Genworth Mortgage Insurance Australia Ltd
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GMA Details
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Solid First half performance: Genworth Mortgage Insurance Australia Ltd (ASX: GMA) stock surged over 6.9% on August 03, 2016 as the group reported a solid first half of 2016 performance with statutory net profit after tax (NPAT) of $135.8 million, a 20% rise over prior corresponding period (pcp); and an underlying NPAT of $112.9 million. Moreover, GMA has a fully franked interim dividend of 14.0 cents per share and a fully franked special dividend of 12.5 cents per share. The dividend payout ratio rose to 63.2% during the period against 61.2% during the first half of 2015. GMA is focusing on customers to offset the regulatory pressure from the Australian mortgage market and lending standards. Moreover, the group estimates a recovering Australian residential mortgage market and expects house price appreciation to moderate in 2016. GMA stock surged over 18.1% in the last three months (as of August 02, 2016) and we believe the positive momentum to continue in the coming months. Despite the solid rally, the stock is trading at a cheap P/E and trading at an outstanding dividend yield.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of $3.10
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Residential mortgage lending market (Source: Company Reports)
Seven Group Holdings Ltd
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SVW Details
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Better than estimated performance: Seven Group Holdings Ltd (ASX: SVW) stock surged over 7.6% on August 03, 2016 as the group reported only 4% decrease of underlying EBIT in fiscal year of 2016, as compared to the issued guidance (10% down). This better performance from the group indicates a recovering demand for equipment and maintenance due to revamp in the resource production cycle. Moreover, the group’s cost restructure efforts three years ago are also generating results across its segments. Accordingly, the group’s underlying EBITDA to operating cash flow conversion rate rose to 112%, during the year as compared to 99% in same period of last year. We believe that SVW would get support from its buy-back program and better than estimate performance.
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Recommendation: Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $7.18
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Business model highlights (Source: Company Reports)
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