Spotless Group Holdings Ltd
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SPO Details
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Retaining the Laundries business: Spotless Group Holdings Ltd (ASX: SPO) stock fell over 10.6% on August 17, 2016 as the group decided to retain the Laundries business in their portfolio. Investors were not happy with this move as they expected the company to sell its tough Laundries business. On the other hand, management reported that they see a future for their Laundries business despite volatility, and is trying to resolve the integration issues that impacted the performance of Laundries in FY16. They also clarified that they are acting in the best interests of shareholders by retaining the Laundries business within its services portfolio. The company’s results are due on August 24, 2016.
· Recommendation: We give a “Speculative Buy” on the stock at the current price of $1.015
QBE Insurance Group Ltd
QBE Details
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Lower than estimated performance dragged the stock:QBE Insurance Group Ltd (ASX: QBE) lost 8.3% on August 17, 2016 as the company released its results with interim profit falling to $265 million as compared to $455 million in the corresponding period of last year. The combined operating ratio was 99.0% as compared to 93.4% in the corresponding period. This result was on the back of $283 million adverse discount rate adjustment as risk-free rates used to discount net outstanding claims decreased. The group is on track to achieve $150 million reduction in operating expenses for FY16, equivalent to 1% improvement in its FY16 expense ratio. Management reported that the European and Australian & New Zealand Operations reported positive development but reported a small amount of net positive development across the rest of the Group.
· Recommendation:We believe the stock is “Expensive” at the current price of $10.24
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FY16 outlook (Source: Company Reports)
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