Costa Group Holdings Limited (ASX: CGC)

Strong first half result:Costa Group, Australia’s leading horticulture group, released an appealing 1HFY2018 result and reported that revenue was up by 9.8% amounting to $489.3 million. Statutory profit was up by $51.2 million as compared to 1HFY2017 that was majorly driven by the fair value gain of $40.1 million recognised on the deemed disposal of the existing 49% of interest in African Blue. From the date of acquisition to 31 December 2017, African Blue contributed a revenue of $0.1 m and a net loss before SGARA of $1.0m to the Group’s results. Growth in operating earnings that is EBITDA before SGARA was up by 24.2% and was driven by solid growth in the Produce. African Blue acquisition got finalised and increased Costa’s control over the subsidiary. The Board declared a fully franked interim dividend of 5.0 cents per ordinary share and this is expected to be paid on 5 April 2018. After the release of the financial result, the share price climbed up by 9.9% on February 27, 2018. We give a “Hold” recommendation on the stock at the current price of $6.85
 

Segment-wise Revenue Growth (Source: Company Reports)
 

Bingo Industries Limited (ASX: BIN)

Ongoing Business Momentum: Bingo announced its half year results for the six months ending 31 December 2017 and delivered a strong revenue and pro forma EBITDA growth of 43% and 40%, respectively. The Group also reaffirmed its FY18 pro forma EBITDA guidance of approximately $93 million. Net Revenue increased by 43.2% as compared to the prior corresponding period that reflected increased market share, new customer contributions and the early impact of completed acquisitions. Statutory NPAT was up by 30.1% and was on track well against prospectus deliverable. The Company continued to generate strong free cash flow and the operating free cash flow increased by 27.8% and moved from $27.8 million to $35.5 million. AS foreshadowed in the IPO Prospectus, Bingo had introduced a dividend of 1.72 cents per share in respect of 1HFY18 which will be paid in March 2018 while the DRP policy has been approved by the Board. Bingo reiterated that it will remain on track and will deliver its recently upgraded FY 18 pro forma EBITDA guidance of approximately $93 million with the completed acquisitions to contribute more materially in 2HFY18. In the past six months, the share prices rose by 31%; while edged low on February 27, 2018. The stock, however, trades at a higher level and looks “Expensive” at the current market price of $2.48
 

Financial Performance Highlights (Source: Company Reports)
 

Iluka Resources Limited (ASX: ILU)

Returned to positive conditions: ILU reported a narrowed net loss after tax of $172 million that reflected adjustments which were previously announced over the course of 2017. This included $106 million of post-tax impairment of the Hamilton mineral separation plant which was placed on care and maintenance in October in 2017 and $30 million of post-tax related to impairment of Iluka’s investment In Metalysis Ltd. Meanwhile, Board also improved its Dividend Reinvestment Plan. The Board delivered an interim dividend of 6 cents per share at the half-year and a final dividend of 25 cents per share, and both of these will be fully franked. The Group is expecting 2018 Z/R/SR production of 705 thousand tonnes while the same was 825 thousand tonnes in 2017. This reduction reflects the completion of processing heavy minerals concentrate from the Murray Basin. ILU’s main focus is on building improvements on Sierra Rutile and progressing towards expansion plans at Sierra Rutile. The Group recently appointed Rob Cole as an independent non-executive director who will effectively take his responsibility from 1 March 2018. Post the announcement, the stock price rose by 4.4% and inched towards the 52-week high price. We give a “Hold” recommendation at the current market price $10.55
 

EBITDA Performance (Source: Company Reports)
 

Select Harvests Limited (ASX: SHV)

Improvements expected in 2H18:SHV, one of the most respected agri-food businesses announced its results for the 6 months ending 31 December 2017 and after considering the prior period adjustments, SHV delivered a normalised 1H18 EBIT of $13.2 million against 1H17 EBIT of $13.4 million. Net Debt as on 31 December 2017 was A$56.4 million and gearing ratio was 15.3%. It recorded zero environmental incidents, and Lost Time Injury Frequency Rate and Medically Treated Injury Frequency Rate have both been reduced more than 25% year on year and Lost Time Injury Severity Rates (LTISR) were down by 50%. The Group is expecting significant improvements in 2H18 that will be due to the potential benefit of the improved almond yield, quality and pricing. SHV’s strategy continues to focus on expanding its base by investing in greenfield development, improving yields and productivity on existing farms. Cash and working capital management are a key focus area of SHV moving forward. The Directors declared an interim dividend (fully franked) of 5 cents per share that will be payable on 5 April 2018 and whereas for 1H17 it was 10 cps fully franked. Post release of the results, the share price declined by 3% as on February 27, 2018; while the same was up 18.5% in last six months. The stock is “Expensive” at the current market price of $4.71
 

EBIT Movement (Source: Company Reports)
 

ZIP Co. Limited (ASX: Z1P)

Reported significant half year loss while revenue surged up with better products offerings: Zip Co. Ltd, a leading player in the digital retail finance and payment industry announced its half year results for the period ending 31 December 2017. The revenue was up by 139% as compared to the same period in the prior year. However, loss from ordinary activities after income tax attributable to members rose to 146% at the back of significant investment in headcount since the previous reporting period, along with increased funding and transactional costs in line with the increase in the size of the receivables portfolio. At 31 December 2017, the loan book stood at $231.3 m against $87.7 m as on 31 December 2016, indicating a rise of 164%. The repayment rate remained healthy at 14% of the prior month end receivables and demonstrated strong recycling of the capital. As on 31 December 2017, the Company had $18.3 m of cash and no corporate debt, and the Company has financed facilities of about $380 m, out of which $211.5 m had been drawn at 31 December 2017. The Company now expects its average funding cost below 6% going forward.  Its main focus is to achieve cashflow breakeven on a monthly basis and continues to grow the merchant and customer base. Z1P’s Pocketbook team delivered an Australian-first of its kind open-banking API integration with Macquarie Bank and continues to grow strongly, adding users to its leading PFM App at a rate of 50,000 a quarter. Given the result, the stock fell significantly in the last five days followed by a drop of 3.8% on February 27, 2018. We give a “Hold” recommendation at the current market price of $1.01


Cash Operating Margin (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.