Western Areas 

Strong exploration results at the Mt Alexander Project: Western Areas Ltd.’s (ASX: WSA) stock rose 4.18% on September 18, 2018 to $2.49 after the company’s joint venture partner St George Mining Limited announced more strong exploration results from the drill programme underway at the Mt Alexander Project, which is located near Leonora in the north-eastern Goldfields. The assays for MAD108 at Investigators site has confirmed a wide intercept of high-grade nickel-copper cobalt-PGEs with: 8.4m @ 2%Ni, 0.96% Cu, 0.06% Co, 2.59g/t total PGEs from 199m, which comprises of 1.37m @ 6.83% Ni, 2.88% Cu, 0.21% Co, 5.58g/t total PGEs from 206.03m. MAD108 has enhanced the down plunge of high grade mineralisation on the MAD60 section to 320 metres with further step-out drilling in the down dip direction underway. The company continues with the testing of conductor MAD111:X1 at Investigators site and has confirmed nickel-copper sulphides by initial drilling. At Investigators East, MAD117 intersects results further massive nickel-copper sulphides. In FY 18, WSA witnessed 23% rise in realised nickel price (pre?payability) to A$7.53/lb. The EBITDA margin was enhanced by 40% to 33.8%. Meanwhile, WSA stock has fallen 33.61% in three months as on September 17, 2018. With the high price to earnings ratio and current developments, we give a “Hold” recommendation on the stock at the current price of $ 2.490.
 

Estia Health

Supported Prime Minister Scott Morrison’s call for a Royal Commission: Estia Health Ltd.’s (ASX: EHE) stock has fallen 27.93% in three months as on September 17, 2018 after Prime Minister Morrison has called for a royal commission into the Australian aged care sector. This is due to scandals, various incidents of neglect, abuse and negligence in nursing homes, and this also includes the mistreatment of patients by staff. EHE has supported Prime Minister Scott Morrison’s call for a Royal Commission but its stock has fallen to 52 week low along with other stocks in this sector. As per the official data, the number of Australians moving into residential care is projected to more than double to 8.9 million by 2055, mostly with the population aged 65 years and above. Moreover, EHE stock moved up on September 18, 2018, as the company is looking forward to engaging in the consultation with government on the Terms of Reference for the Commission. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 2.470.
 

Metcash

Facing highly competitive and challenging conditions: Metcash Limited’s (ASX: MTS) stock has risen 1.8% in three months as on September 17, 2018 after the company at its annual general meeting provided the positive outlook. In FY 18, the company’s underlying profit after tax grew 10.7% to $215.6m. This was achieved despite highly competitive and challenging conditions.  The increase in underlying earnings was due to the ongoing execution of the strategic initiatives across all the pillars, majorly from the Working Smarter program and the integration of Home Timber & Hardware (HTH). Meanwhile, MTS in FY 19 for food segment expects highly competitive market conditions to continue through the remainder of FY19. FY19 earnings of Food segment is expected to be impacted by approximately $10m of operating investment by the Supermarkets business in growth opportunities. However, the additional Working Smarter savings are expected to mitigate the impact of difficult market conditions and cost inflation. The company expects modest growth in Liquor market to continue through the balance of FY19. There is an uncertainty associated with further rollout of CDS in ACT, Qld and WA. Further, the sales of the Hardware segment continues to grow in the FY19 period to date, but is at a lower rate compared to the strong 1H18. The full synergy benefits are expected to be realised in FY19. Therefore, based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $ 2.920.

FY 18 Financial Performance (Source: Company Reports)
 

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