Lynas Corporation Ltd

LYC Details
·         Strong cash flow:Lynas Corporation Ltd (ASX: LYC) stock surged over 10.1% on April 26, 2017 driven by the March quarter results. The group generated a positive cash flow with cash flow from Operating and Investing activities rising $11.6 million to $52.6 million as of March quarter 2017 as compared to $38.5 million as of January 2017. The group received inflow of $5.15 million from the exercise of warrants by certain of the convertible bondholders. They reported an invoiced sales growth 6.6% year on year (yoy) to A$69.3 million while NdPr production enhanced 61.5% yoy to 1,373 tonnes. The group is the second largest NdPr producer in the world and a major supplier of NdPr to the free market. Moreover, improving market demand for rare earths was noted with the in-China market price for NdPr (VAT excluded) rising from US$31 to US$34.

·         Recommendation:LYC rose over 4.7% in the last five days (as of April 24, 2017) while we give a “Speculative Buy” recommendation on the stock at the current price of $ 0.098 

Improving Production over the Quarters (Source: Company Reports) 

a2 Milk Company Ltd

A2M Details
·         Positive trading update triggered the rally:a2 Milk Company Ltd (Australia) (ASX: A2M) stock surged over 7.7% on April 26, 2017 driven by their better than estimated trading update for the second half of 2017 performance. The group expects a better infant formula sales in the second half of 2017 as compared to the sales achieved in the first half FY17. The group’s efforts on inventory management seem to have paid off while major selling events in China weighted towards the first half FY17. Moreover, a2 Platinum® infant formula demand is better than expected in Australia, as well as through the cross-border e-commerce (CBEC) channel into China. Given this rising demand, the group is enhancing the production schedule for the remainder of FY17 with their manufacturing partner, Synlait Milk. A2M reported NZ$388.5 million of revenue for the nine months ended 31 March 2017 and forecasts over NZ$525 million in FY17.

·         Recommendation: A2M stock already rallied over 45.6% in the last three months (as at April 24, 2017) and is now trading at a higher level. We give an “Expensive” recommendation on the stock at the current price of $ 3.20

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