Downer EDI Ltd

DOW Details
·         Falling short of investors’ response: Downer EDI Ltd (ASX: DOW) stock lost over 25.2% on March 24, 2017 due to lower than expected response with regards to the group’s entitlement offer. The group completed the institutional component while raising only $757 million with 66% of entitlements taken by institutional shareholders even when the group offered a 20% discount to the stock’s last closing price of March 20, 2017. The group had announced an entitlement offer to raise over $1,011 million, and now expects the retail component to raise about $254 million. The group intended to use the proceeds to partially fund the proposed acquisition of Spotless Group Holdings Limited.
 
·         Recommendation: DOW stock rallied over 99.5% in the last one year (as of March 23, 2017) and we believe the stock is “Expensive” at the current price of -- $ 5.55

Collins Foods Ltd

CKF Details
·         Boosting capital position: Collins Foods Ltd (ASX: CKF) stock plunged over 9% on March 24, 2017 while the group completed the fully underwritten placement of A$54.5 million via issuing over 10.4 million shares. The placement was oversubscribed at an issue price of A$5.25 per share representing a 10.7% discount to Collins Foods' share price at market close on March 22, 2017. The group would use these proceeds to fund the acquisition of 16 KFC restaurants located in the Netherlands from subsidiaries of Yum! Brands Inc. With the Netherlands Acquisition, the group intends to expedite the European strategy post the recent German acquisition.
 
·         Recommendation: CKF stock corrected over 6.2% in the last three months (as of March 23, 2017). Despite the fall and given the earnings prospects, we believe that the stock is “Expensive” at the current price of – $ 5.35

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