.PNG)
National Australia Bank Ltd
Strong capital position & operating performance: National Australia Bank Ltd (ASX: NAB) was up 3.3% on November 10, 2016, and has well managed the group operating expenses in FY 16 with productivity savings of $187 million (2H16 increase $98 million). NAB is targeting ongoing annual productivity savings of greater than $200 million pa. Further, NAB has sound asset quality of $100 million top up to collective provision overlay. NAB also has strong capital position at 9.77% CET1 that is above the target range of 8.75% – 9.25%. In addition, NAB has reported a 4.2% growth in the cash earnings of $6,483 million in fiscal year of 2016. Having an outstanding dividend yield, we give a “Buy” recommendation on the stock at the current price of – $ 26.69
Crown Resorts Ltd
Lower dependence in International VIP program play business for FY 16:Crown Resorts Ltd (ASX: CWN) has responded to the enquiries regarding its international VIP program play business. As per CWN, around a third of the group revenues are generated from overseas visitors but only some of these overseas visitors participate in international VIP gaming programs. The visitors are from a range of regions including South East Asia, North Asia (including mainland China), Europe and the Middle East. Moreover, in FY16, around a quarter of the CWN’s revenues were from the international VIP gaming programs. Less than half of the revenue of international VIP gaming programs is from the mainland China. Consequently, this segment of the business represents only 12% of the Crown Group revenues in FY16. Meanwhile, CWN stock fell over 20.50% in the last three months (as of November 09, 2016), due to the investors’ concerns of the group’s business from overseas. But given their lower dependence on the International VIP program and focus on the core business, we believe the stock could recover in the coming months. Accordingly, we give a “Hold” recommendation on the stock at the current price of – $ 10.60
Australia and New Zealand Banking Group Ltd
Transforming Business: Australia and New Zealand Banking Group Ltd (ASX: ANZ) recently announced for buyback of remaining CPS2 (ANZPA) for face value ($100) on December 15, 2016. The group reported a 24% fall in the statutory profit after tax to $5.7 billion in fiscal year of 2016 and a 18% fall in the cash profit to $5.9 billion. However, the adjusted pro-forma cash profit fell 3% to $7.0 billion while the profit before provisions has enhanced by 6% as the benefits of simplification and rebalancing initiatives have begun to emerge. Moreover, ANZ is emphasizing on strong capital and cost management outcomes together with $1,077 million of charges (after tax) for specified items primarily that is related to reshaping the bank. The bank is offloading their non-core business and accordingly made an agreement with DBS to sell the retail and wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia. ANZ will plan for the rest of the businesses in the retail and wealth in Asia during FY17. Meanwhile, ANZ stock rose 8.57% in the last six months (as of November 09, 2016), and still trading at an attractive level. The stock is trading ex-dividend on November 14, 2016. Accordingly, we give a “Buy” recommendation on the stock at the current price of – $ 27.59
Suncorp Group Ltd
Gross non-performing loans falling in the September quarter: Suncorp Group Ltd (ASX: SUN) in the September quarter has reported for flat lending assets to $54.1 billion due to the actively managed volume and margin in a price driven market. Accordingly, SUN stock fell over 16.94% in the last three months (as of November 09, 2016). However, the credit quality is strong as the gross non-performing loans decreased by 4.8% over the quarter to $581 million. Moreover, the capital position of SUN is strong as the Common Equity Tier 1 (CET1) ratio is of 8.92%, which is at the upper end of the 8.5% to 9% target in the September quarter 2016. We maintain a “Buy” recommendation on the stock at the current price of – $ 11.96
DUET Group
Refinancing of term debt: DUET Group (ASX: DUE) has raised and refinanced $1.4 billion of term debt to decrease the maturing debt facility limits in 2017 from $1.63 billion down to $477 million. The group reported that Multinet Gas has refinanced $300 million of the term debt and has also refinanced the $500 million of term debt facilities that would mature in the first half of 2017. Moreover, DUE reported a 29.1% growth in the revenues from ordinary activities and a 153.5% growth in NPAT excluding significant items for fiscal year of 2016. We give a “Hold” recommendation on the stock at the current price of – $ 2.30
Spark New Zealand Ltd
Tight ongoing management of cashflow and capital:Spark New Zealand Ltd (ASX: SPK) proposed to offer unsecured, unsubordinated fixed rate 10 year bonds to institutional and New Zealand retail investors. Additionally, SPK reported an EBITDA growth of 2.5% in fiscal year of 2016 due to the tight ongoing management of cashflow and capital. For FY 17, SPK expects ordinary dividend of 22 cps and special dividend of 3 cps. The ordinary dividend is expected to be fully imputed and the special dividend is forecasted to be at least 75% imputed. The revenue is expected to grow 0%-3% in FY 17 and the EBITDA excluding potential net gains on sale for Mayoral Drive Carpark is forecasted at $17m-$19m. The earnings per share for FY 17 is expected to be 21 cents against 20 cents in FY 16. We give a “Hold” recommendation on the stock at the current price of – $ 3.21
