.PNG)
WAM Capital Ltd
Strengthening capital position: WAM Capital Ltd (ASX: WAM) reported net tangible assets before tax of 197.61 cents as at November 30, 2016 but the portfolio performance was outperformed by 2.8% by the S&P/ASX All Ordinaries Accumulation Index in the month of November. WAM had raised over $20.34 million (9 million ordinary shares) via oversubscribed dividend reinvestment plan and $247.2 million via Share Purchase Plan. The capital raising initiatives were undertaken at a premium to the WAM’s net tangible assets (NTA) and increased the July pre-tax NTA by $20.0 million or 3.41 cents per share to a pre-tax NTA of 200.09 cents per share. Additionally, WAM in FY 16 reported a 85.7% increase in operating profit before tax to $132.3 million on the back of 21.6% increase in the investment portfolio, which outperformed by 19.6%. Meanwhile, WAM stock offers a lucrative dividend yield. We give a “Hold” recommendation on the stock at the current price of – $ 2.41
Vocus Group Limited (Vocus Communications Limited)
Agreement with Alcatel Submarine Networks: Vocus Communications Limited (ASX: VOC) last month announced about the appointment of Mark Wratten as it new CFO. VOC made an agreement (contract-in-force) with Alcatel Submarine Networks to construct the Australia Singapore Cable (ASC). The ASC project is expected to cost over US$170 million over the build period, which would take over 19 months to build, while the finishing of the project is targeted by August 2018. Meanwhile, VOC is expecting to receive Indefeasible Rights of Use (IRU) pre-payments of over $US100 million during the build period. The ASC project’s effective life is estimated to be a minimum of twenty-five years. VOC would further give the update on the progress of the ASC project in their upcoming 1H17 results in February 2017. VOC is also available at attractive levels as the stock has fallen 47.82% in the last six months as on January 11, 2017. We give a “Buy” recommendation on the stock at the current price of – $ 4.40
Crown Resorts Ltd
Legal decision in favor of CWN: Crown Resorts Ltd (ASX: CWN) stock has fallen 11.43% in the last three months as on January 11, 2017 due to the legal case. Millers Point Fund Incorporated had challenged the validity of the decision of the NSW Planning Assessment Commission (PAC) to approve the applications for the modification of the approved concept plan for Barangaroo and for the construction of the Crown Sydney Hotel Resort at Barangaroo South. On the other hand, CWN reported that Land and Environment Court of NSW has dismissed the legal challenge brought by the Millers, as an applicant. Moreover, CWN is continuing to construct Crown Sydney and targeting to finish the same by 2021. The group has announced that John Alexander has been appointed as the Executive Chairman with effect from February 2017. We give a “Hold” recommendation on the stock at the current price of – $ 11.83
Suncorp Group Ltd
Expanding health insurance range: Suncorp Group Ltd (ASX: SUN) and nib are launching a new private health insurance solutions in Australia through the SUN insurance and AAMI brands in Australia. This move is an extension to nib’s partnership. Moreover, SUN group is now focusing on customer-centric model to offer more personalized solutions to their clients. Pip Marlow is set to join the group as Chief Executive Officer Strategic Innovation in March 2017. SUN stock has risen 9.31% in the last three months as on January 11, 2017. We give a “Buy” recommendation on the stock at the current price of – $ 13.83
Spark New Zealand Ltd
Acquired remaining stake of Connect 8: Spark New Zealand Ltd (ASX: SPK) stock has risen 6.1% in the last three months as on January 11, 2017 but fell 3% on January 12, 2017 owing to some market volatility. The company has acquired the remaining 50% of the Connect 8 fibre construction business from its joint venture partner Vocus Communications. The acquisition would further strengthen SPK’s ability to help New Zealand businesses navigate a digital future as the fibre which Connect 8 constructs is gaining significance. We maintain a “Hold” recommendation on the stock at the current price of – $ 3.41
DUET Group
Building a major gas storage facility: DUET Group (ASX: DUE) has risen 16.46% in the last three months as on January 11, 2017. Duet confirmed the media release that DBP Development Group (DDG), a wholly owned subsidiary of DUE will build the largest gas storage facility in Western Australia (WA). The group had received an unsolicited, indicative, incomplete, non-binding and conditional proposal from Cheung Kong Infrastructure (CKI) to acquire 100% of DUE’s outstanding stapled securities at a price of $3.00 per stapled security, payable in cash. However, uncertainty prevails on receiving any binding proposal. DUE stock has a high dividend yield and we give a “Hold” recommendation on the stock at the current price of – $ 2.78
Rio Tinto Ltd
New productivity drive: Rio Tinto Ltd (ASX: RIO) committed to generating $5 billion of additional free cash flow over the next five years from a productivity drive as part of its long-term strategy. RIO has planned to raise the productivity across its $50 billion portfolio of assets by focusing on operational excellence to generate superior shareholder returns through the cycle. This is expected to generate a total $5 billion of further free cash flow by the end of 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017. Moreover, RIO is reshaping their portfolio and is going to sell the Lochaber smelter in Scotland for $410 million. Therefore, the total of agreed divestments in 2016 now stands at $1.3 billion. Additionally, RIO has reduced the capex for 2016 to less than $3.5 billion from previously announced $4 billion. 2017 production is expected to generate operating cash flow of around $10 billion based on Q3 2016 average prices. The investment in exploration continues in 17 countries and eight commodities. RIO stock has risen 17.07% in the last three months as on January 11, 2017. We give a “Buy” recommendation on the stock at the current price of – $ 62.87
National Australia Bank Ltd
Positioned to stand regulatory changes: National Australia Bank Ltd (ASX: NAB) is set to release its first quarter FY17 result on February 2017. NAB had reported for statutory net profit of $352 million in the FY 16, which is a fall of 94.4% due to the loss on sale for both CYBG PLC (CYBG) and 80% of NAB Wealth’s life insurance business. Excluding the discontinued operations, the statutory net profit has decreased 5.6% to $6.42 billion. On the other hand, NAB in FY 16 has reported 4.2% growth in the cash earnings of $6,483 million. Moreover, on a cash earnings basis, the revenue grew 2.5%. NAB is also well-placed to meet the upcoming regulatory change and is responding to the changes resulting from the Government’s Financial System Inquiry and Basel III, but there is likely regulatory change in the future. NAB stock has risen 25.69% in the last six months as on January 11, 2017. We give a “Buy” recommendation on the stock at the current price of – $ 31.52
Australia and New Zealand Banking Group Ltd
Simplifying business and selling stake in Shanghai Rural Commercial Bank: Australia and New Zealand Banking Group Ltd (ASX: ANZ) has reached 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 bank has also agreed to sell UDC Finance (asset finance business of ANZ Bank New Zealand) to HNA Group at sale price of NZ$660m, as part of an effort to simplify business. ANZ stock has risen over 30.43% in the last six months as on January 11, 2017. The stock is available at a decent dividend yield of 5.12% and we maintain a “Buy” recommendation on the stock at the current price of – $ 31.24
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 that of 2016. The group plans to establish a small shareholding sale facility for shareholders with holdings valued at $500 or less. This will be established post release of half year results expected on February 22, 2017. IAG stock has risen 9.2% in the last three months as on January 11, 2017. We give a “Hold” recommendation on the stock at the current price of – $ 6.19
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