Western Areas Ltd
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WSA Details
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Cost Reduction: Western Areas Ltd (ASX: WSA) stock rose 3.35% on July 05, 2016. In May, the company raised $60 million which got heavily oversubscribed. Moreover, WSA has reduced cash cost of $0.19/lb in FY15 and more in 1HFY16 and deferred $34 million of capital costs from FY16 to FY17 as the Mill Enhancement Project got deferred for six months. The group even enhanced its cost guidance range by A$0.05/lb due to strong first half 2016 performance, and is on track to deliver decent FY 16 performance, given the recovering nickel prices.
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Recommendation: We give a “Buy” recommendation on the stock at the current price of $2.47
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Low Cost Operations to weather cyclical low nickel prices (Source: Company Reports)
Macquarie Atlas Roads Group
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MQA Details
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Base Fee Reduction: Macquarie Atlas Roads Group (ASX: MQA) stock rose 3.6% on July 05, 2016 as the company announced that a performance fee of A$134.1 million (after offsetting the net underperformance carried forward from 2015) was earned by MQA’s manager/adviser, Macquarie Fund Advisers Pty Limited (MFA), for the year ended on June 30, 2016. Additionally, the first instalment of the 2016 performance fee of A$44.7 million is payable for the year ended on June 30, 2016 while the payment of the second and third performance fee instalments is subject to satisfaction of further performance hurdles. The third instalment of the 2014 performance fee of A$19.4 million has also met the requisite performance criteria for the year ended on June 30, 2016. Meanwhile, MQA has reduced the base fee effective from July 01, 2016 by 100bps per annum on market capitalization of up to A$1.0 billion and 25bps per annum on market capitalization between A$1.0 billion and A$3.0 billion. This would lead to a savings of over A$14.3 million per annum for MQA security holders as compared to the management and advisory agreements of about A$7.5 million.
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Recommendation: We give a “Hold” recommendation on the stock at the current price of 5.48
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Fee Reduction (Source: Company Reports)
Whitehaven Coal Ltd
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WHC Details
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Increase in Coal Production: Whitehaven Coal Ltd (ASX: WHC) stock continued to rally and delivered about 3% on July 05, 2016. The company had reported a 21% increase in ROM coal production to 5.7Mt for the March quarter as compared to corresponding period of 2015 while the Coal sales reached 5.5Mt during March quarter of 2016 which is an increase by 48% on a yoy basis. Moreover, the company is ramping Maules Creek to 10.5Mtpa from January 2017 and is on track to achieve a saleable coal in the range of 19.5Mt to 20.1Mt by fiscal year of 2016. WHC is also controlling its costs, and for FY2016 WHC forecasts costs to be $57/t.
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Recommendation: With the recent recovery in the coal prices, WHC stock would continue to rally and we give a “Speculative Buy” recommendation on the stock at the current price of $1.205
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Production and sales result (Source: Company Reports)
Catapult Group International Ltd
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CAT Details
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Upgraded the Guidance: Catapult Group International Ltd (ASX: CAT) stock rose 5.1% on July 05, 2016 after the group reported record sales for the fourth quarter of 2016 while upgraded the 2016 full year guidance ending on June 30, 2016. In addition, the sales growth was due to better than estimated average revenue per user (ARPU) and the mix of subscription units, including via league level contracts. Moreover, CAT expects subscription units to represent 57% of Total Units Ordered in FY16, up from 51% in FY15, driven by strong subscription sales reported in 4QFY16. As a result, the revenue uplift from increased sales would be reflected in the recurring revenue base going into FY17, rather than in FY16 revenue. On the other hand, CAT stock has risen 59.39% (as of July 04, 2016) in the last six months placing them at higher levels.
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Recommendation: We maintain our “Expensive” recommendation on the stock at the current price of 3.30
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