Stockland Corporation Ltd

Strong Start to FY 17 and record number of deposits for Residential business: Stockland Corporation Ltd (ASX: SGP) reported 2,301 net deposits on residential lots, townhouses and completed homes in the first quarter FY 17 market update, which is up from 1,557 for the corresponding period in FY16. Moreover, SGP is on track to achieve more than 6,000 residential settlements for FY 17 and see constructive signs for an elongated property cycle. SGP has also confirmed that it is on track to achieve target growth in Funds from Operations (FFO) per security of 5.0-7.0 per cent across the entire group, and a profit skew to 2H17, assuming no material change in market conditions. FY 17 DPS is expected at 25.5 cents and the new target range is 75%-80% of FFO. Graham Bradley AM, is retiring from the Stockland Board at the AGM and Tom Pockett would assume role of Chairman. We give a “Hold” recommendation on the stock at the current price of – $ 4.24  

Origin Energy Ltd

Rising LNG production: Origin Energy Ltd (ASX: ORG) is set to redeem all of the subordinated notes on December 22, 2016. The group has announced that Australia Pacific LNG’s first production train has successfully satisfied the lenders’ tests, which shows that the project is performing in line with lenders’ expectations set when the US$8.5 billion facility was put in place in 2012. Moreover, the release of the remaining US$3.4 billion in project finance guarantees for Australia Pacific LNG would occur post lenders’ tests. ORG’s production grew 55% to 74.2 PJe in September quarter against corresponding period last year and grew 8 per cent on the prior quarter. This is due to the increased LNG production at Australia Pacific LNG. The revenue in the September quarter grew 91% over corresponding period in FY 16 and 32% over the prior quarter. The stock rose 9.03% in last three months (as of November 23, 2016) while we give a “Buy” recommendation on the stock at the current price of – $ 6.02

Cimic Group Ltd

Higher valuations: Cimic Group Ltd (ASX: CIM) made a final unconditional off-market takeover offer for shares that it does not own in UGL for $3.15 per share in cash. CIM has a relevant interest in 45.81% of all UGL Shares as on November 23, 2016 and is the largest beneficial shareholder in UGL. Moreover, the majority of the UGL Board has recommended that investors should accept the Offer and the independent expert has recommended the offer to be fair and reasonable. Moreover, CIM’s global mining services provider, Thiess, has got a contract expansion and extension until March 2022 with additional revenues of A$530 million at the Bayan Resources Group’s Melak Coal Mine in East Kalimantan, Indonesia. The stock fell 18.39% in six months (as of November 23, 2016), on concerns over accounting issues, however, the stock is trading at a high P/E. We give an “Expensive” recommendation on the stock at the current price of – $ 31.58

Aristocrat Leisure Limited

Leadership Transition: Aristocrat Leisure Limited’s (ASX: ALL) CEO & Managing Director Jamie Odell intends to leave the company in February 2017 and has appointed Trevor Croker as CEO (Elect), subject to the receipt of the necessary regulatory pre-approvals. Meanwhile, ALL stock rose 20.36 % in the last six months (as of November 23, 2016) placing them at slightly higher levels. The group is facing lawsuits on their slot machines. We give an “Expensive” recommendation at the current price of – $ 14.63

Sonic Healthcare Limited

Concerns over rising debt: Sonic Healthcare Limited (ASX: SHL) in FY 16 reported a net profit growth of 30% to A$451 million, on revenues growth of 20% to A$5,052 million. SHL has achieved the FY2016 guidance of Constant Currency Underlying EBITDA of A$831 vs A$815-840 million. On the other hand, there has been debt increase due to FX changes of approximately A$60 million. Moreover, there was a negative growth in the earnings of the Australian business due to the impact of specimen collection infrastructure costs and Medicare fee cuts. SHL stock fell 5.54% in three months (as of November 23, 2016), and still trading at a high P/E. We give an “Expensive” recommendation on the stock at the current price of – $ 21.90

James Hardie Industries Plc

Profits fell in the first half of FY 17: James Hardie Industries Plc (ASX: JHX) in the first half 2017 reported an 11% growth in the net sales to US$973.5 million. Additionally, JHX expects steady growth in the US housing market in FY17, assuming the new construction starts between approximately 1.2 and 1.3 million and the net volume growth for the North America Fiber Cement segment is expected to outpace overall market growth by mid-to-high single digits. However, the net profit attributable to shareholders fell 24% to US$144.1 million. Moreover, JHX in the second quarter of FY 17 has repurchased and cancelled approximately 6.1 million shares, at an aggregate cost of US$99.8 million. We give an “Expensive” recommendation on the stock at the current price of – $ 20.11 

