Iluka Resources Ltd

ILU details
·         More than doubled revenue with volume growth in Q1FY17:Iluka Resources Ltd.’s (ASX: ILU) stock surged 11% on April 20, 2017 as the group reported for robust revenue growth from Zircon/Rutile/Synthetic Rutile (Z/R/SR) of 118.5% year on year (yoy) driven by recently acquired Sierra Rutile and increased zircon production, and 131.5% yoy growth in sales volumes (including Sierra Rutile) for Q1 FY17. However, excluding the Sierra Rutile contribution, production increased by 26.9% (to 32.1 thousand tonnes), which is reflecting the draw-down of the Murray Basin heavy mineral concentrate. Notably, the company has received higher weighted average prices for both zircon and rutile with price hike in the Q1FY17 due to favorable market conditions. Strong free cash flows enabled the company to reduce debt by $103 million to $403 million ($80 million attributable to free cash flow generation during the first quarter, with the remainder due to the revaluation of USD denominated debt) during Q1FY17. The company retains its Sierra Rutile production guidance at ~150k tonnes in 2017. The period-on-period revenue growth is lower than the sales volumes due to both mix of products (more zircon sold in the Q1FY17 vs Q1FY16) and pricing (despite a price hike of US$50/tonne effective from 15 February 2017, zircon prices in Q1FY17 were lower than zircon prices in Q1FY16).
 

Q1FY17 production and sales summary; (Source: Company Reports)
 
·         Recommendation: ILU stock rallied over 31.3% in the last six months (as of April 19, 2017) and is currently trading at a 52-week high. We give a “Hold” recommendation on the stock at the current price of $ 8.15

Shaver Shop Group Ltd

SSG details
·         Bounce back in sales led to rise in FY17 guidance:Shaver Shop Group Ltd.’s (ASX: SSG)stock moved up 15% on April 20, 2017. Following a weak start in the months of January and February, Shaver Shop’s sales rebounded strongly in March leading to positive total same store sales growth for Q3 FY17. For 9M FY17, sales grew by 1.3% yoy. Further, the company revised the earlier guidance of $12.0 - $13.5 million for EBITDA and now expects to report $13.7 million - $15.0 million for FY17 driven by significantly improved sales performance during the end of Q3 FY17. A substantial portion of the recent sales uplift relates to customers buying selected products in stores for resale to consumers in Asian markets. Further, SSG entered into a binding agreement to acquire the Bondi Junction and McCarthur Square franchises.It will add up two further quality sites to Shaver Shop’s corporate store network in NSW as the acquiring stores have been strong performers for many years.

·         Recommendation: The stock has corrected over 47.4% in the last six months (as of April 19, 2017). Although, the FY17 guidance is improved based on indicative sales rebound during the current quarter, we give “Speculative buy” recommendation on the stock at current price of $ 0.69

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