Mortgage Choice Ltd
Expanding network: Mortgage Choice Ltd (ASX: MOC) stock has risen 8.37% in the last three months (as on February 15, 2017). This rally was partly driven by their decent FY 16 results which reported for a 10.7% growth in the NPAT on a cash basis to $20.5 million. MOC’s core broking business grew 6.3% as the settlements totaled $12.2 billion. For the first time MOC’s average annual monthly settlements exceeded $1 billion. MOC’s loan book crossed the $50 billion milestone, growing to $51.7 billion, a growth of 4.4% on FY15. Moreover, the Franchisee revenue grew 7% from FY15 and there was strong network growth, with more than 600 credit representatives in the field for the first time. We give a “Hold” recommendation on the stock at the current price of – $ 2.45
Insurance Australia Group Ltd
Finalized 2017 catastrophe reinsurance: Insurance Australia Group Ltd (ASX: IAG) has finalized its catastrophe reinsurance program for CY 2017, which is made in a similar manner to prior years. The program will provide the gross reinsurance protection of up to $7 billion, which is also same as in 2016. IAG’s 2017, catastrophe reinsurance program contains an increased multiyear component that involves several counterparties as compared to 2016. The combination of all catastrophe covers in place at January 01, 2017 results in post-quota share first event retentions of $200 million for Australia, NZ$200 million for New Zealand, $20 million for Thailand and Malaysia, and approximately $1 million for Vietnam and Indonesia. The group also intends to establish a small shareholding sale facility for shareholders with holdings valued at $500 or less, post the release of half-year results to 31 December 2016 due on 22 February 2017. IAG stock has risen over 11.75% in the last three months as on February 15, 2017 and has a decent dividend yield. We give a “Hold” recommendation on the stock at the current price of – $ 5.99
National Australia Bank Ltd
Issuing NAB Subordinated Notes 2: National Australia Bank Ltd (ASX: NAB) has recently released its replacement prospectus on NAB Subordinated Notes 2 offer. NAB has enhanced the size of its offer of NAB Subordinated Notes 2 from $750 million to at least $800 million after the successful completion of the Bookbuild. Moreover, NAB has set the margin at 2.20% per annum, the low end of the indicative margin range of 2.20% - 2.30% per annum. The offer opened on February 16, 2017. For first quarter 2017, the group announced for unaudited cash earnings of $1.6 billion, which is approximately 1% lower than the quarterly average of the September 2016 Half Year result and 1% lower than the prior corresponding period. Revenue surged about 1% owing to growth in lending and higher trading income. Meanwhile, NAB stock has risen 16.25% in the last six months (as on February 15, 2017). Given the prospects, we give a “Buy” recommendation on the stock at the current price of – $ 31.83
Suncorp Group Ltd
Decent half year performance: Suncorp Group Ltd (ASX: SUN) reported for NPAT growth of 1.3% to $537 million for the half year ended December 31, 2016, while the dividend grew 10% to 33 cents. The top line growth of 4.3% was recorded. SUN has performed well against the three priorities of Maintaining Stability and Momentum, Elevating the Customer and Recalibrating Costs. Moreover, SUN is expecting some margin growth in the future. SUN is broadening the customer relationships, while targeting for flat cost base in FY17 and FY18, improving the underlying NPAT and looking for sustainable ROE of at least 10%. SUN stock has a decent dividend yield and we give a “Buy” recommendation on the stock at the current price of – $ 13.72
Australia and New Zealand Banking Group Ltd
Offloaded Shanghai Rural Commercial Bank stake: Australia and New Zealand Banking Group Ltd (ASX: ANZ) made an agreement to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB) to China COSCO Shipping Corporation Limited and Shanghai SinoPoland Enterprise Management Development Corporation Limited. Based on the agreement, COSCO and Sino-Poland Enterprise would each acquire 10% of SRCB for a total consideration to ANZ of RMB9,190 million (A$1,838 million). Additionally, the sale would enhance their APRA CET1 capital ratio by about 40 basis points. The group also agreed to sell UDC Finance. The group is set to release its trading update on February 17, 2017. We give a “Buy” recommendation on the stock at the current price of – $ 30.21
Platinum Asset (Investment) Management Ltd
New Irish UCITS fund range started in November: Platinum Asset Management Ltd (ASX: PTM) reported for $23,135.8 million as its Funds Under Management (FUM) in January 2017, which is slightly lower than $23,178 million of December 2016. The group’s New Irish UCITS fund range, Platinum World Portfolios, started in November, and the group has FUM of US$25m over three funds (International, Asia, Japan). Moreover, the average FUM and fee revenues fell over 1% for FY 16 due to China volatility and Brexit. PTM in FY 16 reported a 6% fall in the profit after tax to $199.9m due to lower FX gains, higher staff costs and increased business development spend. However, the margins remained attractive at 82%. We give a “Buy” recommendation on the stock at the current price of – $ 5.00
Magellan Financial Group Ltd
Strong long-term track record: Magellan Financial Group Ltd (ASX: MFG) released its interim results for period ending December 31, 2016 and reported for 10% rise in average funds under management to $42.9 billion while management and services fee revenue surged up 10% to $146.1 million. However, the group reported a 20% slip in after tax profit to $87 million from 1H 2016 owing to lower than expected performance fees. Even earnings per share dropped 21%. As a result, the stock fell 4.5% on February 16, 2017. On the other hand, the retail net inflows continued to be strong. MFG reported net inflows of $339 million for the month of January 2017. MFG has built a long term positive track record, wherein their fund returns have been typically better than benchmark indices. We give a “Hold” recommendation at the current price of – $ 24.03
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