IOOF Holdings Ltd

           IFL Dividend Details
 
Outstanding returns to shareholders and integration of SFG business: IOOF Holdings Ltd (ASX: IFL) has surged 6.17% year to date (as at November 30, 2015) and has indicated that 2015 was a successful year for the company with higher returns for shareholders. The company’s net flows of about $1.24 billion indicated organic growth in 1Q16 while Advice platform (SFG and IFL business) also witnessing positive net inflows of $509 million. With regards to the yearly results, there was 37% rise in statutory net profit at $ 138 million over the previous year while the underlying net profit after tax at $ 174 million surged by 41%. Dividends per share rose by 12% over the previous year with a total dividend of 53 cents per share fully franked and EPS surged by 13% over the previous year to 58.9 cents per share. The aforementioned indicated that shareholders received just over 90% of the underlying profit as dividend which is at the top end of the commitment of the company to return 60% to 90% of profits to shareholders every year.
 
The results clearly demonstrate the consistent strategy and the skill and discipline with which it has been implemented. In 2009, the company is fundamentally transformed through the merger with Australian Wealth Management and the integration of the Australian assets of Skandia. This provided the initial scale and basis for the core of a strategy to build an integrated financial services company based on superior advice and a contemporary suite of products and services.
 

Segment Profitability (Source: Company Reports)
 
The SFG Australia (or Shadforth as it is now called) business has been integrated successfully and is already delivering meaningful results. With this integration, the company is now the third largest non-bank wealth manager in the country and the Australian superannuation industry now ranks as the fourth largest pension market with assets in excess of $ 2 trillion. We believe that the company has a strong foundation to continue its growth and deliver value to shareholders. We would rate the stock as a Buy at the current price of $9.61
 
 
IFL Daily Chart (Source: Thomson Reuters)
 

Alumina Ltd

                   AWC Dividend Details
 
Point Comfort curtailed but growth expected from increase in Chinese Bauxite imports: Alumina Ltd (ASX: AWC) plunged 36.97% in the last six months while surging 3.69% in the last one month (as at November 30, 2015). The company recently highlighted the demand forecast for Alumina of about CAGR of 4.3% from 2014 to 2024. There are refining issues in the medium term. In China, issues are likely to be cost and availability of imported bauxite and the declining grades of domestic bauxite. In the rest of the world, issues are likely to be long lead times and low financial incentives for construction. There will be competitive advantages for refineries which have an integrated supply of bauxite. The company is different from other alumina producers in that its only asset is a 40% stake in Alcoa World Alumina and Chemicals which is the largest alumina producer in the world at the lowest quartile of cost as well as the largest bauxite producer with record production and an abundance of resources. Alcoa is delivering on its strategy to delink alumina pricing which was 75% in 2015 and 84% in 2016. The cost position is expected to improve from 25^th to 21^st percentile by 2016. Alcoa has curtailed Point Comfort (production reduced by 1,200,000 metric tons per year), closed the Point Henry smelter and sold Jamaica fully curtailing Suriname and started production at its low cost Saudi refinery to ensure competitiveness during tough market conditions. Thus, spare tons of bauxite would seem to be put into the export market. Nonetheless, Alumina Limited may be regarded as a unique opportunity for an almost pure investment in bauxite and alumina and its low debt and levels of growth investment provide for the maximum pass-through of dividends.
 

Aluminium demand and Primary aluminium production (Source: Company Reports)
 
The main drivers of global demand growth are electrical transmission in China and transport in China and the rest of the world. The capacity surplus in alumina is tightening and global capacity utilisation increased as the profitability in the industry has improved. 2016 depends on the view of expansion in Indonesia and Shanxi province where bauxite may become an issue. As regards imports by China, the Indonesian ban holds but Malaysia is effectively filling the gap and is expected to continue supply at low costs and margins. Constraints could be community and regulatory restrictions, upward cost pressures and sterilisation of resources. The company thinks that resources and reserves are limited and long-term supply is not sustainable. Because of the unique nature of the company, investors are not making a decision on the Australian prospects of the company but rather on the prospects of Alcoa. We believe that Alcoa is extremely well-placed to take advantage of the coming upturn in the market. AWC stock is trading close to its 52-week low price and offers an investing opportunity. We therefore recommend the stock as a Buy at the current price of $1.125
 
 
AWC Daily Chart (Source: Thomson Reuters)
 
 

Genworth Mortgage Insurance Australia Ltd

           GMA Dividend Details
 
Guidance reaffirmed and buy-back announced: Genworth Mortgage Insurance Australia Ltd (ASX: GMA) has corrected 23.51% year to date (as at November 30, 2015). The company announced its results for the third quarter of 2015 as well as the year to date. The guidance for FY 2015 has been reaffirmed with NEP growth at the top end of the guidance range and loss performance in line with expectations. However, the company reported that gross written premium declined by 20.8% to $ 124.7 million for the third quarter though net earned premium rose by 10.6% to $ 123.9 million and reported net profit after tax by 2.3% to $ 65.5 million against the third quarter of 2014. The underlying net profit after tax fell by 16.4% to $ 56.7 million. For the year to date for 2015, gross written premium fell by 13% to $ 410 million though net earned premium rose by 5.8% to $ 349.6 million. Reported net profit after tax declined by 17.1% to $ 178.5 million and underlying net profit after tax dropped by 5.7% to $ 191.6 million. The market conditions which affected gross written premium were a lower LVR mix affecting price and the performance and investment property lending which was at multi-year highs also. The earnings performance was resilient with net earned premium in-line with expectations and the reported net profit after tax include mark to market gains on the investment portfolio.
 

Dividends (Source: Company Reports)
 
The company completed a data enhancement project in order to refine its risk experience and this analysis has had minor implications for Net Earned Premium as well as the level of reserves for Insured but Not Reported claims. Net Earned Premium increased by 10.6% to $ 123.9 million and included benefit of $ 11.2 million of an actuarial revision from the data project. The year-to-date figure is 5.8% up on the previous year. The reported loss ratio of 33.6% for the quarter was negatively impacted by an impact of a $ 12.2 million increase in the Insured but Not Reported of the outstanding claims reserve. The outlook for 2015 is that the low interest rate environment continues to support strong housing market conditions and unemployment is largely unchanged despite GDP growth below trend. The company expects NEP growth of up to 5% and a full-year loss ratio of between 25% and 30%. As per the capital management initiatives, GMA also announced for an on-market share buyback in order to buy up to AUD 150 million worth of shares in the next one year. We think that the company will continue to be on a growth trajectory and that an investment in the stock is worth considering seriously. The stock is trading at a relatively cheap P/E ratio and has an outstanding dividend yield. We would rate the stock as a Buy at the current price of $2.60
 
 
GMA Daily Chart (Source: Thomson Reuters)

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