Kathmandu Holdings Ltd

KMD Details
·         Rise in group sales: Kathmandu Holdings Ltd (ASX: KMD) stock surged over 4.8% on May 04, 2017 post the release of trading update wherein the total group sales for the 13 weeks 30 January to 30 April surged up 11.9% year on year (yoy) at constant exchange rates (9.3% at actual exchange rates). The same store sales for the same period rose 11.5%. In fact, same store sales FY17 year to date soared up 6.0% year on year. Further, new product performance and better promotional execution have been identified to drive sales in the near term. KMD is positive on its winter sale in June/July which is expected to be the largest promotional event season for the company this year.

·         Recommendation: We give a “Buy” recommendation at the current price of $ 1.97

Aconex Ltd

ACX Details
·         Positive performance update drove the stock: Aconex Ltd (ASX: ACX) stock rallied over 3% on May 04, 2017 driven by the positive update from the group in their Macquarie Australia Conference presentation. The group’s FY17 sales momentum across all regions is ongoing while the uncertainty in the UK, Europe is reducing. Even the US trading conditions is improving. Stable oil prices drove the Middle East market.

·         Recommendation:ACX witnessed rising expenses in the first half of 2017 mainly on the back of Conject acquisition. The group has increased investment in product, engineering and development, while their sales and marketing investment surged 35% on a yoy basis. Even though the group reported a natural hedge at EBITDA, the impact of currency on revenue is expected for FY17. ACX stock already recovered over 39.9% in last three months (as of May 03, 2017). Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 4.44 

Estia Health Ltd

EHE Details
·         Growing market opportunity:Estia Health Ltd (ASX: EHE) stock rallied over 2.8% on May 04, 2017 driven by the positive industry trends update from the group. Growing ageing population in the next ten year would lead to a demand for 76,000 new beds. This promises a significant market opportunity to the group as the supply is limited by barriers to entry. EHE also undertook major Significant Refurbishment programs with six in pipeline while 16 are in planning and pre-approval stage. The average occupancy for the four months to 30 April 2017 reached 93.8%, but the group witnessed a better occupancy in April 2017 which reached 94.4%. Moreover, the group confirmed their guidance for FY17 EBITDA which is expected to be in the range of $86 million – $90 million. The group intends to maintain their dividend policy of paying at least 70% of net profit after tax for the period while no interim dividend was paid in March 2017 in relation to first half FY17.

·         Recommendation:  EHE stock rallied over 17.8% in the last three months (as of May 03, 2017). On the other hand, the sector is susceptible to government funding which accounts to 66% of total funding of the sector. The group’s stock performance is thus subject to government regulations and any potential change can hamper the stock sentiment as seen in the past. The stock is currently trading at higher levels given the risks, and we put an “Expensive” recommendation on the stock.

Macquarie Atlas Roads Group

MQA Details
·         Improving trends: Macquarie Atlas Roads Group (ASX: MQA) stock rose over 1.2% on May 04, 2017 while AMP Ltd acquired a 5% interest in the group. The group reported that they would get a final management fee of over £2.6m and would consequently have no further management obligations with respect to the M6 Toll. Moreover, they reported that their weighted average toll revenue and traffic for the March 2017 quarter enhanced by 2.6% and 0.5%, respectively, as compared to the prior corresponding period (pcp) driven by better traffic levels and revised toll schedules implemented over the past 12 months.

·         Recommendation:MQA stock enhanced over 23.4% in the last six months (as of May 03, 2017). We give a “Hold” recommendation on the stock at the current price of $ 5.72

Super Retail Group Ltd

SUL Details
·         Continued strength in performance: Super Retail Group Ltd (ASX: SUL) stock surged up 0.74% on May 04, 2017 at the back of the positive trading update. The group reiterated that continued performance is expected to yield annual growth in group total segment EBIT of between 16% and 18% above the prior corresponding period. SUL further highlighted that sales performance for 43 weeks to 29 April 2017 represented growth of 8% and 4.5%, for sports retailing and auto retailing divisions while leisure retailing sales slipped by 2%.

·         Recommendation:SUL stock has moved up 14.18% in last one year (as at May 03, 2017). We maintain a “Hold” recommendation at the current price of $ 9.57
 

Improved Returns (Source: Company Reports)

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