Atlas Iron Limited

AGO Details
· Mixed December quarter performance: Atlas Iron Limited (ASX: AGO) stock fell 4.16% on January 24, 2017 with some volatility while the group released a mixed December 2016 Quarter results. The group reported a net operating cashflow of A$56M after interest, and shipped 4.0M wet metric tonne (WMT) against 4.1M WMT in Sept 2016 Quarter. The average realised price (inclusive of low-grade Value Fines product and realised hedge impacts) improved to A$66/WMT CFR as compared to A$54/WMT CFR in Sept 2016 quarter. The group maintained a C1 Operating Costs of A$34/WMT FOB during the quarter on track with September 2016 quarter. But, full cash costs rose to A$55/WMT CFR from A$50/WMT CFR of the Sept 2016 quarter at the back of increase in freight rates and other revenue-based payments. The group repaid a debt of A$54 million in January 2017 and has a cash of A$134 million before the A$54 million debt repayment. S&P Ratings Services upgraded their corporate and senior secured credit ratings to “B-” from “CCC” in January 2017.

· Recommendation: Volatility in iron ore prices could be a concern to the group’s performance for the coming quarters. Further, AGO stock already generated 380% returns in the last three months alone (as at January 23, 2017) and is trading close to its 52-week high price, and we believe the stock is “Expensive” at the current stock price of $ 0.046 

Major metrics (Source: Company Reports) 

Greencross Limited

GXL Details
· Targeting to double their vet fleet size:Greencross Limited (ASX: GXL) stock fell over 0.88% on January 24, 2017 leading to a fall of more than 4% in the last five days alone. On the other hand, the group is targeting an aggressive expansion for rolling out in-store services at over 60% of retail stores with an in-store clinic. This provides an opportunity of more than 120 in-store clinics offering a potential to double the current vet clinic fleet via organic growth in long term. The group has 20 veterinary clinics inside retail stores and has identified further 96 stores from their current fleet as suitable for an in-store clinic. GXL aims to have over 20 new stores per year in the medium term. The group’s cross selling opportunity also offers solid potential as compared to the current cross shopping customers who account only 9% of active customers, generating 22% of total revenue and 25% of total gross margin.

· Recommendation: We maintain a “Hold” recommendation on the stock at the current price of $ 6.72 

Potential customer spending from Cross selling (Source: Company Reports)

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