Our picks in the mid-cap and small-cap categories

Lend Lease Group

LLC Dividend Details
 
Developing a solid pipeline: Lend Lease Group (ASX: LLC) recovered over 11.1% in the last four weeks (as of March 18, 2016) as the group delivered strong first half of 2016 performance despite the challenging economic conditions. LLC’s Profit after tax rose by 12% to $353.8 million during the half year ended on December 2015 against prior corresponding period (pcp). Development pipeline reached $46.6 billion while the group’s sales for residential projects at Victoria Harbor in Melbourne and Elephant & Castle in London contributed to the solid performance during the period. LLC got planning approvals at Chicago for a new urban regeneration project.
 

First half of 2016 performance (Source: Company Reports)
 
Residential pre sales witnessed outstanding momentum wherein the residential settlements increased by 45% to 2,128 while Residential pre sales surged 49% to $5.4 billion. Construction global backlog revenue increased 19% to $18.6 billion and LLC won $6.1 billion worth of new work. We believe that LLC is trading at cheaper valuation. Accordingly, we recommend investors to “HOLD” this dividend yield stock at the current price of  $14.20
 
 
LLC Daily Chart (Source: Thomson Reuters)
 

Virtus Health Ltd

VRT Dividend Details
 
Strong core and international operations performance despite Singapore pressure: Virtus Health Ltd (ASX: VRT) Australian EBITDA rose 6.2% to $39.0 million in the first half of 2016 driven by 8,509 fresh cycles, which represents 11.0% increase against pcp. The Premium clinics delivered an organic increase by 3.2% while the total TFC volumes rose 19% as compared to pcp. But, the International Operations also reported an outstanding EBITDA increase by 98% to $2.4 million even though the group’s Singapore EBITDA reported a loss of $0.6 million. Ireland EBITDA surged by 15.6% on a yoy basis which delivered 1,148 cycles in Ireland.
 

Diversifying revenue base (Source: Company Reports)
 
Even Singapore utilization improved which generated 124 cycles during the first half.  VRT stock has been consolidating since the last three months and we believe that the stock has the potential to rise in the coming months. Trading at an attractive P/E, we place a “BUY” on this dividend yield stock at the current price of $6.17
 
 
VRT Daily Chart (Source: Thomson Reuters)
 

Fairfax Media Ltd

FXJ Dividend Details
 
Expanding portfolio: Fairfax Media Limited (ASX: FXJ) stock corrected over 7.8% (as of March 18, 2016)  in the last three months as the group denied reports over its interest in NEC. But, Fairfax Media has been expanding its portfolio via its Domain Group investments, Life Media & Events portfolio expansion coupled with radio assets mergers. Recently TopBetta signed commercial advertising deal with FXJ. With regard to 2016 half year results, the company’s group revenue for continuing operations rose by 2.8% with underlying EBITDA rising by 2% for continuing business though NPAT was down 2.2%. Meanwhile, FXJ surged over 6.5% in the last five days (as of March 18, 2016) and we issue a “BUY” for this dividend yield stock at the current price of  $0.835
 
 
FXJ Daily Chart (Source: Thomson Reuters)
 

Spotless Group Holdings Ltd

SPO Dividend Details
 
Improving pipeline: Spotless Group Holdings Ltd (ASX:SPO) stock crashed over 50% in the month of December 2015 after the group issued an update of lower than estimated growth from its new business wins for 2016. Accordingly, SPO reported an NPAT decrease by 20% yoy in the first half of 2016 even though the underlying revenue and EBITDA rose by 23% and 19%, respectively.
 

Strong renewals with limited risk in the second half (Source: Company Reports)
 
On the other hand, SPO delivered $400 million of annual revenues in wins/ renewals during first half of 2016. Moreover, the group is trading at very cheaper valuations with a low P/E. SPO also has a strong dividend yield.  We give a “SPECULATUVE BUY” recommendation on this stock at the current price of $1.205
 
 
SPO Daily Chart (Source: Thomson Reuters)
 

FlexiGroup Ltd

FXL Dividend Details
 
Attractive opportunity: FlexiGroup Ltd (ASX: FXL) finished the acquisition of Fisher & Paykel Finance from Fisher & Paykel Appliances. Accordingly, FXL management reported that they would include this acquisition contribution to its fiscal year of 2016 Cash NPAT. The company thus indicated to increase the FY16 Cash NPAT guidance and FY16 dividend is expected within 50-60% of Cash NPAT.
 

First half of 2016 performance (Source: Company Reports)
 
As a result, FXL stock surged over 14% in the last four weeks (as of March 18, 2016). Still the stock is trading at very attractive valuations with a cheaper P/E as compared to its peers. FlexiGroup has a strong dividend yield. Based on the foregoing, we give a “BUY” recommendation on this stock at the current price of  $2.58
 
 
FXL Daily Chart (Source: Thomson Reuters)
 

Cedar Woods Properties Ltd

CWP Dividend Details
 
Improving outlook: Cedar Woods Properties Ltd (ASX: CWP) expects to deliver a profit of over $43 million for fiscal year of 2016 as compared to $42.6 million in FY15. Management forecasts a better second half of 2016 driven by solid pre-sales of $176 million. Moreover, CWP’s solid project pipeline at Queensland, Victoria and Western Australia would also drive its FY2017 performance.
 

Strong project pipeline (Source: Company Reports)
 
The group is trading at very cheaper valuations with a lower P/E and has a strong dividend yield. CWP stock recovered over 23.9% in the last three months (as of March 18, 2016) and we believe this positive momentum in the stock would continue in the coming months. Accordingly, we give a “BUY” at the current price of  $4.60
 
 
CWP Daily Chart (Source: Thomson Reuters)

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