Whitehaven Coal Ltd

WHC Details
· Adverse geotechnical conditions to impact Narrabri production: Whitehaven Coal Ltd (ASX: WHC) stock rose over 4.5% on January 13, 2017 driven by the commodity prices rally. However, WHC expects a lower full year of 2016 ROM coal for Narrabri in the range of 7.5Mt to 7.8Mt as compared to their earlier estimates issued in August 2016. This decrease is mainly on the back of production impacts related with safely managing a discrete area of adverse geotechnical conditions at the mine. However, WHC expects its 2017 saleable production forecasts in the range of 21Mt to 22Mt. Meanwhile, mining in panel LW06 at Narrabri is projected to be finished by early March with production expected to start from LW07 panel (the first 400-metre wide panel) early in the June quarter. Metallurgical coal sales comprised 22% of total sales for December quarter of 2016 against 16% in the September quarter. Meanwhile, sales of metallurgical coal are expected to rise 26% of total group sales in the second half of the year while the group is targeting 35% of total group sales from Maules Creek when it reaches full capacity.

· Recommendation: WHC already delivered big gains generating 390.6% in the last one year (as of January 12, 2017). WHC stock is currently trading at an unreasonable P/E and we give an “Expensive” recommendation at the current price of – $ 3.00

Blackmores Ltd

BKL Details
· Positive sentiment driving the stock higher: Blackmores Ltd (ASX: BKL) stock rallied 2.7% on January 13, 2017 owing to positive sentiments although there are some concerns regarding group’s performance in China given the demand situation. BKL market in Asia might still be challenging given the volatility in the markets. Moreover, BKL sales performance in Australia was weak in the first quarter of 2017, wherein the sales lost 40% to $68 million. Moreover, the group witnessed a destocking impact of over $17 million. BKL believes that changes in Chinese exporters demand would lead to an impact of over $28 million. 

· Recommendation: BKL stock lost over 16.9% in the last six months (as of January 12, 2017) and we believe the pressure in the stock would continue. Trading at a higher P/E, we give an “Expensive” recommendation on the stock at the current price of - $ 116.12
 
First quarter of FY17 (Source: Company Reports)

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