Sky Network Television Ltd

SKT Details
· Weaker guidance dragged the stock lower: Sky Network Television Ltd (ASX: SKT) stock lost over 10.7% on 14 December 2016, after the group reported for a lower than expected guidance for year ending 30 June 2017. SKT guided that its EBITDA will be 5% to 7% below the $296.0 million forecast projected earlier in their June 2016 update. The group also projected that their revenues will be down (as per November trading conditions) impacted by the declining subscriber numbers and a change in customer mix. On the other hand, the group reported that they are making efforts to offset this pressure with superior content and has acquired the rights to broadcast the 2017 America’s Cup, Lions Tour to NZ and PGA golf. However, even though these investments would help realize incremental revenue, rising costs will pose a pressure. SKT forecasts their depreciation, amortization and impairment to be $109.1 million against their earlier forecast of $101.3 million.

· Recommendation: We maintain our “Expensive” recommendation on the stock at the current price of – $ 4.10

a2 Milk Company Ltd

A2M Details 
· Dampening investor sentiment: a2 Milk Company Ltd (Australia) (ASX: A2M) stock continued to fall on ASX and dropped 5.1% on 14 December 2016 with mounting sector-driven concerns over trading conditions in China as the group’s peer, Bellamy’s performance has recently taken a hit. On the other hand, the group gave a positive update over their year to date revenue performance indicating that they have a more competitive presence in China than their peer. A2M’s EBITDA/Sales rose to 22.9% for 4M17 indicating an ongoing growth in infant formula sales. A2M brands’ growing demand generated this business growth.

· Recommendation: A2M already rallied over 43.5% (as of 13 December 2016) in the last six months and we maintain a “Hold” on the stock at the current price of - $ 2.05

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