Two stocks that slipped >6% on ASX - WorleyParsons and Australian Agricultural Company

WorleyParsons Limited


WOR Details

·       Exceeded the cost reduction expectations in FY 16:WorleyParsons Limited (ASX: WOR) stock fell over 6.09% on September 12, 2016 after the company gave the update on the change in the director Jagjeet S. Bindra’s interest. Moreover, WOR reported a fall of 37% in the underlying NPAT to $153.1 million in FY 16. On the other hand, WOR’s cost reduction program lowered the overheads by $170 million against the prior year. WOR has achieved the annualized cost reductions of $200 million exceeding the expected run rate of $120 million by the end of June. In addition, WOR has increased the overhead reduction program target to a total of $350 million in annualized savings for FY17, as compared to the earlier expectation of $300 million. Despite the stock growth of over 55% in the last six months (as on September 09, 2016), we believe there is more momentum in the stock.

·       Recommendation: Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $7.86


FY16 Financial Performance (Source: Company Reports)
 
Australian Agricultural Company Ltd


AAC Details

·       Solid bottom line growth: Australian Agricultural Company Ltd (ASX: AAC) stock fell 6.5% on September 12, 2016 due to ongoing concerns of China’s consumption and market headwinds. On the other hand, AAC has reported the net profit after tax of $67.8 million in FY 16, which is a $58.2 million increase on the FY 15. AAC’s total kilograms of beef sales were up by 96 per cent and therefore the total sales revenue increased by 44.7 per cent to $489 million. Moreover, AAC business performance is improving due to increasing total revenue and margin by owning cattle through the supply chain and maintaining a stable breeding herd.

·       Recommendation:Trading at a reasonable P/E, we give a “Hold” recommendation on the stock at the current price of $1.58


Financial Performance of FY 16 (Source: Company Reports)

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