Insurance Australia Group Ltd
Redemption of Tier 2 subordinated debt instruments: Insurance Australia Group Ltd (ASX: IAG) is set to proceed with redemption of its Tier 2 subordinated debt instruments in December 2016, under its refinance program. The group has extended the quota share agreement for a minimum four-year period from 1st July 2016, with an option for a further two years with Munich Re that covers 30% of IAG’s compulsory third party (CTP) business. Moreover, IAG has announced the $300 million off-market share buy-back as part of the capital management program, which was finished last month. On the other hand, IAG has reported a 14.1% fall in the net profit after tax to $625 million for fiscal year of 2016. But, the insurance profit grew 6.8% to $1.18 billion on FY15. Despite modest GWP contraction, reported margin is of 14.3%. IAG’s reported margin guidance for FY17 is 12.5-14.5% and for FY17 IAG expects the GWP to be relatively flat. But, given the stock fall by 14.19% in the last three months (as of November 09, 2016), the stock looks attractive at the current levels. We give a “Buy” recommendation at the current price of – $ 5.43
Fortescue Metals Group Limited
September Quarterly Production is consistent with guidance and prior performance:Fortescue Metals Group Limited (ASX: FMG) was up 10.7% on November 10, 2016 and the group lately advised about passing of all resolutions at its AGM. The September 2016 quarterly production results entailed shipments of 43.8 million tonnes of iron ore, which are consistent with guidance and prior performance. The cash production costs enhanced to US$13.55 per wet metric tonne (wmt), as there is a reduction of 5% against the June 2016 quarter and 20% over the prior twelve months. Moreover, the group has repaid US$700 million of debt in the September quarter, while reduced the net debt to US$4.2 billion, and had US$1.8 billion cash and finance leases of US$0.5 billion. FMG stock rose over 78.6% in the last six months (as of November 09, 2016) and is trading close to its 52-week high price. We give a “Hold” recommendation on the stock at the current price of – $ 6.01
Coca-Cola Amatil Ltd
Mid-term EPS growth is as expected: Coca-Cola Amatil Ltd (ASX: CCL) has reported a 3% growth in the total revenue to $2,517.1 million in the first half of 2016 and 7.8% growth in the profit to $198.2 million. Moreover, CCA is continuing to deliver mid-single digit earnings per share (EPS) growth in the medium term as the EPS grew 7.8% to 26 cents in the 1H 2016. Accordingly, CCL stock rose 6.9% in the last six months (as of November 09, 2016), and still we give a “Hold” recommendation on the stock at the current price of – $ 9.59
Stockland Corporation Ltd
Record number of deposits for Residential business: Stockland Corporation Ltd (ASX: SGP) reported 2,301 net deposits on residential lots, townhouses in the first quarter FY 17 market update and completed homes in the quarter, which is up from 1,557 for the corresponding period in FY16. Moreover, SGP is on track to achieve more than 6,000 residential settlements for the FY 17 and confirmed that they are track to achieve target growth in Funds from Operations (FFO) per security of 5.0-7.0 per cent across the entire group. We believe the group would able to handle Graham Bradley AM, retirement from the Board with Tom Pockett assuming the role of Chairman after the conclusion of the AGM. We give a “Hold” recommendation on the stock at the current price of – $ 4.21
Woodside Petroleum Limited
Strong Operational Performance in third quarter:Woodside Petroleum Limited (ASX: WPL) has completed the transaction to acquire 100% of shares in ConocoPhillips Senegal BV, and also reported a solid third quarter ending 30th September 2016 quarter driven by the excellent LNG capacity and reliability, and 20% quarter-on-quarter growth in the revenue. In the third quarter 2016, there is a record quarterly LNG production at Karratha Gas Plant (KGP), which is 4% higher than the previous record of the third quarter 2014. There is a record quarterly LNG production at Pluto LNG, which is 1% higher than the previous record of the third quarter 2015. The reliability has exceeded 99% at Pluto and KGP LNG facilities, offshore gas facilities and Nganhurra FPSO (Enfield). Moreover, there was no production interruption of Pluto LNG since 26th January 2016. Additionally, WPL has narrowed the 2016 production guidance to 92–95 MMboe. This is due to the strong operational performance and enhanced production guidance from 86–93 MMboe to 90–95 MMboe in August 2016. Overall, the production in the third quarter 2016 was 13.5% higher than the previous quarter driven by solid production performance across operating asset and NWS facilities contribution. In addition, the production at the Okha FPSO (NWS oil) restarted after the facility turnaround. We give a “Buy” recommendation on the stock at the current price of – 28.72
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