Bendigo and Adelaide Bank Ltd

BEN Details
· Weak results affected the stock sentiment: Bendigo and Adelaide Bank Ltd.’s (ASX: BEN) stock fell over 4.98% on February 13, 2017 impacted by the group’s weak interim results. The bank reported an after tax statutory profit of $209.0 million for the six months ending on December 31, 2016. Underlying cash earnings rose 0.4% year on year (yoy) to $224.7 million while cash earnings per share fell 0.9 cents to 48 cents, against the prior corresponding period (pcp). The bank’s net interest margin came under pressure post the May and August cash rate reductions as well as more impact of additional liquidity for the Keystart portfolio acquisition. Rising competition remains a concern despite the group’s focus on customers.

· Recommendation: BEN stock rallied over 15.8% in the last three months (as of February 10, 2017). Given the trading conditions and prospects, we believe that the stock is “Expensive” at the current price of – $ 12.00
 

Net Interest Margin (Source: Company Reports) 

Domino's Pizza Enterprises Ltd

DMP Details
· Concerns over employment obligations breach: Domino's Pizza Enterprises Ltd.’s (ASX: DMP) stock fell over 4.8% on February 13, 2017 on reports regarding breaches of employment obligations and complaints of visa fraud. On the other hand, the group clarified that they are investigating the allegations. The group further briefed investors over their actions in the last three years wherein they removed four franchisees, operating seven stores, from the system as they were underpaying the employees. Dominos further stated that they would not exempt any franchise which is not paying their employees correctly or fails to meet expectations around ethics and governance.

· Recommendation: DMP stock fell over 9.5% in the last three months (as at February 10, 2017) and still trading at an unreasonable P/E. Despite the group’s recent assurances on the group’s zero tolerance approach, we maintain our “Expensive” recommendation on the stock at the current price of - $ 61.00

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