Three Blue-Chip stocks - National Australia Bank Ltd, BHP Billiton Ltd and CSL Ltd

National Australia Bank Ltd.

NAB Details

Recently, Moody’s has downgraded the long-term ratings of NAB to Aa3 from Aa2 and the outlook was revised to stable from negative. On levies front, based on what the Government has announced in recent budget, the tax could cost NAB approximately $350 million annually, or $245 million post tax. However, the actual cost will not be known until the final legislation for the tax has been passed and bank can fully assess its impact on NAB’s business.

For H1FY17, NAB reported a 2.3% increase in cash earnings on the back of lending and trading income, while there was a 0.8% rise in costs owing to higher redundancy and general expenses (technology depreciation costs). The total bad debt increased by $19 million to $394 million and included an increase in provision overlays of $89 million for potential risks relating to the commercial real estate portfolio. Further, net interest margin fell by 11 basis points.  Banks Common Equity Tier 1 (CET1) ratio stood at 10.1% as at 31 March 2017, an increase of 42 basis points in H1FY16. Importantly, the group has provided a subdued growth outlook due to challenges in the operating environment. In last three months, the stock has declined 11.6% in line with the peers owing to negative developments in the sector. We give a “hold” recommendation on the stock at the current market price of $29.52


NAB Daily chart; Source: (Thomson Reuters) 

BHP Billiton Ltd.

BHP Details
BHP has approved a total of US$250 million (BHP Billiton Brasil) in financial support for the Renova Foundation and Samarco Mineração S.A. (Samarco) until 31 December 2017. The amount of US$174 million will be used to fund the Renova Foundation for remediation and compensation programs identified under the Framework Agreement. Further, this amount will be offset against the Group’s provision for the Samarco dam failure. A short-term facility of up to US$76 million (BHP Billiton Brasil’s share) will be made available to Samarco to carry out remediation and stabilization work and to support Samarco’s operations.

On 18 January 2017, Samarco and its shareholders, Vale S.A. (Vale) and BHP Billiton Brasil entered into a preliminary agreement with the Federal Prosecutors’ Office in Brazil (Federal Prosecutors) in relation to the Samarco dam failure. The Preliminary Agreement outlines the process and timeline for negotiation of a settlement of the BRL155 billion (approximately US$47.5 billion) and BRL20 billion (approximately US$6.1 billion) Public Civil Claims relating to the dam failure. The Preliminary Agreement also provides for the appointment of experts to advise the Federal Prosecutors in relation to environmental and socioeconomic impact assessment and review of the Programs being implemented by the Renova Foundation under the terms of the Framework Agreement. The stock declined by 7.1% in the last six months, while it was up 24.8% in the last one year. Given the ongoing project developments and production efficiency measures, we maintain a “Buy” recommendation on the stock at the current market price of $23.23


BHP Daily chart; (Source: Thomson Reuters) 

CSL Ltd.

CSL Daily chart

Recently, CSL Limited (ASX: CSL) has announced that the U.S. Food and Drug Administration (FDA) has approved CSL Behring’s HAEGARDA (C1 Esterase Inhibitor Subcutaneous), the only subcutaneous therapy indicated for routine prophylaxis to prevent hereditary angioedema (HAE) attacks in adolescent and adult patients. HAE is a rare, genetic, and potentially life-threatening condition that causes painful, debilitating, and unpredictable episodes of swelling on the body, including the abdomen, face, larynx, and extremities. HAEGARDA is a self-administered, plasma-derived concentrate of C1 esterase inhibitor (C1-INH) injected twice weekly subcutaneously. Notably, the FDA approval of HAEGARDA is an important milestone for the HAE community because it addresses the primary need of patients to effectively prevent debilitating HAE attacks.  The stock has moved up 37.5% in last six months (as at July 03, 2017) and is trading near its 52-week elevated levels.We give an “Expensive” recommendation at the current price of $135.27


CSL Daily chart; (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.