Mayne Pharma Group Ltd (ASX: MYX)

Stock price rise despite some shortcomings: Mayne announced first half performance for 2018 and reported that the Generic Products Division operating segment’s sales were $180.9m, down 19% on 1HFY17 with gross profit of $63.6m. In US dollar terms, sales were US$141m and down by 16% on prior corresponding period (pcp) basis. Gross profit margin was impacted by $17m of one-off abnormal stock adjustments including stock obsolescence, write-downs and sales of short-dated stock below cost to mitigate the full obsolescence risk as well as $3m of restructuring costs to improve the cost base. The Company is focussed on expanding channels to market and on extracting cost savings from optimising the supply network and is aggressively pursuing new opportunities through launching products and portfolio optimisation. Since October 2017, GDP performance has significantly strengthened with 2QFY18 sales up by 30% on 1QFY18 and January 2018 sales up by 13% on the monthly average in 2QFY18. The pipeline of commercial manufacturing opportunities continues to grow, and the company expects to receive its first commercial manufacturing revenues in 2HFY18. The share price moved up 10.7% on 23 February 2018, however, the stock looks “Expensive” at the current market price of $0.775
 

Operating Expenses Trend (Source: Company Reports)
 

Nanosonics Limited (ASX: NAN)

Steep fall in profit while growth in installed base of Trophon continues: Down 12%, Nanosonics’ first half of FY18 demonstrated continued progress towards establishing the Trophon technology as standard of care. The FY18 first half financial results reflected a broadening number of selling models and included capital equipment sales, capital equipment rentals and the MES model in the UK as well as inventory sales to distributors, each of different revenue profiles. Operating profit before tax was $3.7 million and was up by 3% on the last half while generating positive free cash flow of $3.9 million as on 31 December 2017. There was a reduction in sales in consumables and accessories with GE inventory holding management. First half sales were $30.0 million representing a reduction of 4% as compared with the prior half year. A number of selling models are now in operation for Trophon adoption which can be tailored for specific customer needs. For the second half of FY 18, NAN expects to grow in terms of the installed base in North America with FY18 H2 being similar to FY18H1. Its distribution agreement with GE Healthcare in the USA will change it to reflect a Capital Reseller model and resulted in a significant increase in consumable revenue and margin and will directly be attributable to Nanosonics that is associated with the GE Healthcare installed base in the USA. While the stock moved up 12% in last three months, we recommend to “Hold” the stock at the current market price of $2.62, given the not-so encouraging financial result.
 

Financial Results (Source: Company Reports)
 

Platinum Asset Management Limited (ASX: PTM)

Improved Investment Performance: PTM’s stock dropped by 11.7% on February 23, 2018 while the group updated the market about stepping down of founder Kerr Neilson as the CEO despite releasing a decent half yearly result. PTM reported that total revenue was up significantly for the half-year and edged to $185.9 million driven by fee revenue (up by 6.95% and amounting to $166 million). Other income was also up significantly and reached to $20 million. The increase in fee revenue was due to the cumulative effect of strong investment returns, net client inflows and additional performance fees earned during the period. Net profit attributable to the members was up by 7.08% and amounted to $102.2 million. The increase in profit was less than the increase in revenue which was predominantly due to the inclusion of an employee incentive non-cash provision of $14.3 million. A dividend of 15 cents per share fully-franked for the year ended 30 June 2017 was paid on 22 September 2017 and though the Company has a Dividend Reinvestment Plan in place, but this has not been activated. Net tangible assets per share were $0.68 at 31 December 2017 as compared to $0.57 on 30 June 2017. The stock still looks “Expensive” at the current price of $6.90, in view of the volatile environment.
 

Alumina Limited (ASX: AWC)

Increased Distribution as Market conditions improved: Alumina Limited reported a statutory net profit after tax of US$339.8 million for the full year to 31 December 2017 against the loss of US$30.2 million in the prior corresponding period. Alumina declared a final, fully franked dividend of 9.3 US cents per share. Since 1 January 2018, Alumina received US$ 198 million of net distributions from AWAC entities which have been included in the final dividend.  Growth in demand for alumina rose by 7.7% in 2017. EBITDA rose by US$1,239.2 million and amounted to US$1,632.7 million. The total production increased by 3.5% during 2017. The improvement in AWAC’s net profit was due to higher realised alumina prices during 2017. Cash from operations in 2017 increased, again due to higher average realised alumina prices. Alumina Limited’s total receipts from AWAC during 2017 were $343.1 million as compared to $232.8 million in 2016. In 2018, further alumina will be produced from the Ma’aden/AWAC Ras Al Khair refinery in Saudi Arabia which is ramping up and recently operated at its 1.8 million tonne nameplate capacity. Given the potential, we recommend to “Hold” the stock at the current market price of $2.33
 

National Storage REIT (ASX: NSR)

Developing multiple revenue streams to maximise returns: NSR announced its financial results for the half year ending 31 December 2017 and reported an IFRS profit after tax of about $59.8 million. This reflected the future growth of its business and enhanced its performance that was generated from multiple revenue streams and demonstrated the success of its continued focus on proactive asset management practices. The acquisition of ten storage centres, plus a development site over the period contributed to a 7% increase in total assets under management and amounted to $1.254 billion, consistent with its ongoing commitment to execute its growth strategy in a highly fragmented industry. A focus on revenue management and occupancy growth has also delivered improvements across the portfolio and the occupancy growth increased to 79.6% on a same centre basis. It declared a final distribution of 4.7 cps to be paid on 26 February 2018. NSR affirmed an underlying EPS and earnings guidance of 9.6-10.1 cps and $51.5-$54.2 million, respectively for the full year. We have a “Hold” recommendation at the current price of $1.51
 

FY 18 Guidance (Source: Company Reports)
 

Automotive Holdings Group Limited (ASX: AHG)

Higher cost management to mitigate other limitations: Up 4.9% on February 23, 2018, AHG reported an operating NPAT of $40.7 million, down by 4.1% on pcp basis for the six months ending on 31 December 2017. Statutory NPAT was $39.9 million, again down by 2.4% on pcp basis while revenues were up by 7.5 per cent to $2.87 billion at the back of strong truck sales. The Company will pay an interim dividend of 9.5 cents per share, fully franked, same as previous corresponding period. In November 2017, the Company announced the sale of Refrigerated Logistics business to HNA International for an enterprise value of $400m and it will be completed before 30 June 2018. AHG will maintain its focus on cost control but will particularly aim to mitigate the effects of changes in its automotive finance and insurance segments. The Group’s Other Logistics division traded in line with expectations. However, AHG suffered a combined $23 million impact from lower add-on insurance income and softness in financing income. We give a “Hold” recommendation at the current market price of $3.62

Operating PBT (Source: Company Reports)

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