MMA Offshore Ltd

Strong contract coverage for FY 19: MMA Offshore Ltd.’s (ASX: MRM) stock initially rose 2.17% on October 19, 2018 before closing flat. The company announced its plan to conduct Annual General Meeting on 21 November 2018. MRM is the provider of marine logistics and marine services to the offshore oil and gas industry in Australia and internationally. The company is engaged in various offshore marine and subsea activities. MRM is among the key players operating in the global seismic survey market. The global seismic survey market stood at US$ 7.21 billion in 2016 and is expected to reach US$ 9.23 billion by the end of the 2022. MRM has posted the EBITDA growth of 2.8% to $18.5 million, which is in line with the company’s expectation. Excluding Dampier Slipway loss, it is up 15.6%. The company has strengthened its balance sheet due to the reduction of net debt and gearing. Moreover for FY 19, the company has strong contract coverage. During the FY18, the company has secured a number of significant term contracts that include a three year contract for the MMA Pinnacle with iTech / Subsea 7, which will secure a baseload of utilisation for one of the company’s key vessels from 2Q FY2019. MRM expects higher utilisation through the course of FY19, with only modest improvements in day rates in the financial year. MRM’s goal is to be cash flow neutral in FY19 and to take advantage of emerging opportunities and improved market conditions. Meanwhile, MRM is trading at the price of level $0.23, has support at $0.21 and resistance at $0.28. The stock has fallen 9.80% in three months as on October 18, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 0.230.
 

McPherson’s Ltd

Reducing Debt: McPherson's Ltd.’s (ASX: MCP) stock has fallen 7.78% in three months as on October 18, 2018 after the company’s total sales revenue from continuing operations declined by 0.3% to $210.4 million in FY 18. Excluding Fine Fragrances, after the termination of the Coty agency agreement, the total sales revenue from continuing operations increased by 3.6% to $196.2 million in 2018. Further, MCP divested the Home Appliances business and has approximately $29 million in net consideration applied for debt reduction, that includes buying back the remaining $25 million in Corporate Bonds, and to further reduce the company’s borrowing costs. As a result, for FY 18, MCP has posted 73% reduction in net debt to $9.8m. On the other hand, MCP is affected due to weak Aussie dollar against US dollars. MCP stock is trading at the price of level $1.545, and has support at $1.45 and resistance at $1.81. Meanwhile, MCP stock is trading at a high P/E of 30.99x. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 1.545.

FY 18 Financial Performance (Source: Company Reports)
 

Gazal Corporation Ltd

Strong Performance in 1H 2018: Gazal Corporation Ltd.’s (ASX: GZL) stock has risen 35.08% in three months as on October 18, 2018 after the company for first half 2018 has reported 99.9% rise in profit after tax from continuing operations of $4.93 million. This is on the back of 71% increase in the share of profit from the PVH Brands Australia joint venture to $4.1m. The total revenues grew by 34% to $128.5m due to continued momentum of the CALVIN KLEIN and TOMMY HILFIGER businesses that drove PVH Brands Australia joint venture (JV). For 1H 2018, GZL has posted 31% rise in like-for-like sales growth. In 1H 2018, the company had opened 7 new stores taking  the total number of stores to 71 (net of closures). The tax gain recognised in the company’s accounts of $1.0m is due to the crystallisation of losses incurred on the disposal of Oroton shares during the first half. The company’s debt position has increased. GZL has declared to pay an interim dividend of 10 cents per share fully franked, payable on 14 December 2018. Meanwhile, GZL stock is trading at a P/E of 24.44x. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 4.120.
 

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