Estia Health Ltd

EHE Details
· Downgrading of underlying EBITDA guidance: Estia Health Ltd (ASX: EHE) stock fell over 3.03% on October 06, 2016 as the group now expects their underlying EBITDA to be in the range of $86 million to $90 million for FY2017. This reduction is mainly due to the lower than estimated occupancy growth rate during the period, which decreased contribution of over $5.5 million, coupled with reappraisal of projected non-labor operating expenses for FY2017. The group now estimates nonlabour operating expenses to be $11.7 million higher than initial projections for FY17, at the current run rate. EHE also paid the final deferred consideration instalment for the acquisition of Kennedy Health Care Group, wherein Kennedy family got $41 million in cash. After this payment, the group has a cash of only $11.7 million on a debt of $286.5 million. Over 43.5 million of undrawn capacity under its debt facilities would mature in December 2018. Kennedy family has also been said to be subscribing for $15 million of ordinary shares at the price applying under Estia’s Dividend Reinvestment Plan (DRP). Going forward, we believe the stock would continue to face pressure given the concerns over the group’s rising debt and occupancy growth rates.
· Recommendation: We give an “Expensive” recommendation on the stock at the current price of – $3.20

                            Vocus Communications Limited

 

VOC Details
· Accounting concerns led to the stock pressure: Vocus Communications Limited (ASX: VOC) stock fell over 1.2% on October 06, 2016 as broker CLSA highlighted certain accounting issues and downgraded the rating for the group. The stock lost over 22.2% in the last four weeks alone (as on October 06, 2016). Concerns over the group’s accounting, exiting staff and their integration capabilities of recent acquisitions have emerged lately. Given the pressure in the telecom sector coupled with industry consolidation, we believe investor’s need to be cautious in the coming months. The group is conducting its Annual Shareholders Meeting on November 29, 2016 which will reveal more details on the on-going performance.
· Recommendation: We give an “Expensive” recommendation on the stock at the current price of - $5.83, and would review the stock at a later date. 

---

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.