Sandfire Resources NL
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SFR Details
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Achieved Copper Production above guidance: Sandfire Resources NL (ASX: SFR) stock rose 9.8% on July 13, 2016 as copper miners enjoyed gains in the red metal while Commonwealth Bank of Australia ceased to be a substantial holder. The group has delivered a solid FY2016 copper production of 68,202 tonnes, above the guidance range 65-68,000 tonnes. SFR even produced 37,612 ounces of contained gold which is a mid-point of guidance range of 35-40,000 ounces. In addition, SFR C1 unit operating cost is expected to be at lower end of guidance range of US$0.95-1.05 and sold 282,012 tonnes of concentrate containing 68,653 tonnes of copper and 36,042 ounces of gold. Moreover, SFR has paid debt of $20 million at the end of the June 2016 quarter. However, the stock has already risen 9.5% in the last five days alone (as on July 12, 2016). On the other hand, we believe that the heavy rally in the stock this month placed the same at higher levels.
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Recommendation: We believe that the stock is “Expensive” at the current price of $6.36
Western Areas Ltd
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WSA Details
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Focusing on Cost Reduction: Western Areas Ltd (ASX: WSA) stock rose 13.2% on July 13, 2016. Meanwhile, the company has recently raised $60 million which was heavily oversubscribed. Moreover, WSA has reduced cash cost of $0.19/ lb in FY15 and more in 1HFY16 while deferred $34m of capital costs from FY16 to FY17 as the Mill Enhancement Project got deferred for six months. Additionally, WSA improved the cost guidance range by A$0.05/lb due to strong first half 2016 performance, and is on track to deliver FY16 guidance given the recovery in the nickel prices. WSA has already positioned to a low nickel prices environment and the recent commodity recovery would further drive the group’s business.
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Recommendation: Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $3.01
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Low Cost Operations to weather cyclical low nickel prices (Source: Company Reports)
Sims Metal Management Ltd
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SGM Details
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Improved Performance: Sims Metal Management Ltd (ASX: SGM) stock rose 6.1% on July 13, 2016 with rise in commodity prices. SGM expects the underlying EBIT for the second half of FY16 to be between $55 to $65 million, with the majority of the earnings to be achieved in the fourth quarter of FY16 due to improved performance of higher ferrous metal prices and stronger sales volumes. Meanwhile, SGM stock has risen 30.30% (as on July 12, 2016) in the last six months and trading at a reasonable P/E.
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Recommendation: Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $8.81, ahead of its results in August 2016.
NetComm Wireless Ltd
NTC Details
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Agreement with Nokia: NetComm Wireless Ltd (ASX: NTC) stock rose 3% on July 13, 2016 after signing of a Frame Purchase agreement with the Nokia for the fixed wireless devices with respect to their global FastMile initiative. This initiative offers operators with an end-to-end, LTE-based broadband internet services to suburban and rural areas, ensuring high data rates and guaranteed minimum throughput of coverage. This is a part of NTC’s wireless’ global fixed wireless growth strategy.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $2.76
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