CIMIC Group Ltd
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CIM Details
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Weak performance driving the stock lower: CIMIC Group Ltd (ASX: CIM) stock plunged over 19% on July 20, 2016 as the group reported a weak top line, wherein the revenue fell 31.4% on a year on year basis during the first half of 2016. NPAT was up 3.1% year on year. The stock has been falling 8.9% in the last four weeks (as of July 19, 2016) as the ongoing tough market conditions led to decrease in mining activity. On the other hand, the group reported today that its mining services provider, Thiess, in joint venture with local contractor Khishig Arvin, got first underground decline project at the Rio Tinto-operated Oyu Tolgoi copper and gold project in Mongolia’s southern Gobi desert. This would generate total revenue of about $130 million, wherein Thiess’ has 80% share. Despite this, we believe the stock would be under pressure in the coming months due to its weak top line.
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Recommendation: Based on the foregoing, we maintain an “Expensive” recommendation on the stock at the current price of $26.96
Independence Group NL
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IGO Details
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Strong June quarter: Independence Group NL (ASX: IGO) stock fell over 6.4% on July 20, 2016 due to falling commodity prices. On the other hand, the group recently reported a strong June quarter performance with its core Tropicana gold production accounting 28,651 ounces during the period. The average annualized processing plant rate at Tropicana for the June quarter reached 6.88 Mtpa with an annualized rate in excess of 7.25 Mtpa being achieved for the months of May and June. Zinc production at Jaguar is on track while copper production was better than estimated.
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Recommendation: We maintain our “Buy” stance on IGO at the current price of $3.97
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Solid June quarter performance (Source: Company Reports)
BHP Billiton Limited
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BHP Details
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Better than estimated production: BHP Billiton Limited (ASX: BHP) stock fell over 3% on July 20, 2016 at par with its peers due to falling commodity prices. On the other hand, BHP reported a better than estimated full year production for petroleum, copper and metallurgical coal, and delivered a solid performance at Western Australia Iron Ore (WAIO). The group estimates to further control its costs for the coming year. Meanwhile, BHP’s Los Colorados Extension project was approved by the Escondida Owners Council with first production expected in the second half of the 2017 financial year.
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Recommendation: We reiterate our “Buy” recommendation on the stock at the current price of $19.25
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Production Highlights (Source: Company Reports)
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