Western Areas Ltd

WSA Details
 
·         Boost from commodity prices: Australia's nickel miner Western Areas Ltd (ASX: WSA) soared 6.6% on May 22, 2017 with gains in metals and mining sector driven by commodity prices. Nickel prices recovered from the recent fall. Particularly, three-month nickel on the LME recovered on Monday, extending Friday's gain. ASX Metals index was also up against a slight movement in the benchmark index during Monday’s morning session.

·         Recommendation: The stock has declined 33.23% over the past six months while it was down 17.6% in last three months (as of May 19, 2017). We give a “Buy” recommendation on the stock at the current price of $ 2.25

Downer EDI Ltd

DOW Details
·         Extension of earlier takeover offer: Downer EDI Ltd (ASX: DOW) edged up 0.32% on May 22, 2017 while the group has extended its earlier takeover offer till 14 June 2017, to acquire all of the issued shares in Spotless Group Holdings Limited (ASX: SPO) for $1.15 cash per share. In March 2017, Downer announced that its wholly owned subsidiary (Downer EDI Services Pty Ltd) lodged a Bidder's Statement for a takeover offer for all the issued shares in Spotless Group Holdings Limited. Further, Downer EDI Services Pty Ltd has an interest equivalent to 19.99% in the issued share capital of Spotless, which is comprised of a 15% shareholding and a further economic interest equivalent to 4.99% via a total return cash settled equity swap.

·         Recently, Downer has been awarded an Engineering, Procurement and Construction (EPC) and Operations and Maintenance (O&M) worth of ~$200 million by Palisade Investment Partners (Palisade) and ESCO Pacific (ESCO) for the Ross River Solar Farm near Townsville in Queensland. Notably, Ross River Solar Farm (148MW) has a 13-year Power Purchase Agreement (PPA) with Energy Australia, and after the completion, it will have enabled the delivery of more than 2.3GW of renewable energy to the Australian market. Currently, it is constructing the 100MW Clare Solar Farm, 15MW Sunshine Coast Solar Farm, and 240MW Ararat Wind Farm.

·         Recommendation: The stock has moved up 77% and 22.4% over the past twelve months and six months, respectively, owing to strong financials and optimistic outlook. Trading at higher levels, we give an “Expensive” recommendation on the stock at the current price of $ 6.36

Village Roadshow Ltd

VRL Details
·         Selling stake in the Golden Village cinema exhibition: Village Roadshow Ltd (ASX: VRL) shares moved up 3.12% on May 22, 2017, after announcing the potential sale of its 50% stake in the Golden Village cinema exhibition (wholly-owned subsidiary), Singapore. Further, MM2 Asia Ltd also had announced that it is in discussions with Village Cinemas Australia Pty Ltd (Village Cinemas) for the purchase of Village Cinemas’ entire stake in Dartina Development Limited (a company incorporated in Hong Kong which holds the Golden Village Cinema) business in Singapore. Recently, Village Roadshow Entertainment Group (VREG) announced a transaction with Vine Alternative Investments and Falcon Investment Advisors. Post the transaction, Village Roadshow Limited’s (VRL) total interest in VREG has been indicated to include 20% of the ordinary equity in VREG with an option over a further 2.5% of VREG’s equity, and US$10 million of subordinated notes, repayable by November 2022 with a non-cash return of 15.5% p.a.

·         Recommendation: The stock has slipped 20% over the past three months owing to weak visitor numbers to its theme parks, especially on the Gold Coast coupled with decline in membership renewals. We give a “Hold” recommendation on the stock at the current price of $ 3.64

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