Two stocks moving high on ASX - Orica Ltd and CYBG PLC

Orica Ltd

ORI Details
· Business improvements initiatives drove the stock higher:  Orica Ltd (ASX: ORI) stock surged over 8.33% on November 04, 2016 as the group reported a strong 2016 full year performance. The group reported a statutory net profit after tax of $343 million during the fiscal year of 2016, against a loss of $1,267 million in the corresponding period of last year. The group’s business enhancements generated an incremental net benefit of $76 million during the period. The group’s gearing reached 36% as compared to 40% from same period of last year as net debt was cut to $1,549 million from $2,026 million of last year. Orica also enhanced their net operating and investing cash flows by 80% driven by their capital management and ongoing generation of operating cash. Orica reported a final ordinary dividend of 29 cents per share which is 55% payout ratio. On the other hand, the group reported that they would face over $60 million from price resets. Moreover, the group’s business improvement initiatives might not be able to offset their core business pressure even in the coming periods.

· Recommendation: Despite the short-term rises and considering that the stock is trading close to its 52-week high price, we believe that the stock is “Expensive” at the current price of – $ 16.90

Business improvements offset EBIT pressure (Source: Company Reports) 

CYBG PLC

CYB Details
· British pound drove the stock higher: CYBG PLC (ASX: CYB) stock surged over 7.1% on November 04, 2016 which seems to be driven by the strengthening of British pound at the back of the latest high court’s ruling concerning Brexit. On the other hand, CYB stock fell over 7% in the last four weeks (as of November 03, 2016) and we believe the stock pressure could continue in the coming months, as the volatility regarding Brexit could continue. Moreover, CYB stock is trading at a very high P/E.

· Recommendation: Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of – $ 4.53

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