Capitol Health Ltd
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CAJ Details
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Lower than estimated performance: Capitol Health Ltd (ASX: CAJ) stock plunged over 18.8% on August 01, 2016 as the group reported that they would suspend their final dividend. Moreover, the lower than estimated performance from the group also led to the stock decline. The group estimates a Net Loss before Tax (after individually significant items) to reach $3.2 million for fiscal year of 2016. The group incurred Business development costs $0.8 million to position itself in China. The group’s individual major items including impairment, one-off acquisition costs (stamp duty, transaction costs), and restructuring costs are estimated to be $13 million. Moreover, Peter Lewis is quitting from executive and board roles. On the other hand, the group still has a solid top line with revenue expected to reach $158 million, which is a rise of 42% as compared to FY15. The Core Radiology EBITDA is forecasted to reach $23 million before business development costs, which is better than the prior corresponding period. The group is divesting four freehold properties to boost its capital position.
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Recommendation: We give a “Hold” recommendation on this stock at the current price of $0.13
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CAJ’s top line performance (Source: Company Reports)
REA Group Limited
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REA Details
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Rising competition: REA Group Limited (ASX: REA) stock plunged over 3.6% on August 01, 2016 as the group’s peer Domain Group has been reported to contribute to strong growth via solid performance for Fairfax Media. Investors were worried over the group’s rising competition from domain.com.au, which delivered a revenue rise of 63% yoy to $153.9 million for the half year ending June 30, 2016. On the other hand, we believe that REA group is still a major real estate player in Australia, and would be able to withstand the competition from its peers. The stock delivered year to date returns of over 18.6% (as of July 29, 2016) and we believe the positive momentum in the stock would continue.
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Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $62.86
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