Crown Resorts Ltd

Dealing with enquiries: Crown Resorts Ltd (ASX: CWN) has responded to the enquiries regarding its international VIP program play business. As per CWN, around a third of the group revenues are generated from overseas visitors but only some of these overseas visitors participate in international VIP gaming programs. In FY16, around a quarter of the CWN’s revenues were from the international VIP gaming programs. Less than half of the revenue of international VIP gaming programs is from the mainland China. Consequently, this segment of the business represents only 12% of the Crown Group revenues in FY16. CWN is continuing to improve and grow Crown’s portfolio of well-recognized, premium branded assets. Crown’s international operations, network, contacts and joint ventures leverage to promote Crown’s integrated resorts and operations. We give a “Hold” recommendation at the current price of – $ 11.89

Lendlease Group

Growing FUM performance: Lendlease Group (ASX: LLC) reported a 13% growth in the profit after tax to $698.2 million and 13% growth in the pre-sold residential revenue to $5.9 billion in FY 16. LLC has established the $400 million managed investment vehicle and witnessed 11% growth in the Funds under Management (FUM) to $23.6 billion. The group posted 20% growth in the construction backlog revenue to $20.7 billion. There is a double-digit growth in new work secured across each of Building, Engineering and Services. Looking at the prospects, we give a “Hold” recommendation at the current price of – $ 13.52

Treasury Wine Estates Ltd

Concerns over acquisitions impacting performance: Treasury Wine Estates Ltd (ASX: TWE) in FY 16 has reported the Net Profit After Tax (NPAT) and Earnings Per Share (EPS) of $179.4m and 25.1 cents respectively, more than double the previous corresponding period. The EBITS grew 37% to $308.8 million in fiscal year of 2016. Moreover, TWE’s Supply Chain Optimization initiative has led to the Cost of Goods Sold (COGS) savings of $41m in F16, due to the realization of cost reductions and benefits from production asset optimization. Additionally, TWE expects the total COGS savings to reach a run-rate of at least $100m (up from $80m) by FY20. TWE also expects the total cash synergies recognized from the acquisition of Diageo to reach a run-rate of US$35m (up from US$25m) by FY20. On the other hand, the acquisition of Diageo Wine would impact EPS accretion in FY17. The stock is trading at higher P/E and close to 52-week high price while we give an “Expensive” recommendation on the stock at the current price of – $ 10.70

Caltex Australia Limited

Better refiner margin performance for October: Caltex Australia Limited (ASX: CTX) reported a better unlagged CRM for October which reached US$ 12.27/bbl against September’s US$ 10.82/bbl. The unlagged Caltex Singapore Weighted Average Margin also rose to US$ 12.69/bbl, as compared to earlier month’s US$ 10.02/bbl. Rising Brent crude oil prices and petrol and diesel refiner margins contributed to this performance. As a result, realized CRM for October reached US$ 11.38/bbl, against CRM US$ 10.94/bbl in September 2016. Production sales in October 2016 reached 558ML from September 2016 production sales of 532ML. Oil prices could rise further in the coming months at the back of OPEC hopes, and this would consequently drive the group’s performance. We give a “Hold” recommendation on the stock at the current price of – $ 30.69

Mirvac Group

Reaffirms earnings guidance for FY17: Mirvac Group (ASX: MGR) recently secured a 50% interest in a Future Retail Asset in Kirrawee NSW. The group also reaffirmed FY17 operating earnings guidance of 14.0 to 14.4 cents per stapled security and expects 15% growth in residential lot settlement. Office occupancy for 1Q FY17 is 95.2% while Industrial occupancy has been 99.7%. MGR is focusing on urban projects while strengthening their residential business. The group delivered a solid statutory profit rise of 69% to over $1 billion for fiscal year of 2016, on the back of solid property revaluation uplifts across their investment portfolio. Operating profit rose 6% to $482 million, while earnings rose 5.7% per stapled security. Recently, the concerns over the property market dragged MGR stock 10.96% lower in the last three months (as at November 23, 2016). MGR stock is trading at a low P/E and has a solid dividend yield. We give a “Hold” recommendation at the current price of – $ 2.03

DEXUS Property Group

Raising funds via office tower at 39 Martin Place: DEXUS Property Group (ASX: DXS) announced for the sale of their office tower at 39 Martin Place, Sydney for $332 million. The group intends to use the proceeds to repay their current debt facilities. On the other hand, despite the group’s efforts to strengthen their balance sheet, concerns over their income growth persist given the softer market conditions. We give an “Expensive” recommendation at the current price of - $ 8.99

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