Two stocks that skyrocketed – BlueScope Steel Limited and Computershare Limited

BlueScope Steel Limited

BSL Details
· Upgraded first half of 2017 guidance:  BlueScope Steel Limited (ASX: BSL) stock surged over 13.5% on November 10, 2016 as the group has enhanced their first half of 2017 guidance. BSL now forecasts underlying earnings before interest and tax (EBIT) to be at least $510 million for the first half FY2017, based on currency fluctuations and market conditions. The group’s ongoing solid Australian business contributed to this upgrade in guidance given the rising despatch volumes coupled with productivity gains despite rising raw material costs. The group’s joint venture with Nippon Steel & Sumitomo Metal Corporation witnessed earnings growth especially in North America as the group’s supply chain efforts paid off. The group enhanced productivity for their North American Buildings business. BSL cut their net debt by $595 million in the June 2016 half. BSL is focusing on their Coated and Painted Products especially in Asia. BSL continued to focus on productivity gains and cost reductions in North America to boost their earnings against FY2016. Similarly, the group expects the same from their China Buildings business. BSL stock surged over 18.3% in the last six months (as of November 09, 2016).

· Recommendation: We give a “Hold” recommendation at the current price of - $ 8.40

Computershare Limited

CPU Details
· Focus on cost control: Computershare Limited (ASX: CPU) stock surged over 12.03% on November 10, 2016 driven by the positive market sentiment and few brokers’ upgrades. CPU has delivered an EPS of 55.09 cents for fiscal year of 2016 on track with their guidance. For fiscal year of 2016, Total management revenue surged 5.0% to $2,075 million. CPU reported a free cash flow of $347.5 million and a return of equity of 26.9% for fiscal year of 2016. CPU is making efforts to generate operational and process efficiencies across FY17 – FY20. Overall benefits, including Louisville, are forecasted to be in the range of $85 – 100 million. The group reported that their first quarter of 2017 is on track and expects the same for FY17 and accordingly reiterate their FY17 guidance. On the other hand, the group’s core Management EBITDA rose only 0.5% year on year (yoy) to $557.1 million for fiscal year of 2016. Excluding margin income, the growth was 4.3%. Management EBITDA, excluding both margin income and the impact of exchange rate movements, surged 46.1% from fiscal year of 2013. Despite this, the currency fluctuations could continue in the coming periods and accordingly the group expects their Management EPS to be just slightly higher for FY17 as compared to FY16. CPU stock surged over 14.3% in the last three months placing them at a higher P/E.

· Recommendation: We give an “Expensive” recommendation on the stock at the current price of - $ 11.46



Cost control initiatives for the long term (Source: Company Reports)

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