Galaxy Resources Limited

Robust Volume Expansion: Galaxy Resources Ltd (ASX: GXY) has recently provided a quarterly update for the period ended as on 31 December 2018. As per the report, a volume expansion of 27% was witnessed over the previous quarter at the Mt. Cattalin operations on account of the increased ore mined and the increased stripping ratio. The company had US$41.1 million in cash and liquid securities and was debt free as at 31 December 2018. As per ASIC, as on 29 January 2019, the stock was shorted by more than 17.45%.

Regarding the Mt. Catlin, the company is targeting a production of spodumene concentrate in the range of 40,000 dmt to 45,000 dmt in Q1 of 2019. Also, the annual production is expected to be in the range of 180,000 to 210,000 dmt for the full calendar year 2019.
 

 
GXY Production and sales numbers (Source: Company Reports)
 
On the financial metrics front, the EBITDA margins for the 1H 2018 came in at 45.80% as compared to the industry median of 39.1%, while the same was negative in the pcp signifying a turnaround in the operations. Meanwhile, the stock price has fallen by 30.28% in the past six months as on 1 February 2019. Thus, considering the strong balance sheet, robust mining volumes registered during the quarter, improving and higher than industry marginsand debt-free status of the company, we maintain our “Hold” recommendation on the stock at the current market price of $1.97 (down 0.505% on 04 February 2019).
 
 

Syrah Resources Limited

 
Better Graphite recovery & throughput: Syrah Resources Limited (ASX: SYR) stated in its Q4 2018, update that the graphite production was recorded at 33.20kt with a fall of 14% on a Q-o-Q basison account of the Primary classifier Unit fire damage and equipment interruption. The graphite recovery rate did improve to 70% for the quarter ended on the back of continued improvement of floatation control & process control.The company had cash at hand of US$77.1 million as at 31 December 2018. As per ASIC, as on 29 January 2019, the stock was shorted by more than 16.77%.
 
Further, the company has provided the production guidance of 45kt – 50kt of natural graphite for the Q1 2019 with the full year 2019 target of ~250kt over the Balama Graphite Project.

The company is currently trading at a Price-to-book multiple of 0.90x while the industry median is at 1.50x, hence the company seems to be trading at attractive prices at this juncture. Also, the company is virtually debt free at this juncture & hence facing less of financial risk.
 

SYR’s production & recovery numbers (Source: Company Reports)
 
The stock price has fallen by 51.19% over the past six months as on 1 February 2019. However, considering the growing opportunity in the electric vehicles segment, the robust graphite recovery rate with a strong FY19 production guidance, virtual debt-free status of the company along with attractive P/B multiple, we maintain our “Hold” rating on the stock at the current market price of $1.50 (up 4.167% on 04 February 2019).

JB Hi-Fi Ltd

 
Robust top-line expansion expected in FY2019: JB Hi-Fi Limited (ASX: JBH) has provided its sales update for the Q1 FY 2019. The highest growth was seen in their JB HI-FI Australia operations by 5.3%. The company reconfirmed its earlier stated sales guidance of circa $7.1 Bn for the FY 2019. This would be contributed by its Australian, New Zealand and Good Guys division in the proportions of $4.75 Bn, $0.22 Bn & $2.15 Bn respectively.

For the FY 2018, the company’s dividend was up by 11.9% and was reported at 132 cents per share.

As per ASIC or Australian Securities and Investment Commission, as on 29 January 2019, JBH was shorted by more than 16.08 %.

The company is trading at a TTM P/CF multiple of 9.10x, while the specialty retailer’s industry median trades at 7.50x, which signifies that the company is trading at a premium.
 

 
JBH’s dividend trend over past 5-years (Source: Company Reports)
 
Meanwhile, the stock price has fallen over the past six months by 4.34% as on 1 February 2019 and is trading at reasonable PE multiple of 11.19x. Currently, it is trading at lower levels. By looking at the trading level since past one year and consistent top-line growth, we have a wait and watch view on the stock that trades at the current price of $22.91 (up 0.792% on 04 February 2019).
 

Inghams Group Ltd

 
Robust outlook on the back of constant price rises: Inghams Group Ltd (ASX: ING) has stated in the latest release that Mr. Ian Brannan has resigned from the post of CFO and hence will be leaving the company at the end of his six months’ notice period. Thus, the company has started its search for the next CFO.

The revenue from ordinary activities for the FY18 came in at 2,373.90 Mn a fall of 2.20% on YoY basis. The revenue decline in the period is attributed to the feed business in Australia, which was cycling the loss of a customer from FY17 and the closure of Red Lea Chickens. This was partially offset by the recovery of dairy feed volumes as dairy demand improved in the New Zealand market.

As per the management, the demand for poultry products continues to grow, the strategy implementation remains on track, and the opportunity pipeline is strong. It expects a continuation of market price increases, reflecting increases in energy and feed costs.
 

ING’s Fey Financial Metrics (Source: Company Reports)
 
The company is yielding a dividend (TTM) 5.30% while the food and tobacco Industry median for the same is 2.50% representingmore income for its shareholders.Meanwhile, the stock price has risen over the past six months by 36.87% as on 1 February 2019 is trading slightly towards higher level. As per ASIC, as on 29 January 2019, the stock was shorted by more than 15.49%.However, considering decent outlook despite short selling along with higher than industry dividend yield, we maintain our “Hold” rating on the stock at the current market price of $4.58 (up 0.219% on 04 February 2019).
 

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