Two stocks on the rise - Aconex Ltd and Macquarie Atlas Roads

Aconex Ltd

ACX Details
· Positive outlook drove the stock higher: Aconex Ltd (ASX: ACX) stock surged over 13.1% on October 25, 2016 as the group delivered a better than estimated outlook coupled with a decent cash flow for the first quarter of 2017. The group has a cash balance of $46.5 million as of September 2016 quarter while the net operating cash flow from core operations reached $2.0 million. The group also issued a positive outlook for FY17, forecasting a revenue in the range of $172 to $180 million while EBITDA is expected to be in the range of $22 to $25 million, excluding acquisition costs. The drivers for this positive outlook is the ongoing underlying growth as well as sales momentum, rising regional performance in ANZ, the Americas and Asia. The group believes that these drivers are expected to offset the slowing European business growth impacted by Brexit, GBP and Euro currency fluctuations and so forth. On the other hand, we have been bearish on ACX stock which fell over 39.2% in the last three months (as of October 24, 2016). Despite this fall, the stock is still trading at an unreasonable P/E.

· Recommendation: We give an “Expensive” recommendation on the stock at the current price of $ 5.87, and would review the stock at a later date. 

Forecasted outlook (Source: Company Reports) 

Macquarie Atlas Roads Group

MQA Details
· Improving toll revenue and traffic statistics: Macquarie Atlas Roads Group (ASX: MQA) stock surged over 2.96% on October 25, 2016 with a rally of over 5.11% in the last five days alone (as at October 24, 2016). The group reported a weighted average toll revenue and traffic growth of 4.9% and 3.4% respectively for the September 2016 quarter as compared to the same period of last year. This rise is driven by better traffic levels coupled with revised toll schedules implementation since the last 12 months. For the nine months to 30 September 2016, weighted average toll revenue grew 5.6% while traffic over the same period was 3.9% above pcp. MQA’s APRR (wherein the group has 20.14% stake) reported an overall traffic (VKT) rise by 3.5% as compared to pcp. Light vehicle and heavy vehicle traffic rose 3.6% and 2.7% respectively during the quarter while Toll revenue rose 4.7% against pcp. The group’s Dulles Greenway segment reported an average daily traffic rise by 3.5% while average workday traffic surged 4.9%. Average daily toll revenue surged 6.6% during the quarter, due to a combination of traffic growth during the quarter and higher tolls.

· Recommendation: Based on the improving revenue drivers, we maintain our “Hold” recommendation on the stock at the current price of $ 4.87
 
Improving Toll revenue and Traffic (Source: Company Reports)

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