Two stocks that fell hard on ASX - Brambles Ltd and Village Roadshow Ltd

Brambles Ltd

BXB Details
· Forecasting below the previous estimates: Brambles Ltd (ASX: BXB) stock lost over 15.8% on January 23, 2017 as the group expects a lower revenue and Underlying Profit for the year ending 30 June 2017. BXB forecasts a constant-currency sales revenue growth of over 5% and a constant-currency Underlying Profit growth of about 3% for the six months ended December 31, 2016. Further, the constant-currency sales revenue growth and Underlying Profit growth for year ending June 30, 2017 is expected to be below the earlier forecasted range of 7% and 9%, and range of 9% and 11%, respectively. This was mainly due to their North America pallets division which witnessed revenue and cost pressures in the first half. US retailer destocking led to the rising transport and plant costs while pricing pressure led to further weakness. Loss from the HFG joint venture investment also impacted BXB’s performance to a certain extent.

· Recommendation: BXB opened this year on a weak note and fell over 2.6% this year to date, as of January 20, 2017. Trading at a higher P/E and given the challenges ahead, we give an “Expensive” recommendation on the stock at the current price of - $ 10.34

Village Roadshow Ltd

VRL Details
· Drop in market attendance: Village Roadshow Ltd (ASX: VRL) stock fell over 9.4% on January 23, 2017 due to the group’s update of the declining visits from Queensland market post the Dreamworld incident. Local Queensland market attendance fell by more than 12% from Dreamworld incident, which earlier accounted over 60% of attendances. Moreover, this Dreamworld incident is also affecting Wet’n’Wild Sydney as well as the Gold Coast and Sydney Parks. As a result, even the food and beverage, retail and other in-park revenue is weakening despite the ticket revenues. Village Roadshow estimates this weakness to continue for some time in the coming weeks. On the other hand, VRL stock slipped by 34.2% in the last one year (as of January 20, 2017). Moreover, the group’s VIP and Membership sales this year have been on track while the December 2016 and January 2017 trading period performance was firm. VRL is implementing several guest experience initiatives and attractions. The group is making strong efforts to strengthen the guest safety.

· Recommendation: We believe these are short-term challenges which the group can outdo in the long run. We give a “Buy” recommendation on the stock at the current price of - $ 4.03

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