feb, higher margins, favourable capital structure, higher than industry dividend yield and an uptrend in the stock price, we givea “buy” recommendation on the stock at the current market price of $1.080 (up by 0.465% today).

ResMed Inc

Strategic Alliance:ResMed Inc (ASX: RMD) is a health care company providing innovative solutions for the treatment of the people at their home. During 1H19, it reported a net income of US$230.4 million with a growth of 141% on pcp on account of one-time transition tax recognized in the prior year quarter. In January 2019, RMD has acquired Propeller Health for US$225.0 million, which was followed by a few other major acquisitions in 1H19 like MatrixCare and Healthcarefirst.

1H19 Income Statement (Source: Company Reports)

During 2Q19, RMD reported higher than industry margins asthe EBITDA and Net margin stood at 30.4% and 19.2% respectively as compared to the industry median of 17.3% and 6.0% respectively. Similarly, RMD is generating better returns for its shareholders than its peers as it reported ROE of 6.5% in 2Q19 as compared to the industry median of 2.0%. Further, RMD is able to convert its stock to cash more efficiently than its peers as it has a better than industry cash conversion cycle of 129.6 days as compared to the industry median of 156 days.

Over the past three months, the stock has generated a negative yield of 10.32%. The Relative Strength Index along with the Bollinger bands shows the stock to be in an attractive position. With the robust 1H19 results, a few strategic alliances with several healthcare companies provide overall growth, higher than industry margins, better than industry ROE, and charts reflecting a bullish movement in the stock price, we give a“Buy” recommendation on the stock at the current market price of $13.130 (up by 1.448% on 6 February 2019).
 

Oil Search Limited

FY18 results to be declared on 19 Feb.:Oil Search Limited (ASX: OSH), an oil and gas company, headquartered in Papua New Guinea. It recently declared its 4Q18 updates in which it recorded a growth of 6% in total revenue over the previous quarter and reported total revenue of US$503.1 million in 4Q18. It will be declaring its FY18 results on 19 February 2019.


4Q18 Financial Highlights (Source: Company Reports)

For 2019, the company expects total production of 28.0 - 31.5 mmboewhereas during FY18 it was able to produce 25.206 million barrels of oil equivalent. This represents a growth of 11.08% - 24.97%. For FY18, it reported total operating revenue of US$1,535.8 Mn with a growth of 6.21% on pcp. This was majorly contributed by LNG and gas sales which was reported at US$1,160.1 Mn for FY18 with a growth of 16.82% on pcp. The average realised oil and condensate price was up by US$14.97 per barrel and was reported at US$70.65 per barrel. Similarly, average realised LNG and gas price was up by US$2.39 per barrel and was reported at US$10.06 per barrel.

For 1H18, it reported a higher than industry EBITDA and Net margin of 63.6% and 14.2% respectively as compared to 33.9% and 10.4% respectively. With the upcoming FY18 results, increasing revenue as seen in 4Q18, robust FY19 production guidance, increasing average realised prices along with higher than industry margins in 1H18, we have a “buy” recommendation on the stock at the current market price of $7.910 (up by 0.127% on 6 February 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)  
 

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