Western Areas Ltd

Improved performance in FY 18: Western Areas Ltd.’s (ASX: WSA) stock has fallen 24.22% in three months as on September 28, 2018 on the back of low nickel price. The company sees that the current nickel price is too low to incentivize the new project development. The new mine can take development in 3 years as the nickel “pie” is not expanding. However, there is significant rise in inbound off?take enquiries for MREP product and Nickel Sulphide concentrate after current contract period, primarily related to the Electric Vehicle battery sector. WSA’s partner, which is China’s largest stainless steel producer, Tsingshan, has strong growth plan that will require significant additional nickel units. There is also technology change to NCM 811 which also requires more Nickel. Moreover, for FY 19, the nickel production is expected to be marginally higher than FY18, assuming mid?point of guidance. Spotted Quoll will contribute around 60% of production in FY19. Further, in FY18, WSA has reported underlying and statutory NPAT of A$11.8m compared to underlying NLAT A$11.5m in 2017. Meanwhile, WSA has informed that results of the Odysseus Definitive Feasibility Study (DFS) will be declared before the end of October 2018 compared to the previous target to declare the DFS results prior to the end of September 2018. There is unplanned late receipt of certain key data which is leading to this delay. WSA has confirmed that all technical work is complete, and the company’s focus is now on report compilation, peer and Board review prior to finalisation. This will have no impact on the intended project delivery schedule. As of now, we give a “Hold” recommendation on the stock at the current price of $ 2.710 while resistance can be seen around $ 2.76 with support around $ 2.64.
 

FY 19 Guidance (Source: Company Reports)
 

Rio Tinto Limited

Signed binding agreement for sale of Grasberg interest: Rio Tinto Limited’s (ASX: RIO) stock fell 0.74% on October 02, 2018 after the company signed a binding agreement for sale of entire Grasberg interest in Indonesia to PT Indonesia Asahan Aluminium (Persero) (Inalum), which is Indonesia’s state mining company, for the consideration of $3.5 billion. The funds that the company will get will be used for general corporate purposes. The company expects the transaction to occur in the first half of 2019 after fulfilling a number of conditions precedent being satisfied, that includes getting regulatory approvals. RIO had recently announced a $3.2 billion dollar share buyback from the sale of coal assets. The company is reshaping the portfolio with divestments announced in H1 2018 of $5 billion. Meanwhile, RIO stock has fallen 5.19% in three months as on September 28, 2018. The outlook on the stock is bearish with a double digit fall expected in profits in the upcoming year compared to the past 5-years’ average growth rate of about 12%. We maintain an “Expensive” recommendation on the stock at the current price of $ 78.07.

Cooper Energy Ltd

Strong outlook for the next 12-15 months: Cooper Energy Ltd.’s (ASX: COE) stock has risen 19.74% in three months as on September 28, 2018 after the company has given strong outlook for the next 12-15 months. For Sole Gas Project, Pipelay is expected to commence in October 2019, plant commissioning will occur from Dec –Jan, gas to plant from April and the project completion, production scheduled to commence from July 2019. For gas marketing, COE has signed new contract for Casino Henry gas supply for calendar year 2019 and the marketing of uncontracted Sole gas will commence from December ‘18 Quarter. Further, COE has planned to drill Dombey-1 in PEL 494, onshore Otway Basin in  late 2018/early 2019. The company has planned preparations for 2019 offshore drilling in offshore Otway and Gippsland. The drilling is expected to commence from March 2019 for offshore Otway, subject to JV approval and rig availability. Additionally, COE’s Joint Venture, in which COE has 50% holding, has signed a new gas sales agreement with Origin Energy Retail Limited. As per the new agreement, the company will supply gas from the joint venture to Origin Energy from 1 January 2019 to 1 January 2020 at current market prices. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $ 0.460 with support level being at its 50 days’ moving average.
 

Tribune Resources Ltd

Decent FY 18 Performance: Tribune Resources Ltd.’s (ASX: TBR) stock has risen 38.06% in three months as on September 28, 2018 after the company for FY 18 reported the profit after tax of $54,424,492 compared to $43,688,873 in FY 17. The revenue in 2018 has increased to $180,015,211 from $136,686,893 in 2017. The company expects the Japa Concession to be granted a Mining Lease before the end of 2018. On the other hand, the Takeovers Panel (Panel) had made a declaration of unacceptable circumstances with regards to cross-holding relationship between TBR and Rand Mining Ltd, due to inadequate disclosures of substantial holdings; and there may be a penalty that TBR may be liable to pay and the amount is yet to be ascertained. Meanwhile, TBR has recently declared the fully franked special dividend of $3.50 per share, payable on 10 October 2018 while the ex-dividend and record dates have been noted to be in the month of September. Based on the situation while TBR may have to face some penalty and ex-dividend date has also passed with respect to the dividend, we give an “Expensive” recommendation on the stock at the current price of $ 5.6, which looks to be slightly high despite a bit of contraction seen lately as the stock continues its downtrend streak (down 17.2% in last five days). The stock is a watch for better entry opportunity.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.