Stocks’ Details

Noni B Limited

Significant growth in top-line: Fashion Retailer, Noni B Limited (ASX: NBL) is of the belief that the Shop, Distributive and Allied Employees’ Association (SDA) campaign is not in the best interests of its members and perhaps based on an incomplete understanding of the facts. SDA released an issue as part of the union’s campaign against Noni B Group’s proposed Enterprise Agreement which, the company is pleased to say, has been approved by 81% of relevant employees.

1HFY19 Financial Summary (Source: Company Reports)

Total Group revenue stood at $464.4 million in 1HFY19, an increase by 140.4% from $193.2 million in 1H 2018, driven by the acquisition of five brands from Specialty Fashion Group on 2 July 2018.Strong Christmas trading resulted in like-for-like sales growth of +1% for the month of December, resulting in the Group delivering -3.1% in like-for-like sales for the half year compared with the -5.0% announced to the end of October.

Challenging Scenario Might be Continue:The company expects the market to remain challenging going forward. It expects the full year benefit of synergies, together with improvements in gross margin, to result in FY20 EBITDA exceeding $75 million consistent with market consensus. The key focus will remain on the investment in the Online presence, product purchase price synergies and restocking the acquired brands to optimum levels.

Meanwhile, the stock has generated a return of 4.78% over the past three months. However, the company’s stock posted -17.63% return in the past six months. Therefore, it can be said that the stock is quite volatile. Based on the foregoing, we give a “Speculative Buy” rating on the stock at the current market price of A$2.890 per share (up 1.404% on 2 April 2019).
 

Bingo Industries Limited

Lower underlying EBITDA margin: Waste management company, Bingo Industries Limited (ASX: BIN) had strong year-on-yearrevenue growth, with net revenue up by 25.4% to $178.7 million.Moreover, it has strong cash conversion of 103%, with the business continuing to generate strong free cash flow to support growth. However, the statutory net profit is down by 24.9% to $13.4 million in 1HFY19. The company’s underlying EBITDA margin stood lower at 25.5% reflecting a further 200 basis points below forecast and got weighed by the number of sites being offline for redevelopment, initial impact of lower margins in the Victorian business, increased volumes of lower-margin material in post-collection, as well as a rise in the corporate costs.
 

1HFY19 Financial Summary (Source: Company Reports)

Strategy going forward: The company has a vision to be an advocate for change in diverting waste from landfill, investing in new technology to increase recovery rates, enhance industry transparency on recycling practices and process materials for re-sale and re-use. However, the company also plans to diversify end-markets to continue to reduce exposure to cyclical markets.

The company is having a robust balance sheet which provides ongoing flexibility. The company has also maintained interim dividend amounting to 1.72 cents per share with regards to 1H FY 2019. However, the company’s stock has delivered -51.27% return in the span of previous 6 months and, in the time frame of previous one month, it posted -5.85% return. Currently, the stock is trading close to a 52-week lower level of $1.170, proffering decent opportunity to buy at the current juncture as it has a decent outlook ahead. Hence, we maintain our “Speculative Buy” recommendation on the stock at the current market price of A$1.550 per share (up 1.307% on 2 April 2019).
 

Galaxy Resources Limited

Strong Balance Sheet Coupled with No Debt: Popular lithium miner, Galaxy Resources Limited (ASX: GXY) lately announcedthat the Grand Council of the Cree, the Cree Nation Government and the Cree Nation of Eastmain have entered into a Pre-Development Agreement regarding the development of the James Bay Lithium Mine Project, located approximately 10 kilometres south-east of the Eastmain River and 100 kilometres east of the community of Eastmain. Galaxy is also pleased to announce that the Environmental and Social Impact Assessment for the James Bay Lithium Project is complete, this was originally filed to the Environmental and Social Impact Review Committee and the Canadian Environmental Assessment Agency in October 2018.


FY18 Profit & Loss Statement (Source: Company Reports)

The revenue of the company stood at US$153.9 million in FY18 as compared to US$96.2 million in FY17, an increase by 60.0% Y-o-Y mainly driven by higher realized selling prices.The company reported a net profit after tax of US$150.2 million which included a gain on sale of US$146.8 million (after-tax) arising from the POSCO transaction. During FY18, the company reported an EBITDA margin of 35.3% which is higher than the industry median of 30.9%.

What to Expect From GXY: The company stated that operational optimization at Mt Cattlin as well as robust balance sheet underpin the company’s continued commitment to the development of Sal de Vida and James Bay.

However, GXY’s stock has delivered -23.51% return in the span of previous 6 months and, in the time frame of three months, it posted -12.33% return. By looking at its robust financials in FY18 and its ongoing commitment towards the development of Sal de Vida and James Bay Projects, we give a “Speculative Buy” recommendation on the stock at the current market price of A$1.980 per share (up 3.125% on 2 April 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)       
 

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