IOOF Holdings Ltd

IFL Details 
· Lower than estimated results affected the stock performance: IOOF Holdings Ltd (ASX: IFL) stock fell over 7.7% on February 15, 2017 as the group delivered a lower than estimated profits as the group reported an interim profit of $74.2 million for the six months through December 2016, and this was a slip of 45% year-on-year. This came at the back of sale of IFL’s Perennial business. However, the group generated net flows rise of 46% year on year (yoy) to $1.4 billion, for fiscal year of 2017 driven by the Platform flows which delivered an outstanding increase of 173% yoy to $401 million. This is 16^th consecutive quarter of positive net flows by IFL. Meanwhile, the group undertook strategic initiatives to enhance their focus on core wealth management businesses. IFL’s FUMA rose 5% yoy to $109.4 billion during the period. The group generated an interim dividend of 26 cents per share which is a 98% payout ratio. The high level of flows into the advice businesses, as witnessed, is said to indicate for the support from client-facing advice model.

· Recommendation: IFL stock rose over 13.6% in the last one year. We give a “Hold” recommendation on the stock at the current price of – $ 8.50

Primary Health Care Ltd

PRY Details
· Disappointing financials led the stock lower: Primary Health Care Ltd (ASX: PRY) stock fell over 11.8% on February 15, 2017 due to weak financial result from the group. The group reported a revenue rise of only 1.8% to $808.7 million for half year ended on December 31, 2016 but underlying earnings before interest and tax performance was even worse as it slipped by 12.8% to $81.9 million. These weak results were mainly on the back of volatile healthcare policy with Medicare rebate freeze and Government policy changes. As a result, the underlying net profit after tax fell 14.7% to $41.9 million. Consequently, the group reduced their interim dividend to 4.8 cents per share from 5.6 cents. Meanwhile, PRY invested in specialties like dermatopathology and in Approved Collection Centres (“ACCs”). Imaging achieved 59% rise against prior corresponding period driven by operating cost programs. However, Medical Centres division’s Bulk Billing EBIT fell 36%, impacted by the lower than expected healthcare practitioner recruitment.

· Recommendation: We believe the weakness in the stock might continue. Trading at an unreasonable level, we give an “Expensive” recommendation on the stock at the current price of - $ 3.41

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