Woolworths Ltd
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WOW Details
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Improving business ended investors’ concerns on the group: Woolworths Ltd (ASX: WOW) stock rose 8.24% on July 25, 2016 after the company gave the update on Operating model review and implementation of the turnaround measures. According to it, WOW gave the clear signs of progress in Australian Supermarkets due to the record voice of the customer scores, the improvement in the team engagement scores and the continued growth in the transaction along with item growth, which is now positive. Moreover, the group review has led to the restructuring costs of $959 million ($571 million non -cash) or $766 million after tax which would be recognized in the FY 2016 results. Accordingly, the decisive action would be taken on General Merchandise with restructuring costs of $460 million, including a $309 million for the impairment of EziBuy. In addition, the company has slowed the new Australian Supermarkets rollout significantly to focus on renewing the existing stores and the provision is taken to close the underperforming or unprofitable stores.
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Recommendation: We maintain a “Buy” recommendation on this dividend yield stock at the current price of $24.30
Corporate Travel Management Ltd
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CTD Details
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Reconfirmed the FY 16 guidance: Corporate Travel Management Ltd (ASX: CTD) stock rose 4.94% on July 25, 2016 while UBS Group AG became initial substantial holder with 5% voting power. CTD has reconfirmed the guidance for underlying earnings at the top end of a range around $68 million for the full FY 2016. Moreover, as per 1H 2016 results, CTD gets revenue of around 73% from TTV, while 54% of revenue and 80% of underlying EBITDA is owing to organic growth. CTD’s continued investment in client-facing technology and internal business tools has given it a competitive advantage. Meanwhile, CTD stock has risen 18.73% in the last six months (as of July 22, 2016) and we believe the stock has more potential.
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Recommendation: Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $15.30
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Growth in Earnings per Share since IPO in December 2010 (Source: Company Reports)
Super Retail Group Ltd
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SUL Details
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Management changes: Super Retail Group Ltd (ASX: SUL) stock rose 3.74% on July 25, 2016. The group appointed Ms Jane Kelly as the Chief Human Resources officer effective from July 25, 2016. On the other side, SUL has planned the full year capital expenditure of circa $85m to support new stores and refurbishment programs, and for general requirements. Moreover, SUL has forecasted costs to be $26 million including unallocated logistics costs of $9 million, digital investment of $9 million and other group costs of $8 million. In addition, as on April 30, 2016, SUL had 307 SCA stores, 121 BCF stores, 54 Ray’s Outdoors/RAYS stores, 101 Rebel stores and 59 Amart Sports stores.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $9.70
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Financial Targets (Source: Company Reports)
Data#3 Ltd
DTL Details
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Pre-audit estimation for FY 16: Data#3 Ltd (ASX: DTL) stock rose 12.55% on July 25, 2016 after the company gave the pre-audit estimation which represents the strong performance by the core Data# 3 business and solid growth in services. This is subject to the confirmation of the Discovery Technology result (62% owned by Data#3) and the DTL final year-end audit, wherein the consolidated net profit after tax for the FY16 is expected to be in the range of $13.0 to $13.5 million, which represents growth of approximately 25% compared to FY15’s NPAT of $10.6 million.
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Recommendation: Trading at a decent dividend yield and reasonable P/E, we give a “Hold” recommendation on the stock at the current price of $1.30
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