Bank of Queensland Ltd

BOQ Details
·         Pain of Big four banks is a gain for few regional banks: Bank of Queensland Ltd (ASX: BOQ) stock moved up 3.6% on May 10, 2017 while the group announced about its dividend distribution. On the other hand, the Australian government announced a six basis-point levy on the deposits of the country's five biggest banks in its annual budget. With the implementation of new levy, Australia's largest banks, Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group, National Australia Bank and Macquarie Group will pay the charge on their liabilities including corporate bonds, commercial paper, certificate of deposits and tier-2 capital instruments. At the same time, BOQ seems to be well positioned to take advantage from the situation for earning higher margins.

·         Recommendation: For H1FY17, BOQ reported 2% and 3% yoy decline in cash earnings and profit before tax led by intense competition in a low interest rate environment contributed to flat loan growth and 5bps decline in Net Interest Margin (NIM). However, management has guided for better H2FY17 as number of the headwinds that occurred in 2016 waned in H1FY17. We give a “Buy” recommendation on the stock at the current price of $ 12.00

Syrah Resources Ltd

SYR Details
·         Premium product to command a premium price: Shares of Syrah Resources Ltd (ASX: SYR) extended gains with a 4.6% surge on May 10, 2017 with improving sentiments on commodities and the stock. SYR expects the battery market to witness significant growth as demand for new energy vehicles may reach ~4 million in 2020 and 7-9 million in 2025. Moreover, it is estimated that maximum supply capacity of natural flake graphite will be <500ktpa due to increasing costs, grade depletion and increasing environmental regulations. Hence, prices will support a high quality spherical product made with natural graphite as it improves battery energy density and reduces total battery cost. Steel market is expected to remain a major demand sector, but in near term, the company expects growth in demand to be flat as China closes steel capacity.

·         Recommendation: Given the optimistic outlook for graphite and lithium products coupled with the ramp in in production levels to address the rising demand,we give a “Buy” recommendation on the stock at the current price of $ 2.75

Cleanaway Waste Management Ltd

CWY Details
·         Improving operational performance: Cleanaway Waste Management Ltd (ASX: CWY) stock moved up 5.4% on May 10, 2017 with improving sentiments. The group recently completed its unmarketable parcel sale facility. For H1FY17, CWY’s revenues declined by 3% year on year (yoy) to A$724.5m due to lower growth in Liquids and Industrials Services segment, however, net income grew by 22% yoy to A$28m. Further, the company is expecting to generate a pre-tax profit of approximately ~$20-$22 million in H2FY17, while reducing spending on rectification and remediation by ~$20 million over next six years. 

·         EPA works Approval is a critical step in the approvals process: Importantly, in March 2017, CWY was granted a works approval from the Victorian Environment Protection Authority (EPA), which will enable the extension of landfill operations at the Melbourne Regional Landfill located in Ravenhall, Victoria. This approval extends the existing footprint for landfilling on the site until 2038 and will support investment in Victorian operations.

·         Recommendation: The stock has moved up 51.7% over the past one year (as at May 09, 2017), following a notable improvement in operations after a couple of years. The stock now trades at higher levels and we give an “Expensive” recommendation at the current price of $ 1.37

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