Whitehaven Coal Ltd
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WHC Details
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Stock rally driven by better than estimated performance: Whitehaven Coal Ltd (ASX: WHC) stock surged over 7.8% on September 16, 2016 leading to a total gain of over 26.5% in the last four weeks. Recovery of coal prices is driving the stock to some extent. The stock has been on an uptrend since it reported a better than estimated FY16 results. The group reported a sales revenue increase by 53% to $1,164.4 million in fiscal year of 2016 while their operating EBITDA surged over 72% to $224.1 million driven by better operating margins. As a result, the group’s cash generated from operations surged 76% year on year to $269.3 million. WHC continued to focus on their unit costs which declined to average $56/t for the year. Accordingly, their net debt fell by $76.7 million to $859.1 million and consequently gearing came down to 23%.
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Recommendation:We reiterate our “Hold” recommendation on the stock at the current price of $2.48
Mantra Group Ltd
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MTR Details
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Positive outlook on tourism drove the stock: Mantra Group Ltd (ASX: MTR) stock surged over 6.23% on September 16, 2016 driven by the positive outlook of the Australian tourism industry. As per IBISworld, the Australian tourism industry is estimated to grow at an annualised rate of 2.7% in the next five years from $124 billion. We believe that MTR is well placed to leverage this booming opportunity. Moreover, the stock fell over 35.6% during this year to date (as of September 16, 2016) due to their performance pressure given the volatile conditions in the economy as well as their slower growth estimates for FY17. The group’s statutory basic EPS fell to 13.8 cents per share, against 14.2 cents per share for FY2015. Despite these challenging conditions, statutory total revenue reached $606.1m for FY16 which is a 21.6% against the prior corresponding period. Moreover, the group’s underlying EBITDAI rose 23% year on year to $89.8m during the year. For FY2017, MTR issued a guidance for EBITDAI, NPAT and NPATA to be in the range of $101.0m - $107.0m, $48.5m - $52.5m and $51.0m - $55.5m, respectively. We believe investors need to use this opportunity to enter the stock given its solid long term prospects.
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Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $3.24
MTR’s growing presence in Australia (Source: Company Reports)
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