Asaleo Care Ltd
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AHY Details
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New product development initiatives: Asaleo Care Ltd (ASX: AHY) rose 7.2% on August 26, 2016 as the group is undertaking solid initiatives to drive the growth of its products. As per its first half of 2016 results, the revenue declined 4.3% to $292.7m due to price downside across key retail categories, while volume fell in Feminine Care and Baby Care, particularly in June. The underlying EBITDA declined by 10.1% to $58.6m, due to adverse FX impacting costs and unfavorable pricing. The underlying NPAT fell 16.4% to $27.1m, and the statutory 1H NPAT fall by 23.2% to $24.9m. On the other hand, AHY’s new strategy ‘Every Day Price’ on Feminine Care and Incontinence Care products has the strong endorsement of major retailers. AHY is continuing its initiatives in the Consumer Tissue category and expects pulp costs to likely decline going into 2017 due to the current and market forecast outlook for US$ pulp prices. Moreover, AHY is investing in manufacturing in Australia and New Zealand with multi-million dollar upgrades to machines in Feminine Care, Baby Care and Paper for the new product development initiatives scheduled for introduction to the market in 2017. Meanwhile, AHY stock a solid dividend yield and is trading at a low P/E.
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Recommendation:Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $1.48
1H 16 Financial Performance (Source: Company Reports)
St Barbara Ltd
SBM Details
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Upgrade of the rating:St Barbara Ltd (ASX: SBM) rose over 5.1% on August 26, 2016 after the Moody’s Investors Service raised rating from ‘B3’ to ‘B2’ on the SBM and its senior secured debt, with a stable outlook. The upgrade of the rating reflects the significant improvement in the company’s financial profile, after its efforts to reduce debt, and the continued improvement in its operating costs. Meanwhile, SBM stock has already risen 62.96% in the last six months (as on August 26, 2016). There is no change to the company’s existing debt arrangements as a consequence of Moody’s upgrade.
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Recommendation:We believe that the stock is trading at higher levels and hence we give an “Expensive” recommendation on the stock at the current price of $3.08
Super Retail Group Ltd
SUL Details
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Transformation initiatives:Super Retail Group Ltd (ASX: SUL) rose over 6.01% on August 26, 2016 after the company reported FY 16 results. SUL’s sales for the group has increased by 8.2 per cent to $2.42 billion. The net profit after tax attributable to owners for the 53-week period to 2
nd July 2016 is $62.8 million, and after adjusting for restructuring costs and brand name impairment, normalized net profit after tax is of $108.6 million. Moreover, SUL has undertaken transformation initiatives which would enable Infinite Retail to contribute over $25 million sales at break-even EBIT to the Sports Division results in 2016/17. Meanwhile, SUL stock has risen 25% in the last six months (as on August 26, 2016).
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Recommendation:We give a “Hold” recommendation on the stock at the current price of $10.40
Financial Performance for FY 16 (Source: Company Reports)
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