Myer Holdings Ltd

 

MYR Details 
Limited topline growth despite strategic initiatives: Myer Holdings Ltd (ASX: MYR) has recently denied any liability with regard to legal proceedings against the company by Perpetual Ltd and Bridgehead Pty Ltd., landlords of the Myer Chadstone store. The company’s new CEO has implemented drastic changes throughout the store network. The operational changes include focus on brands and improved customer service. The company’s new focus of fast-fashion brands like Topshop and the flexibility of being able to shop anywhere would keep attracting shoppers to stores, which is positive for the company. The company has introduced 850 new or upgraded wanted brand destinations and exited 150 brands. Additionally, the company has seen 7.2% improvement in Net Promoter Score in flagship and premium stores driven by service investments. The company noted 74% growth in omni-channel sales with profit growing well ahead of sales. Over FY16, the company has reported net profit of $60.5 million, which doubled from last year. Total sales across the group swelled 2.9% to 3.3 billion. The company has declared final dividend of 3 cents per share. For Q1 FY17, the company reported sales of $719.2 million and sales per square meter increased by 6%. On the other hand, Myer is targeting a limited average sales growth of more than 3% during 2016 to 2020. Rising competition and costs remain a concern. The stock has surged over 10.32% in the last four weeks (as at December 23, 2016), and has been trading at a high P/E. We rate the stock as “Expensive” at the current price of – $ 1.39

 
MYR Daily Chart (Source: Thomson Reuters) 

Aconex Ltd

ACX Details
Enterprise agreements:Aconex Ltd (ASX: ACX) has entered into three-year enterprise agreement with AECOM, a fully integrated global infrastructure firm, for use of Aconex project-wide collaboration solutions. This move is expected to give a boost to company’s momentum in global infrastructure market that is estimated to grow to US$9 trillion per year by 2025. ACX also had entered into three-year enterprise agreement with Fletcher Building Ltd under which Fletcher will standardize on Aconex solutions across all construction business divisions, which includes Fletcher Building and interiors, Fletcher Constructions, Fletcher infrastructure and Fletcher living. Aconex would be the preferred solution for Fletcher South Pacific and Higgins Contracting. This expands on a prior agreement between the companies. Post Trump’s victory, the boost in construction industry would be an added advantage to Aconex as it provides a cloud collaboration platform for the construction industry. The management has guided that company’s revenue is set to rise to $172 to $180 million in FY17 against $123.4 million of FY16 after which the management expects FY18 - FY19 growth of 20-25% per annum. Post Trump’s victory, it is expected that the company would outperform its guidance. The company’s long-term customers are increasing the use of company’s software. Aconex has also appointed Paul Koppelman as its Chief Financial Officer. However, the stock is currently trading at higher valuation. CEO retirement and recent share sales from management has also raised concerns on the stock. We rate the stock as “Expensive” at the current market price of $ 4.93

 
ACX Daily Chart (Source: Thomson Reuters) 

Western Areas Ltd

WSA Details
New contract win from Chinese stainless steel producer: Western Areas Ltd (ASX: WSA) announced that it has entered into an offtake contract with the Tsingshan Group through its associated entity, Golden Harbour International Pte Ltd to import raw materials for the production of stainless steel. The company has further announced that it has entered into an offtake contract with BHP Billiton Nickel West for the period of three years from February 01, 2017 or the completion of the aggregate quantity. The contract includes quantity up to 10,000 tonnes of nickel contained in concentrate per annum with a 30,000 tonne aggregate limit. The combination of the Tsingshan and Nickel West contracts would enable Western Areas to realize a greater return from nickel produced in concentrate.

 

Cathedrals Belt highlights (Source: Company Reports)
 
Recently, Mt Alexander Project has been reported to witness more EM anomalies at Cathedrals Belt as per the fixed loop electromagnetic (FLEM) SAMSON survey. New EM anomalies include deeper targets in comparison to the earlier ones explored by St George. For the first quarter 2017, drill program to test massive nickel?copper sulphide has been planned. We rate the stock a “Buy” at the current market price of $ 2.96

 
WSA Daily Chart (Source: Thomson Reuters) 

Metcash Ltd

MTS Details
No FY17 interim dividend:Metcash Ltd (ASX: MTS) reported a limited 0.3% rise in group sales to $6.63 billion for six months of FY17 including the three weeks’ sales from the Home Timber and Hardware business it acquired from its rival Woolworths Ltd. The company’s earnings before interest and tax (EBIT) declined 4.2% to $128.1 million while its underlying profit fell 4.7% to $82.8 million. The liquor and hardware continued its growth momentum while food and grocery division showed declined in earnings (EBIT down 8%). Therefore, MTS has taken strategic initiatives to improve the performance of the grocery division. The company is equally focused on selling non-core assets and reducing debt.  Metcash already cut their net debt to $197.6 million from $275.5 million as on June 2016. The company has targeted $100 million of annualized cost savings by FY19.
 

Acquisition creating significant scale (Source: Company Reports)
 
On the other hand, the company still faces competitive trading conditions and has not declared any FY17 interim dividend. The stock is also trading close to its 52-week high price and we maintain an “Expensive” recommendation at the current price of $ 2.22

 
MTS Daily Chart (Source: Thomson Reuters) 

Nine Entertainment Co Holdings Ltd

NEC Details
Revenue growth expected in production business: Nine Entertainment Co Holdings Ltd (ASX: NEC) reported a net profit of $120 million for FY16 and declared a full year dividend of 12 cents per share, a rise of 30%. But, TV earnings fell by 11% which have been offset by fall in group costs by 6.5%. Going forward, the management expects free-to-air advertising revenue to be down in low single-digits for FY17. On the other hand, the company has sold its entire 9.99% stake in Southern Cross Media Group Ltd at a price of $1.54 per share. The company expects revenues in production business to grow in excess of 50% in FY17. The company has taken various steps to achieve efficiency in cost base which would result in additional $50 million reduction in costs by FY19. The stock recovered over 15.6% in the last four weeks (as of December 23, 2016) and is trading at an attractive dividend yield. We recommend a “Hold” on the stock at the current market price of $ $ 1.04

 
NEC Daily Chart (Source: Thomson Reuters)

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