Saracen Mineral Holdings Limited

SAR Details

Building a long-term resource position:Saracen Mineral Holdings Limited’s (ASX: SAR) latest drilling results demonstrated the potential for extended production growth and mine life at both Carosue Dam and Thunderbox. Further, the company is on track to hit the 300kozpa production rate in the current quarter with FY18 outlook of 170koz for Carosue Dam. Notably, solid drill outcomes at Karari are also demonstrating significant growth opportunity while confirming the mineralization remains open in all directions and further results are expected to be released shortly from all three key projects.
 

Carosue Dam – Production Momentum (Source: Company Reports)
 
The stock has moved up about 7.8% in last one month (as at May 30, 2017). We give a “Buy” recommendation at the current price of $ 1.04
 

SAR Daily Chart (Source: Thomson Reuters) 

Gold Road Resources Limited

GOR Details

Increase in mineral resource at Attila Open Pit:Gold Road Resources Limited (ASX: GOR) announced an increase in mineral resources at its Attila Open Pit while maiden reserve evaluation has been planned for completion in September 2017. The new Mineral Resource now totals 6,570,900 tonnes at 1.55 g/t Au for 327,300 ounces of gold. This represents an addition of 103,200 ounces (+46%) compared to the 2015 Resource, with 91% of the Mineral Resource being classified in the Measured or Indicated categories. Attila Deposit is located on the Gruyere Joint Venture (Gruyere JV or Joint Venture) tenements, a 50:50 Joint Venture with Gold Fields Limited (Gold Fields), and situated approximately 30 kilometers west of the Gruyere Gold Project. Gruyere, is a long life, large scale, minimal risk and low-cost gold project and has been recently de-risked by the JV deal with Gold Fields (who has 10% relevant interest in GOR). We give a “Buy” recommendation on the stock at the current price of $ 0.68
 

GOR Daily Chart (Source: Thomson Reuters) 

Bank of Queensland Limited

BOQ Details

Well positioned among peers:Recently, Standard & Poor’s (S&P) has downgraded its long-term issuer credit rating of Bank of Queensland Limited (ASX: BOQ) to ‘BBB+’ from ‘A-’ as part of a downgrade of ratings on 23 Australian financial institutions, while maintaining a stable outlook. S&P’s decision is based on its view that continued build-up of economic imbalances in the country due to a rapid rise in private sector debt and house prices, has exposed Australian financial institutions to greater economic risks. However, BOQ seems to have a significantly lower level of exposure to the Sydney and Melbourne property markets than many other industry participants and the bank’s loan book has performed well in the central Queensland and northern WA. Although the earnings were subdued in H1FY17, the outlook for remaining FY17 is expected to be moderate as growth in lending segment has been picking up in recent quarters and expected to drive improvement in spreads. We give a “Buy” recommendation on the stock at the current price of $ 11.16
 

BOQ Daily Chart (Source: Thomson Reuters) 

Telstra Corporation Limited

TLS Details

Favorable ACCC’s draft decision on mobile roaming services: Telstra Corporation Limited (ASX: TLS) came under slight pressure with the Australian Competition and Consumer Commission’s (ACCC) move on finalizing the regulation of high-speed internet services supplied by non-NBN fixed line networks and setting wholesale prices and other terms and conditions. However, Telstra’s fiber networks have been said to be subject to different pricing arrangements due to the cost of separating the networks from Telstra’s legacy network systems and the prospect that the fiber networks may be transferred to NBN. On the other hand, the recent ACCC’s draft decision on mobile roaming services was considered as a positive and is not expected to affect TLS retail mobile prices to a significant extent. Further, it will help TLS keep its competitors at bay from the use of TLS’ infrastructure. 

