Yellow Brick Road Holdings Ltd
YBR Details
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Lower than estimated Mortgage Book performance: Yellow Brick Road Holdings Ltd (ASX: YBR) stock fell over 4.9% on July 29, 2016 as the group reported a softness in performance. The group’s branded business rose 24% in growth of settlements during the fourth quarter as compared to the same period of last year. On the other hand, during second half of 2016, the lending market conditions worsened as government policy reduced foreign borrowings while historically low rates increased refinance activity. Moreover, the Mortgage Book rose over 23% to $37.8 billion during fourth quarter of 2016, but investors are concerned over this value as the group targets over $100 billion by 2020. YBR stock corrected over 26.8% during this year to date (as of July 28, 2016) and we believe this pressure in the stock would continue in the coming months.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $0.195
Operating performance for fourth quarter of FY16 (Source: Company Reports)
MG Unit Trust
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MGC Details
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Lost the contract from Woolworths: MG Unit Trust (ASX: MGC) stock fell over 8.4% on July 29, 2016 as the group lost a contract from Woolworths that selected another supplier for offering private label products like cheese, UHT, adult milk powder and cream. The group is expected to have an annualized revenue loss of over $108 million even though the group reported that it estimates a limited loss in FY17 given the timing of the completion of existing contracts.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $1.145
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