Vitaco Holdings Ltd
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VIT Details
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SIIC and PV Zeus’ acquisition proposal: Vitaco Holdings Ltd (ASX: VIT) stock surged over 19.89% on August 04, 2016 on news about signing a scheme implementation deed with SIIC Medical Science and Technology and PV Zeus who have proposed to acquire 1005 of Vitaco Holdings shares. This entails an overall A$2.25 per share in cash price indicating a 37% premium on the one month VWAP of A$1.64per while representing a multiple of 14.7x Enterprise Value/Pro Forma FY16 EBITDA and management believes this to be a decent valuation and persuaded shareholders to approve the transaction. VIT reported a net revenue rise of 23.5% year on year (yoy) to A$212.9 million as compared to the same period of last year despite the challenging regulatory environment from China. Pro Forma EBITDA rose by 15.6% to A$23.9 million. For fiscal year of 2017, the group estimates a reasonable earnings growth and would make further investments to position for longer-term growth.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $2.11
Downer EDI Limited
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DOW Details
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Profits as per expectations: Downer EDI Limited (ASX: DOW) stock surged over 7.7% on August 04, 2016 as the group reported a solid FY16 performance than expected. The group’s overall revenue fell 0.5% yoy to $7.4 billion but net profit fell to $180.6 million in the year through June which is in line with the $180 million target announced earlier. Transport Services revenue declined 3.9% to $1.8 billion on the back of decline in government expenditure in Western Australia and unfavorable weather in New South Wales. Weak contribution from rail infrastructure projects and New Zealand also led to the decline. Technology and Communications Services revenue lost 2.0% to $485.5 million due to pressure from Chorus contract in New Zealand which offset positive contribution from nbnTM contracts in Australia. On the other hand, the group’s Utilities Services revenue surged over 35.2% to $788.8 million driven by total contribution from Tenix and better contributions from power, gas and water projects in Australia and New Zealand. Moreover, Mining revenue also recovered and contributed over $1.6 billion. Meanwhile, DOW stock is trading at a reasonable P/E and has a good dividend yield.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $4.48
Performance (Source: Company Reports)
Cover-More Group Ltd
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CVO Details
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Recovering expectations on performance: Cover-More Group Ltd (ASX: CVO) stock surged over 6.1% on August 04, 2016 with a total increase of over 9.4% in the last one month alone (as of August 03, 2016). Market perceives a positive outlook over the upcoming group’s results which are due to be released on August 19, 2016. CVO stock corrected over 35.5% during this year to date due to fears pertaining to volatile conditions amidst Brexit outcome.
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Recommendation: We give a “Buy” recommendation on the stock at the current price of $1.485
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