Domino's Pizza Enterprises Ltd

DMP Details

·         Option exercise notice from Bain Capital Domino Hong Kong Ltd: Domino's Pizza Enterprises Ltd.’s (ASX: DMP) stock fell over 3.8% on May 29, 2017. DMP has received an option exercise notice from Bain Capital Domino Hong Kong Ltd requiring the purchase of all of Bain's shares in the Domino's Pizza Japan joint venture vehicle (DPJ) by August 28, 2017, and the group is reviewing the calculation of the proposed option exercise price. If required, the purchase of the Bain’s shares would be funded from existing cash resources and bank facilities. Moreover, short sellers seem to be targeting DMP at the back of the recent developments including the issue relating to underpayment of wages by franchisees, and the subsequent investigation by the Fair Work Ombudsman.

·         Recommendation: DMP stock fell over 10.52% in the last six months (as of May 26, 2017) but is still trading at relatively higher levels given price to earnings scenario and other prospects. We maintain our “Expensive” recommendation at the current price of $ 59.19

Macquarie Atlas Roads Group

MQA Details

·         Temporary weakness in stock momentum: Macquarie Atlas Roads Group (ASX: MQA) stock fell over 2.2% on May 29, 2017 owing to some volatility. However, MQA has recently announced that the financial close was reached for the acquisition of the remaining 50% economic interest in the Dulles Greenway for US$445 million. MQA has also advised that an amount of US$175 million was drawn under an eight-year bullet financing facility as part of the acquisition funding. The drawdown amount is below the originally projected requirement of US$200 million, as advised earlier to the market. Further, MQA’s nominal interest in the M6 Toll, West Midlands U.K., was indicated for transfer to the lender group on or about May 11, 2017. MQA expected a final management fee of over £2.6m in the above regard, and thereafter will have no further management obligations with respect to the M6 Toll.

·         Recommendation: MQA stock rose over 28.04% in the last six months (as of May 26, 2017). We give a “Hold” recommendation at the current price of $ 5.76

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