Share to buy: Nanosonics (NAN)
December quarter sales were up 41% on the prior quarter, as North American direct sales gained momentum.
The company's move into the US market seems to be paying off, with gross margins improving significantly.
The next driver of share price could be publication of decontamination guidelines in the UK and Scotland favourable to Nanosonic products.
Technically, the stock remains strong and has broken out to fresh all-time highs recently on rising volumes.
Share to buy – Money3 Corporation
Money3 Corporation provides small and micro-cap loans for individuals in need of quick finance, with amounts ranging from as little as $100 to $20,000. The company has significant insider ownership and has provided exceptional returns over the last five years. In FY14 it grew basic earnings per share by 32%. However the company recently said it expects record revenue and profit in FY15. With a large market place, good financials, a 3.5% fully franked dividend and only around 70 stores in operation, the future is looking bright for the company. On the technical front, the MNY is chart is displaying a solid bullish structure. The shorter-term EMAs are crossed higher and the price action is above the longer-term EMA filter, which is positive. We have a valid, traditional uptrend in place, characterised by a series of higher lows and higher highs. We also have an ascending triangle forming, the upper boundary of which sits at $1.60. Traders can now look to buy the breakout, targeting $1.85.
Share to Sell – Mermaid Marine (MRM)
Mermaid Marine Australia Limited provides diversified marine services. The Company operates mainly in the Dampier and North West Shelf in Western Australia and also in the Northern Territory. Mermaid operates crew vessel charters, vessel manning, management and logistics along with operating supply base facilities. MRM has been in freefall since early September when it topped out around $2.40. The stock was sold off in line with the market rout that month, but crucially failed to participate in the October rebound. This indicates underlying weakness in the share price, and with the three EMAs crossed lower the bearish momentum appears strong enough to drive further price declines. The price action collapsed through a key support level around $1.95 last month, only to then rotate higher and confirm this level as new resistance. MRM has turned down once more and is threatening to break below the next support level at $1.78.
Shares To Sell Newcrest Mining Limited (NCM)
Good News Gets Better For Rio Tinto
Rio Tinto (RIO) is an international mining company listed on both the Australian Stock Exchange and the London Stock Exchange. The group is an industry leader in most of the major commodities, including aluminium, coking and thermal coal, copper, manganese, iron ore, uranium, nickel, silver and titanium. Rio also has sizable interests in oil, gas and natural gas. China manufacturing growing again Iron ore makes up the most significant component of RIO’s business, around 44% of its overall revenue. Not only have iron prices risen around 19% since the end of June, but the outlook for the mineral appears to be improving. The iron ore recovery has coincided with data showing a return to growth for China’s manufacturing sector. On Monday, the HSBC Final PMI returned a reading of 50.8 for September, representing a slight acceleration in manufacturing growth from October’s 50.4 reading. It was also the third month in a row where China’s manufacturing sector expanded, adding to signs the economy is regaining its footing after a year slowing growth. Outlook Following a poor 1H13, RIO is generating a healthy dose of momentum and is ahead on a number of some of its strategic goals. Last week, RIO announced that iron ore production capacity will rapidly increase towards its targeted 360 million tonnes a year (MT/a), and at significantly lower cost than originally estimated. From a base run rate of 290Mt/a, RIO expects to reach its target between 2014 and 2017, with the majority of the increase to be delivered in the next two years. The miner expects to achieve this by expanding production at existing mines and securing productivity gains. The costs savings works both ways for RIO – helping to alleviate margin pressures in a weak commodity environment and increase earnings leverage to rising commodity prices. For all of our latest australian share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files. Read more: http://www.australianstockreport.com.au/share-tips/#ixzz2nKRlceAE
Webjet (WEB) Share To Sell
Webjet (WEB) is an online travel website, specialising in both domestic and international online flight bookings, accommodation, car rental, and insurance. WEB is Australia’s largest independent online travel site, competing mainly with companies offering similar leisure-related services, such as Jetset (JET), Flight Centre (FLT), Wotif.com (WTF), Expedia, and Bestflights.com.au. Earlier this year, the company acquired rival Zuji and launched business-to-business hotel aggregation platform, Lots of Hotels, for the Middle Eastern and African markets. The company derives its revenue primarily through booking charges and fees, with its main customers being the general public and tourists. Weak FY13 results WEB’s FY13 results weren’t that impressive for a company that traditionally trades on a high P/E multiple. Revenue of $66.5 million represented a rise of 15% on the prior year’s result. Underlying net profit was only 5.6% higher on FY12’s result, missing previous guidance of 15% growth. EBIT margin contracted 10 basis points to 32.4%, continuing a worrying trend where profit margins have fallen for three straight years. Business momentum is also heading in a negative direction, with Total Transaction Value (TTV) and flight booking volumes both declining from 1H12 to 1H13. Outlook WEB trades on a forward P/E of 13.5x, which is a discount to other online service providers, including closest rival, Flight Centre (FLT). The trend of shrinking profit