Stocks’ Details
 

Syrah Resources 

Downgraded its Production Guidance for FY18:Syrah Resources Limited (ASX: SYR) is one of the most shorted stock on ASX as per the recent trading scenario. The stock tumbled 3.15% on September 03, 2018 while the group is under the short-selling radar with over 18.45% short positions (as per the ASIC report of 28 August 2018) after the Group downgraded its production guidance.  Initially, the Company expected that it will be able to produce 160,000 tonnes of graphite concentrate in FY18 but now currently expects to produce between 135,000 tonnes and 145,000 tonnesin FY18.  As a result, the company has now estimated C1 cash operating costs in the range of US$430/t to US$450/t from US$400/t by end of 2018 which indicates moderate downfall in the bottom-line for the full-year.


Revised Target (Source: Company Reports)

UBS Group AG and its related bodies corporate ceased to be the substantial holder of the Group since 22 August 2018. Meanwhile, the share price has fallen 19.87 percent in the past six months as at August 31, 2018 and traded close to the 52-week lower level. We maintain our “Hold” recommendation on the stock amid the negative sentiments, at the current market price of $2.46 by looking at its decent fundamentals and rise in demand of higher fixed carbon graphite products in the market.
 

Myer Holdings 

Continued Short Interest Scenario: Myer Holdings Limited’s (ASX: MYR) is a small-cap company with the market capitalization of circa 365.47 Mn as of September 03, 2018. It provides apparel, footwear, and accessories for women, men, misses, and children; beauty products that consist makeup, skincare, men's grooming, bath and body, electrical, fragrance, and home fragrance products; and toys. Recently, the group disclosed its third quarter 2018 sales update for the 13 weeks to 28 April 2018 in which the group reported 2.7% fall in the total sales to $635.3 Mn in Q3FY18; and on a comparable store basis, the sales have fallen 3.1%. Resultantly, the total year to date sale was down by 3.4% to $2,355.0 Mn and the total sales fell 3.0% on a comparable store basis. It was mainly impacted by the challenging retail environment during the same period. However, in the third quarter, the online sales have grown 49.4% to $35.9 Mn and online sales year to date have grown 49% to $141.1 Mn.


Cost Reduction Reflects Ongoing Focus on Efficiencies (Source: Company Reports)

Meanwhile, the share price has fallen 39.04 percent in the last one year but was up by 3.49 percent in the past one week as on August 31, 2018. The stock experienced a short interest of 11.31 percent (as per the ASIC report of 28 August 2018). Based on foregoing, we maintain our “Hold” recommendation on the stock at the current market price of $ 0.435 (down by 2.25 percent on September 03, 2018), as the group is in progressing stage while the full-year result is expected around 12 September 2018.
 

Harvey Norman Holdings

Subdued Performance in FY18:Harvey Norman Holdings Limited’s (ASX: HVN) stock tumbled 2.5 per cent on September 03, 2018 depicting a fall continued after the release of FY18 result on August 31, 2018, wherein reported NPAT and non-controlling interests was substantially down by 16.4 per cent to $ 375.38 Mn in FY18 as compared to the prior year. It was mainly impacted by the reduction of the net property revaluation increment by $56.41 Mn in FY18 and the first-time recognition of impairment losses totalling of $49.44 Mn relating to the Coomboona Joint Venture. However, the Company-operated sales revenue increased by 8.8 per cent and amounted to $1,993.76 Mn in FY18 against FY17.  Further, for the full year 2018, the company’s operating cash flow rose 6.8 percent or increased by $29.03 Mn to $454.17 Mn. It was primarily driven by the higher sale generated by overseas company-operated stores. The group had cash and cash equivalent of $ 125.46 Mn as at 30 June 2018. The current ratio increased from 1.50x to 1.59x in FY18 from the prior year.


Financial Highlights (Source: Company Reports)

Based on mixed performance, the Board of Directors declared a fully franked final dividend of 18 cents per share, bringing the total dividend for FY18 to 30 cps, up 15.4 per cent as compared to the prior year. It will be paid on 2 November 2018 with the record date of 12 October 2018. Meanwhile, HVN stock has fallen 5.26 per cent in the past six months as at August 31, 2018 and traded close to the 52-week lower level of $3.310. The stock has seen a 9.96% of the short position as per the ASIC report of 28 August 2018. Based on full-year performance and considering challenging conditions in the retail market, we maintain our “Expensive” recommendation on the stock at the current market price of $ 3.510.

JB Hi-Fi

Acquisition of Additional Shares by One of its Directors: JB Hi-Fi Limited (ASX: JBH) disclosed to ASX that one of its directors, Mr. Mark Powell had a Direct Interest in the Company and acquired 1,000 ordinary shares via on-market purchase for the total consideration of $25,653.30. On the financial front, RoE came in at 25.9% in FY18 which is above the industry median of 13.5%. The current ratio stood at 1.32x which is broadly in line compared to the prior year. Moreover, UBS Group AG and its related bodies corporate, a substantial holder of the Group changed its holding from 6.0% of interest to 7.15% of the voting power. Meanwhile, the stock has risen 10.05 percent in the past three months as at August 31, 2018 and is trading at a reasonable PE level of 13.0x. However, the JBH’s stock remains the most shorted share on ASX as per the ASIC report of 28 August 2018. It is indicative of over 18.81% of short position. Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $ 25.860 as it traded at the higher level.
 

Domino's Pizza Enterprises

Update on Buy-Back Event: Domino's Pizza Enterprises Limited (ASX: DMP) updated the market about the final notice of buy back event in which the group has bought back a total of 4,348,366 shares via on-market trade for the total consideration of A$ 183,479,033.71. Recently, the company has issued 75,000 fully paid ordinary share at the price of $49.95 each with the objective of exercised under Executive Share and Option Plan. The Group reported an increase of 12.4 per cent over the previous year in the underlying net profit after tax that amounted to $133.2 million for the year ended 30 June 2018.  Meanwhile, the stock price is up by 9.89% in the past three months (as at August 31, 2018) and trading close to 52-week higher level ($57.80). The stock experienced a short interest of more than 12.48 per cent (as per the ASIC report of 28 August 2018). We maintain our “Expensive” recommendation on the stock at the current market price of $ 54.14.
 

Galaxy Resources 

        
Solid Performance in 1HFY18:Galaxy Resources Limited’s (ASX: GXY) stock remains one of the most shorted shares on ASX as per the ASIC report of 28 August 2018. It is indicative of over 17.01% of the short position as the investors are concerned about the future lithium prices. Recently, the company posted solid 1HFY18 performance in which revenue and NPAT grew by 682% and 331% to US$88.4 Mn and US$11.5 Mn, respectively in 1HFY18 as compared to the prior corresponding period (pcp). As of June 30, 2018, the group had the cash balance of US$45.1 Mn which will support to fund the required ongoing project development and optimization initiatives. Besides this, the group will retain its 100 percent interest in all the remaining Sal de Vida Project tenements in Catamarca Province. Net proceeds from the transaction are to be used to advance the development of the Sal de Vida Project. The transaction is expected to be settled in Q4 CY18 on completion of the relevant tenement transfer and registration procedures in Argentina.


1HFY18 Financial Highlights (Source: Company Reports)

Meanwhile, the share price has fallen 21.78 per cent in the past three months as at August 31, 2018 and traded over the 52-week low level of $1.710. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $2.730, considering foregoing developments.
 
 

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