Creso Pharma Limited

CPH Details

·         Improvement in sentiments: Creso Pharma Limited’s (ASX: CPH) stock surged 3.4% on May 26, 2017 with the improved investment interests at the back of bargain opportunity in the pot stock sector. Recently, the group inked a strategic agreement with LeafCann (Australian medicinal cannabis producer).The latter will supply GMP-standard cannabis and hemp-derived materials to Creso for producing therapeutic products for humans and animals.

·     Recommendation: In last six months (as at May 26, 2017), the stock has moved up 90%. We maintain a “Hold” recommendation at the current price of $ 0.45

Orocobre Limited

ORE Details

·         Moving on a positive sentiment with strong Q3FY17 performance: Orocobre Limited (ASX: ORE) witnessed a stock price surge of 1.9% on May 26, 2017. The group announced that it has received VAT refund and additional cash security deposits in Australia which back Sales de Jujuy S.A.’s (SDJ) Argentine working capital facility. Total of ~US$19.8m of VAT refunds have been received by SDJ to date including US$2.7m of additional VAT refunds received recently. Through this all VAT claims submitted to Argentine authorities including January 2017 have now been approved and paid. Further claims of ~US$3.5m relating to February and March 2017 have been submitted to the Argentine authorities and the total outstanding VAT balance from project construction yet to be claimed by SDJ stands at ~US$15.7m on a pre-discounted basis. For Q3FY17, the company reported 19% Quarter on Quarter (QoQ) growth in total revenue at US$32.1 million led by 13% QoQ increase in average FOB price at US$10,211/ton, reflecting firmer market conditions. Importantly, cash cost of production increased only by 1% QoQ to US$3,565/ton, despite lower production volumes. Gross cash margins grew by 21% QoQ to US$6,646/ton reflecting an operating margin of 65% (up from 61% in December 2016 quarter). The company expects production to rise significantly in the H1FY18, while expecting the production in the range of 5,500 tons – 6,000 tons in H2FY17.
 

Quarterly Result (Source: Company Reports)
 
·         Recommendation: The stock has declined 15.7% over the past six months and 9.9% in last twelve months (as on May 26, 2017) on account of production in Q2FY17 and delays in customs clearance.We give a “Hold” recommendation on the stock at the current price of $ 3.73

Aristocrat Leisure Limited

ALL Details

·         Surged on robust H1FY17 results:During H1FY17, Aristocrat Leisure Limited (ASX: ALL) reported a robust revenue growth of 21.6% year on year (YoY) to $1.23b, while net profit before amortisation grew by 49.0% YoY to $272.9m, led by impressive performance across the group’s global portfolio, particularly growth in Aristocrat’s Americas, Digital and International Class III businesses, supported by sustained momentum in Australia. Despite the competitive market conditions, ALL’s industry leading content, hardware and technology translated into solid operational performance. Currently, the company is focused on growing core business while investing prudently to capture attractive opportunities in adjacent segments and markets over time. Moreover, strong balance sheet, improving debt ratios and substantial liquidity position provides the company with sufficient flexibility for continued investment going forward. The company is expected to deliver full-year normalized NPATA of 20%-30% over FY17.
 

H1FY17 Financial Summary (Source: Company Reports)
 
·         Recommendation: The stock surged over 1% on May 26, 2017 at the back of bumper result. Over the past three months, the stock has moved up by 28%, while it was up 71% in the last twelve months as on May 26, 2017, and currently trading at high levels.We give an “Expensive” recommendation on the stock at the current price of $ 21.27

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