Stocks’ Details

Rural Funds Group (ASX: RFF)

Decent Forecast for future Distributions: Recently, Rural Funds Management Limited (RFM), as a responsible entity and manager of the Rural Funds Group reviewed and updated its Distribution Reinvestment Plan (DRP) policy. The Group released its first half 2018 financial results and reported an increase of 22 per cent of Adjusted funds from operations (AFFO) that amounted to $15.4 million as against the same period in the prior year and this was driven due to the rent on development capital expenditure and from acquisitions and lease indexation. It is expected that AFFO will be higher in the second half of FY18. The group reaffirmed its FY18 AFFO and distribution forecasts of 12.7 cpu and 10.3 cpu, respectively. The acquisition of Natal was consistent with RFM’s strategy to expand RFF’s sector and climatic diversification. The Group also disclosed its forecast for FY19 distribution and expects that distributions will increase by 4 per cent as compared to FY18, amounting to 10.43 cpu (approximately). The share price was down by 5.17 per cent in the past one month and we recommend to “Hold” the stock (which has a good dividend yield) at the current market price of $ 2.18, given the group’s focus to seek acquisition opportunities in infrastructure and natural resource predominant assets.
 
    
Adjusted Property Assets Management (Source: Company Reports)
 

Freedom Foods Group Limited (ASX: FNP)

Increase of debt in the capital structure:Recently, the Group disclosed to the ASX about its director, Ronald Perich’s indirect interest in the Company. Arrovest Pty Limited is a registered holder of FNP shares and Directors hold more than 20 per cent of the voting power of Arrovest and therefore have a relevant interest in the shares held by Arrovest. The Group recently announced a pro-rata accelerated non-renounceable entitlement offer and an institutional placement of ordinary shares at an offer price of $4.80 per new share to raise approximately $200 million. After this, the total number of shares now on issue account to 243,354,292. One of its substantial holder, Bennelong Funds Management Group Pty Ltd changed its substantial holding since 12 April 2018 and now after the change, it holds 8.3468 per cent of the voting power up from 5.98 per cent. The stock’s current PE Ratio that is 263.510 looks a bit high relative to its peers and industry average. While the group may have a potential of margin expansion, the share price jumped up by 16.1 per cent in the past one month and the stock looks “Expensive” at the current market price of $ 5.96. It might be prudent to watch for any drop in the price at the moment.
 

Cash Flow Activities (Source: Company Reports)

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