Sigma Healthcare Ltd. (ASX: SIG)

SIG Details

Expanding footprint in healthcare: Sigma Healthcare Ltd., the retail pharmacy group, enjoyed a share price rally of 2.9% on September 07, 2017 as it announced a major acquisition of Australia’s largest provider of medication management services, Medication Packaging Systems (MPS), for aged care residents for $18.5 million. This deal is said to be completed by end of September 2017 and will be earnings accretive from the first full year. Along with the acquisition news, SIG has released its half year results with 1H18 underlying EBIT falling 8.7%, not in line with the group’s expectation of EBIT growth of at least 5% for two years. SIG’s gross profit is also down 0.3%to $141.4 million.
 

Result Summary (Source: Company Reports)
 
As highlighted earlier in the month of August 2017, Sigma has faced a number of challenges during 1H18 impacting its current half year underlying performance. However, the group expects to manage them well through to FY18 while benefitting from strategic investments. SIG also intends to continuously invest in its infrastructure across Australia. On the other hand, Sigma has reaffirmed its downgraded full-year earnings guidance to $90 million from $95 million. It might be better to wait for some indications on upside potential.We believe that the stock is “Expensive” at the current price of $ 0.88


SIG Daily Chart (Source: Thomson Reuters) 

Iluka Resources Ltd (ASX: ILU)

ILU Details

Improved cash flow scenario: Shares of Iluka Resources Ltd witnessed the needle moving up about 4.1% on September 07, 2017 with positive sentiments emanating on the supplier of metals and rare earth minerals. In last six months, the stock has surged 30.9% (as at September 06, 2017) and is peaking towards its 52-week high price given commodity price movements and financial performance. For six months ended June 2017, ILU reported for a robust free cash flow of $180 million while its net debt reduced by 40% to $305 million. Rise in Zircon Premium and Standard weighted average price boosted the performance and there was 147% growth in underlying EBITDA to $155 million while sales volumes of high value products zircon, rutile and synthetic rutile (Z/R/SR) soared up 43%. However, the group reported for an impairment charge of $151 million in relation to the Hamilton mineral separation plant (MSP). This along with expenses led to net loss after tax of $82 million. On the other hand, ILU has enhanced Z/R/SR production guidance for 2017 from 720kt to 795kt at the back of the stronger zircon and rutile production. The group is expected to report modest growth over next few years. Given the decent prospects keeping the trading scenario in view, we give a “Hold” at the current price of $ 9.70


ILU Daily Chart (Source: Thomson Reuters)

Galaxy Resources Ltd (ASX: GXY)

GXY Details

Lowering production cash costs at Mt Cattlin: Galaxy Resources’ stock moved up about 14.7% in last five days (as at September 06, 2017) and the momentum continued with 4.13% rise on September 07, 2017. In its half yearly result update, the group had reported that its Mt Cattlin spodumene project has transitioned into commercial production as of May 01, 2017 as the group had finished the ramp up and commissioning of the plant by the end of April 2017. The average production cash costs were US$391/dmt for the half year (excluding royalties and marketing fees) and the group intends to reduce the costs as further efficiencies are achieved with full production rates maintained.The run-rate has improved across the half year with spodumene production of about 14,038t in June 2017; and this equates to an annual run rate of 168,000 tonnes. GXY has also made a total of four shipments of lithium concentrate during the half year.
 

Production and Sales (Source: Company Reports)
 
The group’s half-year revenue has been of the order of $14,975,000 while half-year loss after tax is of $6,481,000. On the development side, assays from the 2017 drilling campaign at the James Bay Project in Quebec, Canada, confirmed the extent and continuity of spodumene mineralization. We expect more run-up in the stock given the developments at Mt Cattlin, cash costs reduction and improved production. We maintain a “Buy” at the current price of $ 2.27


GXY 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.