Fortescue Metals Group Limited
Industry: Metals and Mining
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FMG Details
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Strong cash flow: The shares of Fortescue Metals Group Limited (ASX: FMG) corrected over 6.25% on April 26, 2016 as the iron ore prices have been correcting after delivering an outstanding performance last week. On the other hand, the group’s productivity and efficiency enhancements led to solid cash flows during the quarter improving cash balances to US$2.5 billion as of March 2016 while decreased net debt to US$5.9 billion. Given the recovering scenario in China, decrease in cash costs by the group coupled with improving efficiency efforts would sustain the stock in the coming periods.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $3.15
Decrease in cash costs (Source: Company Reports)
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27Apr ‘ 2016
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REA Group Limited
Industry: Consumer Discretionary
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REA Details
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Acquisition of Flatmates.com: REA Group Limited (ASX: REA) stock surged over 3.76% on April 26, 2016 on news of the group’s 100% acquisition of Flatmates.com.au which is a leading player for share accommodation in Australia. REA has been aggressively expanding its international position and this acquisition would further boost its domestic as well as international expansion. The group is considering the acquisition for $25 million plus potential earn out payments for the next two years based on Flatmates financial performance. Flatmates site gets an average of 2.6 million visits and around 9 million flatmate searches monthly while REA intends to leverage the booming share accommodation segment in the Australia wherein the traffic rose by around 50% on a year over year basis.
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Recommendation: We maintain our “HOLD” recommendation on REA at the current price of $52.04
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