Bellamy's Australia Ltd
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BAL Details
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Lucrative China potential despite challenges: Bellamy's Australia Ltd (ASX: BAL) stock rallied over 6.1% on July 08, 2016. The stock has been consolidating in the last three months and slightly rose by 3.6% in the last three months (as of July 07, 2016) after falling earlier. Bellamy’s competitor, a2 Milk Company has recently upgraded their earnings guidance, indicating that the Chinese regulations would have minimal impact on these infant formula producers. In fact, Bellamy’s is also well positioned to leverage the booming opportunity in China, wherein the whole baby industry is estimated to rise 11% with non-food categories improving over 17%. Infant milk formula (IMF) market in China rose even more by 21%. Accordingly, BAL has penetrated via nine distinct retail channels servicing infant formula customers and continuing their efforts to make strategic partnerships to win in China.
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Recommendation: We remain bullish on the stock and give a “Speculative Buy” at the current price of $11.00
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Bellamy’s sustainable growth in China (Source: Company Reports)
South32 Ltd
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S32 Details
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Competitive cost position: South32 Ltd (ASX: S32) surged over 5.2% on July 08, 2016 driven by the recovering commodity prices. The recent recovery in prices coupled with the group’s efforts to control costs would drive its performance further in the coming months. S32 targets to cut its controllable costs by US$300 million and capital expenditure by US$218 million by FY16. Most of the group’s operations are placed in the first quartile of the cost curve position, giving the company a solid competitive edge against its peers. S32 generated over 53.7% returns during this year to date (as of July 07, 2016).
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Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $1.73
Spark New Zealand Ltd
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SPK Details
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Upgrading customer service IT Platform: Spark New Zealand Ltd (ASX: SPK) stock surged over 4.902% on July 08, 2016. SPK’s has been divesting its non-core business and recently finished the sale of its US international voice business to MNF Group Limited after getting US government approvals. SPK finished a four-year long, $200 million program to upgrade its major customer service IT platforms.
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Recommendation: We maintain our “Hold” recommendation on the group at the current price of $3.62
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