Asaleo Care Ltd
AHY Details
Lower half year performance and weak guidance: Asaleo Care Ltd (ASX: AHY) stock plunged over 30% on July 22, 2016 as the group delivered a disappointing first half of 2016 performance and accordingly lowered the guidance. The group’s personal care revenue and tissue care revenue fell over 11.3% yoy and 1% yoy, respectively, in the first half of 2016. As a result, overall revenues declined by 4.3% yoy to $292.7 million during the period while underlying NPAT dropped by 16.6% and statutory NPAT declined by 23.4%.
Rising discount by competitors led to the weak performance of the group. Increase in pulp costs due to weak Australian dollar as compared to the same period of last year hurt the bottom line. Consequently, the group lowered its overall fiscal year of 2016 guidance given its weak first half.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $1.505
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Guidance (Source: Company Reports)
Coca-Cola Amatil Ltd
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CCL Details
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Concern from proposed container deposit scheme: Coca-Cola Amatil Ltd (ASX: CCL) stock fell over 3.2% on July 22, 2016 due to Queensland Government’ announcement regarding a proposed container deposit scheme. The Government signaled that the plan for the scheme would be similar to the New South Wales scheme. This also led Credit Suisse analysts to downgrade CCL’s rating to neutral from outperform. Meanwhile, the group reported that they would continue to work with Queensland as well as NSW governments, regarding developing a cost efficient scheme in each state. On the other hand, CCL has a decent dividend yield while the stock rose over 7.3% (as of July 21, 2016) in the last four weeks. We believe that the stock has potential given its efforts to boost top line, launching healthy variants to fight competition and improving Indonesia penetration.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $8.85
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