Mayne Pharma Group Ltd
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MYX Details
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Raising capital to fund its Teva and Allergan acquisitions: Mayne Pharma Group Ltd (ASX: MYX) stock surged over 28.3% on June 30, 2016 as the group finished an Entitlement Offer to raise over A$634 million. The group intends to raise a total of over A$888 million equity raising (the Offer) to fund the acquisition of US generic product portfolio of Teva Pharmaceutical Industries Limited and Allergan plc. With these acquisitions, the group would add 37 approved and 5 FDA filed products. Moreover, the group reported that their acquired Portfolio has 6 pipeline products with target markets of IMS Health sales with more than US$700 million. Most of the acquired Portfolio pipeline products would commence in the next 2 years and are technically challenging to manufacture. Meanwhile, MYX stock has already surged over 54.7% in the last one year (as of June 29, 2016) placing the stock at higher valuations. With today’s surge the stock is trading at an unreasonable P/E against its peers.
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Recommendation: Looking at some of the key factors, we believe that the stock is “Expensive” at the current price of $1.905
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Diversifying portfolio via acquisitions (Source: Company reports)
Seven Group Holdings Ltd
SVW Details
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Strong dividend yield: Seven Group Holdings Ltd (ASX: SVW) stock surged over 9.8% on June 30, 2016. The recovering commodity prices on easing fears of Brexit drove the stock higher. Moreover, the group has been diversifying its investments and recently reported that it increased its voting power to 18.4% in Capilano Honey from 17.35%. SVW has been consolidating this year and slightly fell over 1.97% (as of June 29, 2016) in the last four weeks.
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Recommendation: Having a strong dividend yield, we give a “hold” on the stock at the current price of $6.01
Seven Group Holdings diversified portfolio (Source: Company Reports)
Western Areas Ltd
WSA Details
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Recovering commodity prices drove the stock: The shares of Western Areas Ltd (ASX: WSA) surged over 7.5% on June 30, 2016 driven by the sharp recovery in nickel and other metal prices. WSA is among a low cash cost nickel producer and has higher grade assets. The group raised over $60 million of equity which was oversubscribed, indicating the confidence of investors on WSA. WSA also enhanced its balance sheet flexibility with A$50 million ANZ facility. The group is planning short term explorations to drive organic growth while expanded portfolio via Cosmos acquisition. Meanwhile, the group’s non-Executive Director, Mr Julian Hanna, resigned from the Board. WSA earlier reported that A$1/lb lift in nickel price would generate a circa A$35m EBITDA.
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Recommendation: We believe that WSA has the potential to recover further in the coming months, and give a “Buy” recommendation on this dividend yield stock at the current price of $2.15
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Low cost operations producer (Source: Company reports)
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