Pact Group Holdings Ltd

Profit Declined in FY 18 & Key Personnel Resigned: Pact Group Holdings Ltd.’s (ASX: PGH) stock has fallen 35.31% in three months as on October 12, 2018 after the company for FY 18 reported 5% decline in Net profit after tax (NPAT) before significant items to $94.7 million, and statutory NPAT of $74.5M compared to $90.3 million in the prior year. EBIT for the year 2018 was 3% lower to $165 million than the prior year on the back of higher depreciation and amortisation from acquisitions and the new crate pooling business. The earnings were also affected due to higher raw material and energy input costs; however, the Group sales revenue rose 13.5% to $1.7 billion in FY 18 compared to the prior year. Meanwhile, PGH’s Chief Executive Officer and Managing Director, Mr Malcolm Bundey has resigned, but will be available to the company until 8 March 2019. On the other hand, PGH stock is trading at the price of level $3.37, has resistance at $4.35 and support at $3.38. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 3.37 while the stock is struggling a bit owing to lower customer base and low payout ratio.
 

Fletcher Building Limited

Withdraws Steel & Tube’s Acquisition proposal: Fletcher Building Limited’s (ASX: FBU) stock fell 0.71% on October 15, 2018 after the company reported about withdrawing its proposal of acquisition of Steel & Tube on the back of lack of support from Steel & Tube’s Board in terms of progress on the acquisition proposal in a timely manner. Major shareholders of Steel & Tube, Milford Asset Management and Harbour Asset Management, were supporting the acquisition, but the company Steel & Tube did not support FBU’s revised proposal. The total effective consideration to shareholders was of NZ$1.95 per ordinary share, which was a significant premium of more than 50% to Steel & Tube’s pre-announcement five day volume weighted average price. FBU otherwise is experiencing some improvement in the New Zealand market. Meanwhile, FBU stock has fallen 12.87% in three months as on October 12, 2018. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 5.580 while we watch out for key catalysts for a turnaround.
 

iSentia Group Ltd

Achieved the earnings guidance in FY 18 & Initiated a cost-out program in 2018: iSentia Group Ltd.’s (ASX: ISD) stock has fallen 60.87% in three months as on October 12, 2018 after the company’s reported revenue was slightly below the guidance range driven by price compression, lower traditional media volumes and customer churn. However, in FY 18, ISD has achieved the earnings guidance which was set in October 2017. Moreover, in FY 18, ISD has initiated a cost-out program in 2018 that could result up to $11 million in cost savings by the end of FY20. In 2019, further cost reductions will be undertaken due to the automation of processes, and rationalisation of technology and procurement. Meanwhile, Pat O’Sullivan will retire as Non- Executive Director of the Company at the end of the 2018 Annual General Meeting to be held on 15 November. Further, ISD has decided not to pay a final dividend for 2018, though paid an interim dividend of 0.647 cents per share in March 2018. ISD stock is trading at the price of level $0.30, (further down 4.7% on October 15, 2018) has resistance at $0.51 and support at about $0.25. Meanwhile ISD’s dividend yield looks inflated at about 11.81% in view of the significant share price slump. ISD stock was removed from S&P/ASX 300 Index, effective from on September 24, 2018. Based on the fact that the group is in a struggling zone, we give a “Hold” recommendation on the stock at the current price of $ 0.300 and it is a watch for any improvement.
 

Kingsrose Mining Limited

Appointment of Chief Financial Officer and Joint Company Secretary: Kingsrose Mining Limited (ASX: KRM) has recently appointed Ms Karen O’Neill as Chief Financial Officer and Joint Company Secretary of the company. On the other hand, KRM has made the first significant update to the Mineral Resource since the production resumed at Way Linggo in Indonesia and the company’s shares were re-instated to trading in 2017. As per the update, Mineral Resource at the Way Linggo mine is 354,000 tonnes at 7.2 g/t Au and 68 g/t Ag for 81,000 ounces of gold and 769,000 ounces of silver. The company has made this estimate based as at June 30, 2018, and is reported in accordance with the JORC Code (2012 ed.). KRM stock is trading at the price of level $0.053, has resistance at $0.072 and support at $0.051. The KRM stock has fallen 22.54% in three months as on October 12, 2018  and is trading at a P/E of 6.32x. Based on the foregoing, we have a wait and watch view on the stock at the current price of $ 0.053, as the downward trend might continue for some more time and moving averages indicate for a bearish movement going forward.
 

Way Linggo (Mine) Mineral Resource, as at 30 June 2018 (Source: Company Reports)
 

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