Santos Ltd
.PNG)
STO Details
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Oil prices rally drove the stock: Santos Ltd (ASX: STO) stock surged over 3.6% on October 06, 2016 leading to over 9% increase in the last five days driven by the oil prices. The group has a solid asset base and recently Big Lake-135 was cased and suspended as a future Permian gas producer from its South Australian Gas project (joint venture with Beach and Origin). We believe the improving oil prices coupled with the group’s efforts to enhance their operating cash flow would further drive the stock in the coming months.
STO intends to achieve a free cash flow breakeven at US$35-40/bbl on a portfolio basis. The group is also improving their technical capabilities and optimizing asset portfolio to generate stable returns throughout the cycle.
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Recommendation: Trading at a decent dividend yield, we give a “Buy” recommendation on the stock at the current price of - $4.00
Cooper Basin Wells (Source: Company Reports)
Australian Pharmaceutical Industries Ltd
.PNG)
API Details
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Enhanced Underlying NPAT guidance: Australian Pharmaceutical Industries Ltd (ASX: API) stock surged around 4.8% on October 06, 2016 as the group improved their Underlying NPAT guidance to $51m for FY17, which represents an increase of 17% against the prior year. The group’s net debt is estimated to be less than $30 million by the year end. API has 442 stores in Priceline Pharmacy network as of 31 August 2016. The group also reported that their CEO and Managing Director, Stephen Roche would exit in February 2017. Stephen Roche has been the CEO and Managing Director of the group from 2006 and aggressively expanded the Priceline Pharmacy network under his leadership.
He also undertook several transformational initiatives like investing $57 million in their supply chain and $45 million in the implementation of the world’s first wholesale and retail SAP system. API is releasing its 2016 earnings on October 20, 2016.
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Recommendation: We give a “Speculative buy” on the stock ahead of its results at the current price of – $1.98
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