BHP Billiton Limited

BHP Details

Robust Balance Sheet: BHP Billiton Limited’s (ASX: BHP) stock tumbled 1.444 per cent on August 22, 2018 depicting a fall continued after the release of FY18 result on August 21, 2018, wherein Profit after taxation attributable to the members of the BHP Group was substantially down by 37 per cent to $3,705 Mn in FY18 as compared to the prior year. However, revenue increased by 20 per cent and amounted to $45,809 Mn in FY18 against FY17. Despite this, the company missed the investor expectations and recorded EBITDA (including the contribution from the Onshore US assets) of $24.1 Mn for the full year. Besides this, BHP is a cash-rich company with cash and cash equivalent of US$ 15,871 Mn, net debt to equity of 0.20x, net operating cash flow of US$18,461 Mn and free cash flow of US$ 12.5 Bn. It reflects the healthy position of the company and shows the ability to produce positive cash flows even under tough market conditions on the strength of its wider market reach which enables the company to meet the competitions.


FY18 Financial Dashboard (Source: Company Reports)

Based on mixed performance, the Board of Directors declared a fully franked final dividend of 63 US cents per share, bringing the total dividend for FY18 to 118 US cps, up 42 per cent as compared to the prior year. It will be paid on 25 September 2018 with the record date of 7 September 2018. Meanwhile, BHP stock has risen 9.19 per cent in the past six months as at August 21, 2018 and traded close to 52-week higher level of $35.290. Based on the foregoing, we maintain our “Hold” recommendation on the stock at the current market price of $32.080.
 

BHP Daily Chart (Source: Thomson Reuters)
 

Accent Group Limited

AX1 Details

Appointed Mr. Nico van der Merwe as an Alternate Director: Accent Group Limited (ASX: AX1) informed the market that Mr. Brett Blundy, a non-executive director of the Company, has appointed Mr. Nico van der Merwe to act as his alternate director effective from 10 August 2018. On the financial front, net margin increased by 460 bps to 7.0% in 1HFY18 against the previous six months. Resultantly, RoE grew up to 6.8% in 1HFY18, against the value of 2.1% in 2HFY17. Further, the second half also seems to have started at a positive note with like for like retail sales for the first 7 weeks of the second-half up 4%. The unaudited, underlying EBITDA for the first 7 months of the year recorded growth of 12% as compared to the prior corresponding period, exhibited ahead of plan. At large, 2018 is expected to be another year of profit growth at the back of continued progress in omnichannel, healthy online growth and improved performance in the Hype DC banner. Based on the first half performance, the business is well positioned to defend against new market entrants and capitalise on growth opportunities. Meanwhile, the stock price has risen 73.74 per cent in the past six months as at August 21, 2018 and it is trading close to its 52-week high price that is $1.675 and a higher PE level of 25.0x among its peer group. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $1.555, ahead of its full-year result which is expected to be published on August 28, 2018.
 

AX1 Daily Chart (Source: Thomson Reuters)
 

Transurban Group

TCL Details

Decent Outlook: Transurban Group (ASX: TCL) is a large-cap company with the market capitalization of circa $26.44 Bn as of August 22, 2018. Recently, the group delivered toll revenue growth of 8.7 per cent to $2,340 Mn in FY18 as compared to the prior year. It was mainly driven by the contribution of $182 million from the existing assets on the back of traffic growth and an increase in toll price. Resultantly, revenue increased by 20.7 per cent and amounted to $3,298 Mn in FY18 compared to the previous year. EBITDA stood at $1,649 Mn in FY18 against the prior year, exhibiting significant growth on Y-o-Y basis while EBITDA margin contracted to 585 bps and recorded 50% in FY18 against 55.9% in FY17. EBITDA margin was mainly impacted by the higher construction cost incurred during the year. Based on mixed performance, the group recorded NPAT growth of 123.9% in FY18 on a Y-o-Y basis. As of now, the group has $10 Bn committed pipeline and the projects are expected to remain within TCL’s budget as the company has a strong balance sheet. Furthermore, the company has been provided with the FY19 distribution guidance of 59.0 cps that includes 2 cps fully franked. We expect that the company will continue to focus on initiatives to enhance the customer experience – both on and off the road and ensure its overall growth momentum in years ahead. The market is now eyeing the update on acquisition of WestConnex motorway.


FY18 Key Highlights (Source: Company Reports)

Meanwhile, the share price has risen 3.39 per cent in the past three months as at August 21, 2018 and traded close to a 52-week low level of $10.970. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $11.840, by looking at its healthy balance sheet to fund existing $10 billion pipeline and continued improvements to enable fee reduction and enhanced digital platforms for customers.
 

TCL Daily Chart (Source: Thomson Reuters)

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