Syrah Resources Ltd

          SYR Details
 
Positive prospects for the Balama project: Syrah Resources Ltd (ASX: SYR) rose over $211 million of capital to fund the development of its Balama project. The group is also making sales negotiations with several graphite traders and end customers. SYR is continuously getting positive feedback from the potential clients on higher quality of Balama spherical graphite promising solid prospective. Syrah Resources reported that the project development activities of Balama is on track and estimates to start the production by next year end and production ramp up by the first quarter of 2017. As per the September quarter updates, construction license has been sought with earthwork and civil work being started for processing the plant site. SYR plans to complete substantial work before the wet season in November 2015. Even the front end engineering design is complete and important long lead capital items have been ordered.


Balama Processing Plant (Source: Company Reports)
 
Syrah estimates its Balama project to produce over 270,000 tonnes of +95% graphite for world markets in 2017. The group scheduled the production of the project at 356,000 tonnes per annum (tpa) for the first 10 years. The group reported a proven and probable ore reserve of 81.4 Mt at an average grade of 16.2% total graphitic carbon. SYR received the necessary government approvals and made a three year Offtake Agreement with China Aluminum International Engineering Corporation for 80,000 tpa. Syrah Resources also entered in to an MOU with Marubeni Corporation.
 


Key Feasibility Study for Balama Project (Source: Company Reports)
 
The shares of Syrah Resources surged over 7.17% (as of November 09, 2015) in the last five days and we believe the positive momentum in the stock would continue in the coming months given solid Balama project prospects. Based on the foregoing, we give a BUY recommendation on the stock at the current price of $3.22
 
 
SYR Daily Chart (Source: Thomson Reuters)
 

Spotless Group Holdings Ltd

      SPO Dividend Details
 
Building clients and acquisitions to enhance performance: Spotless Group Holdings Ltd (ASX: SPO) statutory revenues rose 9.6% year on year (yoy) to $2.8 billion during the fiscal year of 2015, driven by its bolt on acquisitions and organic growth. Spotless Group cost savings efforts and efficiency programs since last three years have improved its statutory EBITDA by 70.2% yoy to $316.4 million in FY15. The group is developing a long term client base and has renewals of over $1,300 million per annum and achieved over $350 million per annum of new contract wins. SPO’s contracts have a combined average tenor of ~27 years, offering a long-term security to SPO’s revenue stream. Spotless Group is also on acquisition spree and accordingly finished Aladdin Laundry, International Linen Service and TechGuard Security acquisitions during the first half of fiscal 2015. Spotless Group also acquired Utility Service Group, which is Australia’s leading provider of retail meter reading and installation services, with annual revenues of $200 million at the time of acquisition.
 

Growing revenue and EBITDA base over the last few years (Source: Company Reports)
 
SPO is also acquiring AE Smith, Australia’s leading air-conditioning and mechanical services provider, which has $100 million of annual service and maintenance revenues. Meanwhile, the shares of Spotless Group delivered a returns of about 8.54% in the last three months (as at November 04, 2015) and we believe the stock has the potential to rise in the coming months. The annual dividend yield of 4.69% is also attractive. The group has issued a positive outlook and expects an incremental annualized revenue of over $130 million from projects achieving a full operational phase during FY16 and FY17. Based on the foregoing, we reiterate our BUY recommendation on the stock at the current price of  $2.08
 
 
SPO Daily Chart (Source: Thomson Reuters)
 

Skydive Beach Group Ltd

                 SKB Dividend Details
 
Improved outlook: Skydive Beach Group Ltd (ASX: SKB) enhanced its EBITDA to $13.5 million for the fiscal year of 2016 against its earlier EBITDA estimates of $11.5 million. Skydive estimates greater than 130,381 tandum skydives and revenue of $54.9 million in FY16 which includes Australia Skydive acquisition impact (the effects of this acquisition contribution started from the final quarter of FY2015 and SKB acquired Australia Skydive in March). Skydive is developing its business through acquisitions and even recently acquired Skydive Queenstown for over $15.5 million, which is a New Zealand’s skydiving company with 33% of share. Skydive Queenstown locations delivered 29% increase of international visitors in fiscal year of 2015.
 

SQ Tandem Skydive Growth (Source: Company Reports)
 
On the other hand, to fund its acquisitions the group made a retail entitlement offer for 3.21 million fully paid ordinary shares at a price of $0.3 per share for $963,715.3. The group also earlier made an institutional offer to raise over $19.58 million via 65.27 million shares under the entitlement offer. Meanwhile, Skydive delivered better FY15 performance than the prospectus with the revenues increasing by 46% yoy to $26.3 million in fiscal year of 2015 while its EBITDA rose by 35% yoy to $6.02 million.
 

Fiscal year of 2015 performance (Source: Company Reports)
 
Skydive reported a Tandem Jumps increase of 48% yoy to 61,069 during the year. SKB stock corrected over 9.47% since its listing but the shares have recovered over 12.09% in the last four weeks (as at November 09, 2015) driven by its improved guidance for FY16. We believe the stock is trading at a decent valuation and accordingly give a BUY recommendation on the stock at the current price of  $0.35
 
 
SKB Daily Chart (Source: Thomson Reuters)
 

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