Stocks’ Details
 

JB Hi-Fi Limited

Rising Competition in Home Appliance Market - JB Hi-Fi Limited (ASX: JBH) has recently presented its business prospects at the Macquarie Australia Conference and highlighted about FY18 activity and its outlook. As per the presentation, it was observed that Q3 FY18 total sales growth was 6.8% with comparable sales growth of 4.0% and whereas The Good Guys sale was down by 1.3% (Q3 FY17: 2.6 per cent) with comparable sales growth of -2.9%. During the quarter, The Good Guys sales improved due to strong sales of Seasonal products like Air Conditioning. The Company reaffirmed its FY18 sales guidance with total Group sales to be circa $6.85 Bn comprising of JB Hi-Fi sales of $4.75 Bn and The Good Guys sales of $2.1 Bn, and the business continues to perform in line with expectations. As a result, it expects that the group will be able to deliver NPAT of $230 Mn for full year which is slightly down from the previous guidance of $235 Mn to $240 Mn. The Good Guys performance has been impacted by challenging conditions in the Home Appliance market, due to unfavourable weather conditions coupled with heightened price competition because of which gross margin in 2HY18 was impacted. Besides this, UBS Group AG, a substantial holder of the Group changed its substantial holding and now holds 6.41 per cent of the voting power in the Company since 10 July 2018.


Low cost operating model (Source: Company Reports)

Meanwhile, the share price of JBH has fallen 16.79% in the past six months but up by 2.61% in the past one week as at July 27, 2018. The stock has seen a 19.57% of short position lately. Based on aforesaid facts and presumed short-term headwinds in Home Appliance business segment due to intense competition and housing market scenario, we maintain our “Expensive” recommendation on the stock at the current market price of $ 23.84.
 

Domino's Pizza Enterprises Limited

Short-Interest Fall - The group issued 274 fully paid ordinary shares at an issue price of $51.97 each subject to Domino's Pizza Enterprises Limited Share Acquisition Plan Rules including 12-month trading restriction from each allocation date (which participant can extend up to 3 years). The Company’s employees will remain on the Fast Food Industry Award (Modern Award), rather than continue to pursue approval of a new Enterprise Bargaining Agreement (EBA). The Group will be releasing its full-year earnings guidance next month and till now it has witnessed its short interest fall to approx. 14.9 per cent (week-on-week). As the Group achieved net profit after tax growth of 7% in the first-half of FY18 so the market is keeping an eye on whether the Group will be able to achieve its guidance of at least 20% year-on-year growth in net profit after tax. Meanwhile, the stock price is up by 13.63% in the past three months and trading close to 52-week higher level ($58.120).The stock experienced a short interest of 14.96 per cent (as per the ASIC report of 24 July 2018). Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $ 50.240.


Network Sales growth (Excluding Germany) (Source: Company Reports)
 

Galaxy Resources Limited

Decent Performance in June 2018 Quarter: Galaxy Resources Limited (ASX: GXY) released its report for the quarter ended 30 June 2018 wherein it stated that the operations at Mt Cattlin continued without any Lost Time Injuries. Ore volume treated increased by 1% to 4,35,296 wmt, with ore feed grade of 1.17% achieved as compared with the previous quarter mainly due to higher grade mined during the quarter.Spodumene concentrate produced of 47,901 dmt was 9% higher on Q-o-Q basis because of higher grade treated and rise in the recovery. The company completed the total of 3 shipments of lithium concentrates during the quarter for an aggregate of 45,761 dmt of product sold. During the quarter, the Company finished the acquisition of 3 exploration licenses i.e., E74/571, E74/570, and E74/589 from Kingston Resources Limited that encompass the existing Mt Cattlin operations for $300,000 in cash and the issuance of 93,168 shares in Galaxy. As a result, the Company now owns approximately 460 square kilometres of mining and exploration licences, an increase from 154 square kilometres at the end of 2017, including the existing Mt Cattlin operations. As at 30 June 2018, the group reported a cash balance of US$68.3 million with no debt.


Production and Sales Statistics (Source: Company Reports)

Recently, Mitsubishi UFJ Financial Group became the substantial holder of the Group by holing 5.02 per cent of the voting power since 24 July 2018. Meanwhile, the share price has fallen 17.70 per cent in the past six months and down by 1.365 per cent on July 30, 2018. The stock experienced a short interest of 14.75 per cent (as per the ASIC report of 24 July 2018). Looking at a decent outlook of ore minerals ahead, we maintain our “Hold” recommendation on the stock at the current market price of $ 2.890, while it became a substantial holder from Mitsubishi UFJ Financial Group.
 

Orocobre Limited

Decent Outlook: Orocobre Limited’s (ASX: ORE) stock tumbled 6.263 per cent on July 30, 2018 and it is under short selling radar with over 13.44% short positions. Recently, the group released its Quarterly report for the quarter ended 30 June 2018 wherein the group achieved second highest ever production of 3,596 tonnes, marking the growth of 28 per cent on Q-o-Q basis. During the quarter, the company recorded sales of 3,496 tonnes at an average sale price of US$13,611 per tonne on a FOB basis which resulted in record quarterly sales revenue of US$47.6 Mn. June quarter cost of sales is yet to be finalized, while March quarter number was US$4,356 / tonne with a gross cash margin of US$9,177 / tonne. The management expects that the June margins will be higher than the record March quarter (US$9,177 per tonne) at the back of higher production and lower costs. As at 31 March 2018, the group had a cash reserve of US$ 319 Mn.


Annual Prices (US$/tonne) (Source: Company Reports)

Recently, the group has signed a deal with Advantage Lithium Corp to support a private placement by Advantage. As per the deal, the group will participate on a pro-rata basis in a C$12 Mn private placement by Advantage Lithium wherein Advantage will issue 15,585,000 common shares of Advantage Lithium at a price of C$0.77 per Share for gross proceeds of C$12,000,450. The purpose of raising the fund by Advantage is to fulfill the working capital needs and strengthen its development and exploration activities on its Lithium properties in Argentina. The Common Shares issued in accordance with the Private Placement will be liable to a 4-month holding period from the date of closing. Meanwhile, the stock has fallen 3.51 per cent in the last five days as at July 27, 2018 and is currently trading close to lower level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 4.640.
 

Syrah Resources Limited

Downgraded Production Guidance: Syrah Resources Limited (ASX: SYR) is one of the most shorted shares on ASX as per the recent trading scenario. The stock tumbled 6.09% on July 30, 2018 while the group is under the short-selling radar with over 19.45% short positions. Recently, the company released its June quarter report in which the management revised its 2018 production target to 135,000 to 145,000 tonnes from 160,000 tonnes and as a result C1 cash operating cost are now forecasted to US$430 to US$450 per tonnes from earlier US$ 400 per tonnes. From 2019 onwards, C1 cash operating costs are expected to initially progress below $400 per tonnes, and thereafter decline towards US$ 300 per tonnes as volume increases. Besides this, the group will complete the update to the Balama vanadium Scoping study by end of fourth quarter 2018. As at 30 June 2018, the company had cash reserve of US$ 56.7 Mn. Moreover, Credit Suisse holdings (Australia) Limited ceased to be the substantial holder of the Group since 24 July 2018. Meanwhile, the stock was down by 23.72 per cent in the past six months but up by 15.99 per cent in the past one month as at July 27, 2018. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $2.930 while the natural flake graphite demand is expected to stay decent at the back of robust outlook of electric vehicle battery market across the globe.


Balama Production Summary (Source: Company Reports)

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.