Half year 2017 Results (Source: Company Reports)
 
We believe that mobile network investments and buybacks opportunities can drive the momentum going forward while the stock is trading at attractive levels. The group had otherwise reported for NPAT slip of 14.43% to $1,791m for the half-year ended 31 December 2016. There is a speculation that the group is now eying energy retailing space and has grabbed rights to a solar energy farm in Queensland in a project worth $100 million. Given the prospects, we maintain a “Buy” recommendation on the stock at the current price of $ 4.40
 

TLS Daily Chart (Source: Thomson Reuters) 

TPG Telecom Limited

TPM Details

Pushing into mobile space: TPG Telecom Limited (ASX: TPM) is seen to be emerging as a competitor in the mobile space with the winning of a bid for 2x10MHz of mobile spectrum in the 700MHz band at the recent auction conducted by the Australian Communications and Media Authority (ACMA). Further, the company had successfully raised approximately A$400.3 million at A$5.25 per share through the retail entitlement offer and the institutional offer for the network expansion and repayment of debt. Further, the company has reaffirmed the underlying EBITDA of $820 to $830 million for FY 17. TPM stock has fallen 50.7% in the last twelve months as on May 30, 2017 and is trading close to its low levels. We give a “Buy” recommendation on the stock at the current price of $ 5.89


TPM Daily Chart (Source: Thomson Reuters) 

Woolworths Limited

WOW Details

Turnaround of BIG W coupled with cost efficiencies expected to drive momentum:For Q3FY17, Woolworths Limited (ASX: WOW) reported a moderate sales growth of 3.7% year on year (yoy) to $13.8 billion, led by strong momentum in Australian food division with 5.1% yoy growth to $9.3 billion. Further, the company is expecting a significant ramp-up in supermarket renewals run-rate with 49 planned for H2FY17.  Currently, the company is focusing on rebuilding sustainable sales momentum for the remaining FY17 and into FY18. However, H2FY17 is expected to be impacted by higher costs in key areas such as team incentives, depreciation and team training.  

New Stores and Renewals/ Refurbishments (Source: Company Reports)
 
Given the sales data and turnaround plan in progress for BIG W coupled with further cost efficiencies going forward, the stock is expected to witness momentum. WOW has also been able to outpace Coles recently with the latest sales result. We give a “Buy” recommendation on the stock at the current market price of $ 26.05
 

WOW Daily Chart (Source: Thomson Reuters) 

Magellan Financial Group Limited

MFG Details

Continuous focus to outperform global benchmark indices: For April 2017, Magellan Financial Group Limited (ASX: MFG) reported about 5.4% month on month growth in total Funds under Management (FUM) at $50.4 billion against $47.8 billion as at March 2017. Total net inflows stood at $109 million against an outflow of $27 million during March. However, net retail inflows into Global Equities strategies declined to $38 million against $69 million in March, while net retail inflows into Infrastructure Equities and net institutional inflows for April were reported to be $26 million ($19 million in March) and $45 million (outflows of $115 million in March), respectively. Although fund inflows have been growing, earnings have been impacting by revenue from performance fee due to constant fluctuations in global equities. We believe that catalysts such as attractive inflows coupled with historical investment performance track record and continuous focus to outperform global benchmark indices can drive momentum going forward.We give a “Buy” recommendation on the stock at the current price of $ 25.18
 

MFG Daily Chart (Source: Thomson Reuters) 

Scentre Group

SCG Details

Decent growth despite volatility in the market: Scentre Group (ASX: SCG) has reported a 2.4% growth in comparable Specialty sales for 12 months ended March 31, 2017 at an average price of $11,230 per square meter, led by the momentum in fashion, food retail, food catering, retail services and technology categories. The company has opened the first stage new fashion precinct of the $355 million redevelopment at Westfield Chermside in April. Importantly, the group witnessed around 30 Australian growth retailers enhancing their store network to 438 stores from 151 during the last five years, while 100 stores were leased last year. Further, the group has started developments worth $430 million in FY17 while targeting more than 7% development yields and >15% returns. With strong portfolio and low-risk earnings guidance, we expect stock to move upwards from current levels and give a “Buy” recommendation on the stock at the current price of $ 4.26
 

SCG Daily Chart (Source: Thomson Reuters)

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