OZ Minerals Limited
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OZL Details
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Drilling programs at South Australia and Queensland:The shares of OZ Minerals Limited(ASX: OZL) surged over 5.3% on September 15, 2016 as their joint venture partner Minotaur Exploration reported new drilling programs (copper and other base metals) for South Australia as well as Queensland. The drilling programmes in these two states are performed from two distinct agreements. First agreement comprises Eloise JV, which is 55km south-east of Cloncurry wherein the group agreed to invest a minimum A$1.5m for initial fund drilling programs on Minotaur’s project tenements. OZL would than invest more A$3.5m into the Eloise project for the next two years for a 51% interest in the tenements. Moreover, OZL might invest more A$5m to earn up to 70% interest over the next three years. As per the second agreement at Prominent Hill mine, both Minotaur and OZ Minerals would each contribute up to $1.5 million to proof test agreed targets. Minotaur would get a 20% beneficial interest in any designated target and can earn more 10% beneficial interest by sole funding $2 million of exploration expenditure.
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Recommendation: OZL stock delivered over 44.2% during this year to date (as of September 14, 2016) and we maintain our “Hold” recommendation on this dividend yield stock at the current price of $5.98
Saracen Mineral Holdings Limited
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SARDetails
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Higher levels: Saracen Mineral Holdings Limited (ASX: SAR) stock surged over 5.7% on September 15, 2016 at the back of the gold price momentum. On the other hand, the shares of SAR already surged over 234.5% (as of September 14, 2016) in the last one year placing the stock at unreasonable levels as compared to its peers. There are several other value based gold peers in ASX which are trading at cheaper levels as compared to SAR. SAR stock is trading at a very high P/E.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $1.485
Reject Shop Ltd
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TRS Details
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Weak outlook at Western and South Australia stores:The shares of Reject Shop Ltd(ASX: TRS) surged over 9.3% on September 15, 2016 with support from a positive note from Morgan Stanley. The stock had fallen over 28.7% since the last four weeks, as the group delivered a lower than estimated performance. TRS sales rose 5.7% to $799.9m (inclusive of 53rd Trading) for fiscal year of 2016 against prior corresponding period, comparable store sales rose 3.0% for FY16 against prior year while NPAT delivered a better increase of 20.1% to $17.1 million. On the other hand, TRS reported a weaker outlook for their stores at Western and South Australia. TRS forecasts a similar sales momentum for first quarter of FY2017 as Q4 FY2016, driven by comparable store sales trends across the Eastern Seaboard and Tasmania.
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Recommendation: Despite the rally, we believe the stock performance would be under pressure in the coming months and give an “Expensive” recommendation at the current price of $11.02
Financial performance summary (Source: Company Reports)
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