Downer EDI Limited

DOW Details
· Better than estimated first half performance boosted the stock higher: Downer EDI Limited (ASX: DOW) stock rallied over 13.1% on February 02, 2017 driven by their better than estimated first half of 2017 performance. The group’s overall revenue rose $59.6 million, or 1.7%, to $3.6 billion in the half year ended on December 2016. Transport Services revenue rose 13.5% to $911.2 million driven by solid performance on current contracts, and better contribution from Infrastructure Projects including Newcastle Light Rail and the acquisition of RPQ. Utilities Services revenue surged 17.5% to $442.3 million, driven by contracts and contributions from renewable energy, power, gas and water projects in Australia and New Zealand. EC&M revenue improved 4.9% to $973.4 million on the back of better activities on the Gorgon and Wheatstone projects in Western Australia, despite challenging resources sector in Australia. The group is targeting an NPAT of over $175 million for the 2017 financial year.

· Recommendation: Downer stock surged over 47.4% in the last six months (as of February 01, 2017), and with the recent rise, we believe the stock is trading at higher levels. We give an “Expensive” recommendation on the stock at the current price of – $ 7.07

Downer Revenue Base (Source: Company Reports) 

Resolute Mining Limited

RSG Details
· Restarting mining at the Sarsfield open pit: Resolute Mining Limited (ASX: RSG) stock rose over 5.5% on February 02, 2017 as the mining at the Sarsfield open pit is expected to be recommenced. Queensland Department of Environment and Heritage Protection has supported the planned Ravenswood Expansion Project. With this Project, the group’s local operations would be extended by a further 13 years to at least 2029, enhancing the average annual gold production to more than 120,000 ounces, while Life-of-Mine All-in Sustaining Costs was A$1,166 per ounce. Further, open pit mining restart from Nolans East and continuing during 2017, and the processing capacity enhancement to 2.8 million tonnes per annum (Mtpa) have been contemplated. Regulatory approvals are expected to lead to mining restart at Sarsfield by early 2017 and Buck Reef West by mid-2018.

· Recommendation: Despite the recent rise in the stock, we give an “Expensive” recommendation at the current price of $ 1.54, given the ongoing volatility in the gold prices. 

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