Suncorp Group Limited (ASX: SUN)

SUN Details

Improved customer experiences: Suncorp’s Board has recently appointed Ms Sylvia Falzon as its non-executive director who will take her responsibilities from 1 September 2018. Ms Falzon has held senior executive positions in institutional and in retail funds management businesses. The Group disclosed to the ASX that one of its director, Douglas Francis McTaggart had a direct interest in the Company and initially was holding 25,787 shares and further acquired 621 ordinary shares at $13.69 per share and now total shares held by him are 26,408. Shares were issued under the Company’s Dividend Reinvestment Policy. One of its substantial holder, Vero Insurance New Zealand Limited ceased to be a substantial holder of the Group since 14 March 2018. Meanwhile, the Board declared a fully franked interim dividend of 33 cents per share for 2018. Suncorp has progressed well on its two strategic programs - The Marketplace acceleration program and Business Improvement Program, and has improved customer experience, while lowering the Group’s cost base and delivering a more resilient business model which embeds a culture of continuous improvement across the organisation.
 

Trend of Retail Lending Portfolio (Source: Company Reports)
 
The Group is expecting that in FY19 its underlying insurance trading ratio (ITR)will return to at least 12 per cent and its Banking Cost to Income ratio will be around 50 per cent. SUN is also working on its efficiency in claims process. The stock price was up by 1.2 per cent in the past six months but fell 3.24% in the past one month. We recommend to “Hold” the stock at the current market price of $ 13.570.
 

SUN Daily Chart (Source: Thomson Reuters)
 

Oil Search Limited (ASX: OSH)

OSH Details

Resumption of operation at Central Processing Facility: Oil Search Limited has a healthy foothold based on exploration and appraisal activities. Progress at PNG LNG operations with changing scenario at Muruk seem to be helping the group. OSH recently announced that its Central Processing Facility (CPF) resumed operations and oil production also commenced, which were otherwise shut down post the occurrence of earthquake of 7.5 magnitude that impacted the PNG Highlands in February 18. A detail assessment of all Oil Search-operated infrastructure was undertaken to ensure the integrity of the facility. Now the CPF is operational, the oil production from the Kutubu complex fields is expected to be in line and will be brought back online progressively during April 2018.
 

Gross Production Rate (Source: Company Reports)
 
It also operated the condensate handing facilities at the CPF and liquids export pipeline, integral to the operation of the PNG LNG Project; and the facilities are ready to receive, store and export the condensate once the Project recommences the gas production. The Group will release its updated guidance for production along with operating and capital costs with first quarter results of 2018. The stock price was up by 3.25 per cent in the past one month driven by oil prices. We recommend to “Hold” the stock at the current market price of $ 7.400.
 

OSH Daily Chart (Source: Thomson Reuters)
 

BHP Billiton Limited (ASX: BHP)

BHP Details

Continuous initiatives for improvement: BHP has been benefitting from the favourable commodity pricing environment. The group is managing its EBITDA margin well with a decent balance sheet position; and has introduced a dividend reinvestment plan which is expected to be operational for the FY18 final dividend. Meanwhile, BHP and Woodside entered into an agreement in relation to the proposed development of the Scarborough gas field. Under this agreement, Woodside granted BHP an option to purchase an additional 10 per cent of interest in Scarborough on an equivalent consideration and on the terms on the basis of transaction with ExxonMobil.
 

Return on Equity Trend (Source: Company Reports)
 
The underlying EBITDA for H1FY18 was up by 14 per cent as compared to H1FY17. Capital and exploration expenditure guidance was unchanged and remained at US$6.9 billion for FY18 and is expected to remain below US$8 billion per annum in FY19 and in FY20. The stock was up by 7.62 per cent in the past six months and we would recommend to “Hold” the stock at the current market price of $ 28.880.
 

BHP Daily Chart (Source: Thomson Reuters)
 

Senex Energy Limited (ASX: SXY)

SXY Details

Looking forward to establishing new partnerships: Senex seems to be having improved earnings over the next couple of years based on the existing gas projects, and benefits from the oil price scenario. The Group released its monthly drilling report for March 2018 that showcased that Senex has continued its drilling campaign on the Western flank of the Cooper Basin, South Australia; and has been granted with Petroleum Lease and preliminary environmental approvals from the Queensland Government so that it can develop Project Atlas for domestic gas supply. This will help in addressing the issues of the shortage of the new east coast gas supply. Senex expects that it will receive all the remaining State and Commonwealth approvals in mid-19 and is targeting to deliver the first gas to the domestic market in late 2019.
 

Section of South Australian Western Flank (Source: Company Reports)
 
Further, drilling component of the Stunsail full field development project was successfully completed with the second horizontal oil development mine. Horizontal oil development well, Growler-15 was drilled in the Grower Field.The share price was up by 33.3 per cent in the past six months as at 10 April 2018. We recommend to “Hold” the stock at the current market price of $ 0.420.
 

SXY Daily Chart (Source: Thomson Reuters)
 

Link Administration Holdings Limited (ASX: LNK)

LNK Details

Decrease in the Fund Administration Revenue: Superannuation fund administration company, Link delivered mixed first half year results for 2018 and reported an increase of 55 per cent in its NPAT that amounted to $64.3 million as compared to the same period in the prior year. The Board declared a fully franked interim dividend of 7.0 cents per share and will be paying the same on 30 April 18.
 

Financial Performance (Source: Company Reports)
 
Revenue from Fund Administration for 1HFY18 was down by 2.0 per cent and amounted to $284.3 million due to reduction in revenue from the rebased Superpartner’s contract. Meanwhile, National Australia Bank and Macquarie Group ceased to be substantial holders of the Group since 29 March 2018. On the other hand, the Group appointed Cassandra Hamlin as its Company Secretary. The stock price was up by 12.58 per cent in the past six months and is trading at a high level. We believe that the stock looks “Expensive” at the current market price of $ 8.590.
 

LNK Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.