Vita Group Ltd

VTG Details
· Strong first half of 2017 performance: Vita Group Ltd (ASX: VTG) stock surged over 4.1% on March 01, 2017.  VTG reported an 8% year on year (yoy) rise in revenue to $344.1 million in the first half of FY17 while EBITDA surged 15% yoy to $35.0 million. The group built a flexible balance sheet and has no debt. As a result, the group reported a 60% yoy growth in interim dividend to 9.20 cps fully franked. The group’s efforts to optimise its retail channel paid off and accordingly Retail channel EBITDA enhanced 12% on a yoy basis. Retail channel revenues increased 5%, even though the fee income was offset by slower growth in low margin device sales. VTG small-to-medium business (SMB) and enterprise channels growth was ongoing. The group’s Enterprise channel revenues delivered an increase of 16% driven by major account wins. Sprout revenue enhanced 28% driven by internal distribution channels and third party customer base expansion.

· Recommendation: VTG stock lost over 26.6% in the last six months (as of February 28, 2017). We maintain our “Hold” recommendation on the stock at the current price of - $ 3.30
 

Strategy into action (Source: Company Reports) 

Macmahon Holdings Ltd

MAH Details
· Agreement with PT Amman Mineral Nusa Tenggara: Macmahon Holdings Ltd (ASX: MAH) stock rallied 10% on March 01, 2017 driven by heads of agreement signed with PT Amman Mineral Nusa Tenggara (AMNT) for acquisition of certain assets from AMNT. The group along with AMNT will make a life of mine, alliance style mining contract for the Batu Hijau copper-gold mine in Indonesia (Mining Contract). Initial scope of work (for Phase 7 of the Batu Hijau open-pit) is forecasted to have an order book of over US$2.7 billion over the life of the Batu Hijau operation (with about US$2.0 billion occurring over the first five years from January 2018). Moreover, the work could also include the development of the Elang deposit (which is over 60km east of Batu Hijau) and the Nangka prospect which are controlled by AMNT. The group would acquire some current equipment at Batu Hijau from AMNT (including loading equipment, trucks, ancillary and support assets and usable inventory) (Sale Assets) based upon an independent valuation. As per the group’s preliminary internal estimates, the sale assets are forecasted to be worth of over US$150 million, subject to variation. On the other hand, CIMIC Group Investments Pty Ltd has made a fourth supplementary bid to acquire fully paid ordinary shares in MAH, with an offer price of 14.5 cent per MAH share. Meanwhile, it is noted that MAH’s financial performance has deteriorated in 1H17 with negative loss after tax of $23.3 million. Accordingly, MAH’s shareholders have been encouraged to accept the CIMIC’s offer.

· Recommendation: MAH stock rallied over 50% in the last three months (as of February 28, 2017) and is now trading at an unreasonable level. We rate the stock “Expensive” at the current price of - $ 0.16

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