Cover-More Group Limited
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CVO Details
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Signing of new deed on underwriting arrangements: Cover-More Group Limited (ASX: CVO) surged 11.29% on July 06, 2016 at the back of finalization of an underwriting agreement with Great Lakes Australia. As per the company, this will provide for underwriter payments based on generalized linear modelling effective from July 01, 2016 while giving CVO an option to appoint alternative partners. Post the finalization of discussion and selection of a preferred partner, the group will transition to the new underwriter. The new term of the agreement is up to September 30, 2017 and the target loss ratio is said to remain unchanged. The company has further reported that impact of any adjustments on EBITDA for policies sold in H2 FY16 will be in the order of $0 to -$0.7m across the aggregate period to FY18.
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Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $1.38
Evolution Mining Ltd
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EVN Details
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Gold Intersected at Edna Beryl West: Evolution Mining Ltd (ASX: EVN) stock surged over 6.5% on July 06, 2016 with the surge in gold prices while the company reported that a high grade of gold is intersected from the first of 3,900m drill campaign at Edna Beryl West and the further result will come up in next few weeks. Meanwhile, from this drill the company got 6m at 13.2g/t gold, including the 3m at 15.7g/t gold from 120m (EBWRC012), 3m at 11.2g/t gold, from 126m(EBWRC015) and 9m at 5.33g/t gold, including the 3m at 10.4g/t gold from 135m (EBWRC018). Moreover, the adjacent Edna Beryl East mine development is underway and the first production is expected to be later this year. In addition, Emmerson’s (the partner of EVN) next round of over 6,500m of reverse circulation and diamond drilling would start in August 2016 and would include further drilling at Edna Beryl, plus some new projects including Susan, Venus, Retsina, Eldorado AN5, the M5 and Black Eye. On the other hand, EVN stock has already risen 99.28% (as of July 05, 2016) in the last six months, placing the stock at higher P/E.
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Recommendation: Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $2.95
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Drill results (Source: Company Reports)
Coca Cola Amatil Ltd
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CCL Details
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Cost Cutting Initiatives: Coca-Cola Amatil Ltd (ASX: CCL) stock rallied over 4.5% on July 06, 2016 while the broker, Morgan Stanley upgraded CCL to overweight from equal-weight given the low price-to-earnings ratio and improving volume trends despite consumer criticism against sugary drinks. However, the core Australian Beverage market has underperformed due to structural shift as the younger Australians shunned Coca-Cola in favor of healthier alternatives. UK government has introduced a “sugar tax” on products like Coca-Cola that contain high amounts of sugar and to combat this situation the company has diversified into with more retailing of bottled water, coffee, and alcoholic drinks. CCL stock has fallen 11.6% during this year to date (as of July 05, 2016). But, Coca-Cola Amatil is ahead of schedule to deliver three year $100 million of cost savings plan in Australian Beverages. In addition, CCL is on track to return to mid-single digit growth in EPS over the next few years and there is increased contribution from growth segments, especially from Alcohol & Coffee. CCL stock has a solid dividend yield.
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Recommendation: Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $8.50
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