Stocks’ Details
 

Tabcorp holdings limited

1H19 results to be declared on 13 Feb.:Tabcorp Holdings Limited (ASX: TAH) is an Australia-based gaming, gambling and lottery operator. Recently, it stated that the they will be announcing the results for the first half of FY19 ending 31 December 2018 on the 13 February 2019and will be distributing the dividends on 13 March 2019 with a record date of 19 February 2019.It expects to create EBITDA cost and revenue synergies of $50 million in FY19, $78 million in FY20, and more than $130 Mn in FY21.


EBITDA synergies over the next three FYs (Source: Company Reports)

Over the past 5 years, the revenue of the company has grown at a CAGR of 17.05%. It has a favourable capital structure with a debt/equity ratio of 0.48x. Moreover, the TTM dividend yield delivered by the stock is 4.50% which is better than that provided by the hotel and entertainment service industry of 3.50% generating more income for the shareholders.

Meanwhile, the stock price has generated a positive return of 8.35% during the last 1-month period as on 08 February 2019, and we expect the trend to continue. Thus, we believe that the company is poised to benefit from the stable regulatory norms as well as the synergies on account of the combinations completed by it along with the growing revenues, upcoming 1H19 results, dividends to be paid in March 2019, higher dividend yield and uptrend in the stock price. We, therefore, maintain our “Buy” recommendation on the stock at the current market price of $4.800 as on 8 February 2019.

Evolution Mining Limited

Improving Margins: Evolution Mining Limited (ASX: EVN) is an Australia-based gold mining company. EVN’s gold production for 1H19 summed up to 382,214 ounces at an al-in cost of $1,201 per ounce. It also reaffirmed its FY19 guidance, which states that the company will produce 720,000 – 770,000 ounces of gold at the cost of $850 – $900 per ounce. Its net bank debt reduced to $41.1 million (as on 31 December 2018) as compared $78.2 million as on 30 September 2018.


Consolidated production and sales summary (Source: Company Website)

Over the past five years, the margins of the company have improved and are reported above the industry medians. During FY18, the company reported an EBITDA and Net margin of 49.4% and 17.1% respectively which were above the industry median of 30.2% and 12.8% respectively. The company also reported ROE of 11.9% again above the industry median of 11.5% generating more returns for the shareholders.

During the last three months, the stock has generated a positive yield of 26.14% and is trading at higher levels. The Bollinger band along with the Relative Strength Index are visible in a neutral territory and are moving up indicating a limited, but upside potential. Thus, by looking at 1H19 production, reaffirmed production guidance, improving debt profile, improving margins, better returns to shareholders with a limited but upside potential, we suggest the market players to ‘hold’ the stock at the current market price of $3.860 (up 2.387% on 8 February 2019).

Cooper Energy Limited

1H19 results to be declared on 11 Feb.: Cooper Energy Limited (ASX: COE) is an Australia-based energy company engaged in the discovery, commercialisation and sale of gas as well as the production of oil from Cooper Basin. It will be announcing its 1H19 results on 11 February 2019 at 09:00 am AEDT. As per its December 2018 quarter report, it generated a sales revenue of A$36.2 million for 1H19 which was up by 16% as compared to A$31.2 Mn in 1H18. It provided the capex guidance for 2H19 and FY19 of A$137.2 million and A$244.8 million respectively. Further, it has maintained a hedge book as a protection against downside oil prices. It has 8,180 zero cost collar options for 3Q19 and 1,632 zero cost collar options for 4Q19 of a price range of US$55.00 - US$79.50.


Capex Guidance (Source: Company Reports)

Over the past five years, the margins of the company have improved and are reported above the industry medians. During FY18, the company reported an EBITDA and Net margin of 59.8% and 37.8% respectively which were above the industry median of 31.9% and 13.2% respectively. It has a favourable capital structure with a Debt/Equity ratio of 0.26x.

During the last 1-month period, the stock has generated a positive yield of 11.24%.Thus, with the upcoming 1H19 results and by looking at increasing sales revenue, capex guidance, higher and improving margins along with favourable capital structure, we maintain our “Buy” recommendation on the stock at the current market price of A$0.495 (up 2.062% on 8 February 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)  
 

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