Cleanaway Waste Management Ltd
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CWY Details
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Solid bottom line growth: Cleanaway Waste Management Ltd (ASX: CWY) stock surged over 15.5% on August 19, 2016 as the group came up with outstanding fiscal year of 2016 results. CWY reported a positive statutory profit after tax attributable to ordinary equity holders of $44.8 million during the period against statutory loss after tax of $23.6 million in the same period of last year. Net underlying profit after tax surged 38.5% year on year (yoy) to $63.3 million as the group’s new operating model simplified the organizational structure, coupled with cost reduction efforts that paid off. Revenue rose 5.1% yoy to $1,455.1 billion in FY16 while underlying EBITDA increased 21.6% yoy to $281.3 million. The group’s review of the rectification and remediation spend would enhance its targeted free cash flows over the next four years by over $30 million. Management reported that their Melbourne Regional Landfill (MRL) is delivering decent performance and accordingly submitted an extension application for the facility. On the other hand, CWY stock already rallied over 27.61% in the last four weeks (as of August 19, 2016) and is trading at a high P/E.
· Recommendation: We believe that the stock is “Expensive” at the current price of $1.04
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Fiscal year of 2016 performance (Source: Company Reports)
Ardent Leisure Group
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AAD Details
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Selling Health Clubs division: Ardent Leisure Group (ASX: AAD) stock surged over 10.8% on August 19, 2016 driven by the news of the group’s sale of its health division to funds advised by Quadrant Private Equity. The group’s Health Clubs division has Goodlife Health Clubs and Hypoxi segments. With this move, the group would be generating $260 million on a cash?free, debt?free basis. The group is selling these assets at premium price to the carrying value of the division’s net assets while has a transaction multiple of 14.9x FY16 EBIT or 8.6x FY16 EBITDA. The group intends to use the proceeds to boost its balance sheet and for Main Event Entertainment roll?out opportunity in the US. Management reported that they would further strengthen their focus on the core global leisure and entertainment business, which has over 20 million customer visits across Australasia and the United States in 2016.
The group’s stock is under trading halt and would resume trading from August 23rd, 2016 or when a pending announcement is made.
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Ardent Leisure Group core portfolio (Source: Company Reports)
Bellamy's Australia Ltd
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BAL Details
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Solid results indicate the group’s ability to withstand pressure from Chinese regulators: Bellamy's Australia Ltd (ASX: BAL) stock surged about 1% on August 19, 2016 as the group came up with decent Preliminary results. BAL reported an EBIT growth of 342% to $54.3 million, while EBIT margin more than doubled against FY15. Accordingly, NPAT rose 326% yoy to $38.3 million, driven by ongoing growth in supply of organic ingredients. The group seems to have strengthened its ability to withstand any pressure from Chinese regulators. The stock is trading ex-dividend on August 26, 2016.
· Recommendation: Accordingly, we give a “Hold” recommendation on the stock at the current price of $13.50
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FY16 performance (Source: Company Reports)
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