Sonic Healthcare Limited

Increase in Debt: Sonic Healthcare Limited (ASX: SHL) reported a net profit growth of 30% to A$451 million in FY 16, on revenue growth of 20% to A$5,052 million. SHL reported underlying EBITDA of A$831 which fell in line with the guidance of A$815-840 million. Additionally, SHL expects 5% growth for underlying EBITDA in FY 17. But, there has been debt increase due to FX changes of about A$60 million and acquisitions. However, lease-back of two properties would enhance the capital structure. On the other hand, there was a negative growth in the earnings of the Australian business in FY 16 due to the impact of specimen collection infrastructure costs and Medicare fee cuts. Imaging earnings were affected by low market growth. SHL stock has fallen 3.89% in the last six months (as on January 18, 2017), while trading at a slightly higher level. We give an “Expensive” recommendation on this dividend yield stock at the current price of – $ 21.07 

Lendlease Group

Partnership with Clean Energy Company: Lendlease Group (ASX: LLC) has inked a joint venture 50/50 partnership with Carnegie Clean Energy Limited for delivery of solar photovoltaic, battery energy storage systems and microgrids through EPC contracts in Australia. Carnegie has recently raised $5 million to fast track its project pipeline under the JV with LLC. Lendlease stock has risen 11.16% in the last six months (as on January 18, 2017). The company has reported a 13% growth in the profit after tax to $698.2 million in FY 16. LLC delivered a 13% growth in the pre-sold residential revenue to $5.9 billion. LLC has established the $400 million managed investment vehicle and 11% growth in the Funds under Management (FUM) to $23.6 billion. Moreover, LLC has posted 20% growth in the construction backlog revenue to $20.7 billion. There is a double-digit growth in new work secured across each of Building, Engineering and Services. The group has appointed Philip Coffey to its Board lately. We give a “Hold” recommendation on the stock at the current price of – $ 13.89

Caltex Australia Limited

Purchase of Gull New Zealand: Caltex Australia Limited (ASX: CTX) has slipped 7.5% in last three months (as of January 18, 2017). The group was disappointed post Woolworths’ announcement about the sale of its fuel business to BP and WOW’s strategic partnership with BP. CTX had expressed interest for WOW’s fuel business. On the other hand, CTX has entered into an agreement to purchase Gull New Zealand for NZ$340 million (approximately A$325 million). As a result, CTX would acquire Gull’s Mount Maunganui import fuel terminal and retail operating assets. The group has forecasted that on a Historic cost profit after tax (HCOP) basis, it expects an after tax profit in the range of $560 million to $580 million for the 2016 full year as opposed to $522 million of 2015.CTX has a decent dividend yield and we give a “Hold” recommendation on the stock at the current price of – $ 30.29

REA Group Limited

Strategic investment in India: REA Group Limited (ASX: REA) has announced about its strategic investment in India by acquiring a 14.7% strategic stake in PropTiger, which is a leading digital real estate marketing platform in India. From asset structuring standpoint, the group had agreed to sell its European businesses for $189.7 million to the UK’s Oakley Capital Private Equity. Meanwhile, REA stock has fallen 12.61% in the last six months and has risen 4.6% in the last one month (as on January 18, 2017). We give a “Hold” recommendation on the stock at the current price of – $ 56.31

Santos Limited

Completed the two?well gas development program in the Allunga Field: Santos Limited (ASX: STO) reported that their South Australian Gas-SACB JV (in which STO has 66.66% stake) has completed the two?well gas development program in the Allunga Field in December 2016. The results are in line with pre?drill estimates and supporting potential follow?on drilling as part of a broader field development plan. However, Windigo?3 was drilled and later cased and suspended as a future producer. The results were in?line with pre?drill estimates. The group had sold 50% of its remaining interest in Mereenie oil and gas field to Macquarie. In December 2016, STO launched a share purchase plan offer to raise $500 million and the same will close by January 31, 2017. Looking at the prospects, we give a “Buy” recommendation on the stock at the current price of – $ 4.11

Computershare Limited

Resilient financial performance in FY 16: Computershare Limited (ASX: CPU) reported a 7.9% fall in the Management earnings per share (EPS) of 55.09 cents in FY 16, which is in line with guidance. In constant currency terms, the Management revenue is up 5.0% at $2,074.7 million and the Management EBITDA is up 0.5% to $557.1 million. The register maintenance and corporate actions EBITDA is up 2.6% to $277.5 million, while the business services EBITDA is up 13.9% to $153.6 million. In addition, CPU expects FY17 Management EPS to be slightly up on FY16. But, the employee share plans EBITDA is $58.9m, which is down 20.8% primarily due to a substantial reduction in the transaction volumes after a period of sustained market volatility. The significant additional headcount from acquisitions, change in revenue mix and investment in product development, innovation, risk and compliance has led to higher costs, which is up 6.8%. Meanwhile, CPU stock has risen 40.89% in the last six months (as on January 18, 2017) placing them at a higher P/E. We give an “Expensive” recommendation on the stock at the current price of – $ 12.48

TPG Telecom Limited

Expanding in Singapore: TPG Telecom Limited (ASX: TPM) became the successful bidder at the New Entrant Spectrum Auction in Singapore and has acquired all of the spectrum available at the auction (being 2 lots of 2x5MHz of 900MHz spectrum and 8 lots of 5MHz of 2.3GHz spectrum) for a total purchase price of S$105m. Moreover, TPM expects to incur the capital investment in the range of S$200m to S$300m for the establishment of a mobile network with nationwide coverage by September 2018. Trading at decent dividend yield, we give a “Buy” recommendation on the stock at the current price of – $ 7.02

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