CSL Limited

CSL Details

Decent Outlook: CSL Limited (ASX: CSL) has bright outlook at the back of rising demand of its product and geographical sales mix growth, particularly immunoglobulin products such as Idelvion and Haegarda across the global market. The haemophilia market keeps on developing and the new generation products such as Idelvion (rFIX-FP) and Afstyla (rFVIII-SC) are well placed in the market. Based on robust outlook, the company has lifted its profit guidance for FY18 in the range of US$1,680 Mn and US$1,710 Mn at constant currency basis as compared to the previous guidance which was around $1,550 to $1,600 Mn USD at constant currency basis, representing circa 17% to 20% earnings growth for full year as compared to previous year. The current ratio and quick ratio came at 2.86x and 1.42x, respectively in the six months as at 31 December 2017 while debt to equity ratio was moderately down to 1.16x in 1HFY18 from previous six months (1.26x). Looking forward, the management expects Helixate sales to decline as the product winds down.


CSL Behring Revenue – 1HFY18 (Source: Company Reports)

Competition in the factor VIII space remains intense as new entrants come to market. On the other hand, Ms. Fiona Mead has been appointed as Company Secretary and Head of Group Governance to the Board, effective from June 04, 2018. Meanwhile, the share price was up by 39.23 per cent in the past six months and by 7.31 per cent in the last one month as at June 26, 2018. The stock price is touching distance of their all-time high of $199.885, and catalysts are already factored in the price, hence, we maintain our “Expensive” recommendation on the stock at the current market price of $195.0, while it edged lower amid macro headwinds at global level.
 

CSL Daily Chart (Source: Thomson Reuters)
 

Qantas Airways Limited

QAN Details

Strong Fundamentals: Qantas Airways Limited (ASX: QAN) has recently updated the market about the progress on several transactions under its ongoing buy-back event wherein the Group has recently cancelled 91,17,409 shares under the buy-back event. Besides this, QantasLink unveils cabin upgrades for regional flyers wherein it has completed its first cabin refurbishment on a Bombardier Q300, as part of a programme that will cover its fleet of 45 turboprops. This will offer flyers a better in-flight experience resulting in better volume growth in the route of Tamworth to Sydney. Moreover, the company will increase its Airbus A330 services on the Sydney to Singapore and Sydney to Jakarta routes to meet the increase in demand, effective from December 14, 2018. In addition, the company focuses on to increase its Sydney-Noumea service from three to four times weekly which will be effective from 12 December 2018 by using its Boeing 737-800 aircraft. These recent additions will boost the number of flyers resulting to topline growth in years to come.

Total Revenue Per Available Seat Mile (ASM) improved by 3.4% to AUD0.180 in 1HFY18 as compared to the prior corresponding period (pcp). ROE and ROIC stood at 16.7 per cent and 5.9 per cent, respectively in 1HFY18, representing good return within the industry and expecting same performance in years to come.


1HFY18 Key Financial Metrics (Source: Company Reports)
 
Meanwhile, the stock price climbed up 27.67 per cent in the past six months and is trading at a low PE level among its peer group despite a 2% fall on June 27, 2018 as oil prices rose up. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $6.330, considering the aforesaid facts and robust fundamentals.
 

QAN Daily Chart (Source: Thomson Reuters)
 

Aveo Group

AOG Details

FY18 Financial and Operating Metric on Track: Aveo Group (ASX: AOG) has recently presented its business prospects at the Macquarie Conference and highlighted about FY18 activity. The group confirmed previously communicated guidance for FY18 across a range of financial and operational metrics and expects Retirement Return on Assets (ROA) ratio in the range of 7.5% -8.0% for the full year. Further, the company is expecting development delivery of more than 500 new retirement units and anticipates NTA per security greater than $3.80 as at 30 June 2018. The company upwardly revised its Underlying earnings per share guidance from previous guidance of 20.4 cents per security (cps) to 21.6 cps due to higher than expected development profits arising from the Group’s flagship retirement community development at Brisbane. Apart from this, the Board of Directors estimated an unfranked dividend of 9 cents per share for the period of twelve months ending 30 June 2018, inline within the guidance of distributing 40 to 60% of underlying profit after tax.


Retirement Earnings Composition (Source: Company Reports)
 
The record date for determining entitlement to the distribution is 29 June 2018 with the payment date of 28 September 2018 and ex-dividend date of June 28, 2018. Meanwhile, the share price has fallen 10.11 per cent in the past six months as at June 26, 2018 and trading close to 52-week low level. However, we expect a decent outlook for the business in the medium run, thus, maintain our “Buy” recommendation on the stock at the current market price of $ 2.430 (up 1.25% on June 27, 2018), considering retirement sales volume growth.
 

AOG Daily Chart (Source: Thomson Reuters)
 

Beach Energy Limited

BPT Details

Acquisition Update: Beach Energy Limited (ASX: BPT) confirmed that it has completed the transaction with Toyota Tsusho Corporation and related parties. With this announcement and oil price movement, the share price for BPT climbed 3.659 per cent on June 27, 2018. Further, the group and/or its wholly-owned subsidiaries will increase their ownership in the Otway Gas Project and BassGas Project. Both projects are operated by the Company. After acquisition (i.e., 5%) in Otway’s gas project, Beach’s effective interest in Otway gas project is now 100%.  Similarly, acquisition of Toyota’s 11.25% in BassGas projects helped Beach’s effective interest in BassGas project coming to 53.75%. On the financial front, ROE and RoIC stood at 6.0% and 5.1%, respectively in 1HFY18 while Current ratio and Quick ratio were recorded at 5.46x and 5.13x, respectively during the same period.


Summary of changes in the group’s interest (Source: Company Reports)
 
The company enjoys rich cash position with virtual debt free status that ensures further investment for business development plan. In the last one year, the BPT’s share price rallied over 197.62 per cent and up by 5.47 per cent in the past one month as on June 26, 2018. Currently, the stock is inching to 52-week higher level, hence we give an “Expensive” recommendation on the stock at the current market price of $ 1.700.
 

BPT Daily Chart (Source: Thomson Reuters)

 
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