margins is a worry, suggesting that WEB is losing market share to FLT and not getting enough return for each dollar spent on marketing and advertising. WEB followed up its disappointing results by offering relatively subdued guidance earlier this month. It warned that FY14 EBITDA was likely to be unchanged from a year earlier, at $21.5 million. The group admitted that the Australian market had been flat over the past year, but that it would still push on with plans to spend $3 million on marketing and technology, which was expected to weigh on the bottom line. This is a big worry given how important Australia is to WEB’s business. Moreover, the increased marketing and ad spend comes on top of the resources needed to integrate Zuji and support the launch of Lots of Hotels. Although the longer-term outlook appears more promising, FY14 is shaping up to be another disappointing year for FLT. The prospect for further margin erosion will be a key factor behind continued share price weakness in our opinion. For all of our latest australian share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Share To Buy – Bank Of Queensland (BOQ)
Bank of Queensland (BOQ) is a financial institution, with services spanning retail and commercial banking, wealth management, insurance and equipment finance. As its name implies, BOQ predominantly caters to the Queensland market but has branches throughout Australia. FY13 results Much of BOQ’s recent strong share price performance has come on the back of its FY13 results. Cash profit surged to $250.9 million, from $30.6 million a year earlier. The bottom line turnaround was driven by a major decline in impairment charges from $401 million in FY12 to $112 million in FY13. This reflected a dramatic improvement in asset quality (by exiting weak and impaired assets). Net interest margin (NIM) grew from 1.65% to 1.7%, continuing a positive trend from FY09 when NIM was 1.6%. FY13’s NIM growth came on the back of a more favourable funding mix, which has also positioned BOQ to boost lending volumes in what remains a highly competitive mortgage market. There was also good cost control, with the cost-to-income ratio falling to 44.3%. This exceeded the initial guidance of 45% due to the successful implementation of efficiency and effectiveness programs. Outlook Management has targeted return on tangible equity (ROTE) of 13%+ by FY15. FY13 ROTE was 11.9%, well in excess of the ~10% initial guidance. Due to a combination of falling impairments, rising net interest income and disciplined cost control, we think the 15% ROE target will be achieved by management. The one area of concern was the retail lending growth of 0.6x system growth during FY13, this below the 1.2x target aimed for by FY15. Yet, as we mentioned before, the rise in NIM and dramatically improved asset mix gives the group flexibility to boost lending volumes ahead of FY15. The FY13 result was robust in nearly all areas, and expectations for a continuation of this momentum into FY14 are likely to provide a further boost to BOQ’s share price. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Newcrest Mining Limited – Sell Stock
Newcrest Mining (NCM) is an Australian gold producer, with operations in Australia, Indonesia, Papua New Guinea, Fiji and West Africa. The group’s flagship mine is PNG-based, Lihir, with the other offshore operations being Gosowong in Indonesia, Hidden Valley (50%-owned) in PNG and Bonriko in Ivory Coast. NSW-based Cadia Valley and WA-based Telfer make up the company’s domestic operations. Gold weakness Although gold prices have stabilised in recent months, gold exchange traded funds (ETFs) have continued to shed their bullion holdings, highlighting weak investment demand for the yellow metal. Last Friday night’s better-than-expected US jobs report has increased the likelihood of the US Federal Reserve bringing the forward the date it begins tapering stimulus to December. The market response will likely be a rise in US bond yields and the US dollar, both of which are negative for gold. This reduces the incentive for ETFs to hold bullion and if they continue to sell their holdings – which we expect they will - gold prices are likely to head south. Outlook NCM’s cash costs for the September quarter were $1093 an ounce (oz), whilst the average realised gold price was $1442/oz. With gold prices recently trading around $1285/oz that implies NCM’s cash margin has shrunk by approximately 44% since the end of the quarter, to $192. It also means that Lihir, with a cash cost of $1152/oz, Telfer, with a cash cost of $1296/oz and Bonriko, with a cash cost of $1889/oz, have either become uneconomical or are very close to it. The balance sheet worsened considerably in FY13, with the net debt to equity ratio soaring from 14% to 41%. High costs and falling gold prices are hammering the group’s cash flows, limiting its options to arrest the balance sheet deterioration. This increases the odds of a capital raising. NCM stuck to its FY14 production guidance of 2.0 – 2.3 million ounces. Unfortunately, it is mining lower grade ore from its gold mines, as evidenced by the September quarter production report. A repeat performance in subsequent quarters increases the risk of missing production guidance. Amidst all these concerns, we think there is enough bad news to send NCM shares even lower from current levels. For all of our latest australian sell shares and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Crown Limited (CWN) Share To Buy
Crown (CWN) manages a variety of gaming and entertainment facilities, including, bars, restaurants, nightclubs, cinemas and retail outlets. It also develops hotels and conference centre facilities. The company wholly owns and operates two integrated resorts; the Crown Entertainment Complex in Melbourne and Burswood Entertainment Complex in Perth. Mr James Packer currently owns a 50.1% stake in the group. CWN also has an interest in several different projects including:
>> 33.7% interest in Melco Crown Entertainment (MCE), which is based in Macau >> 50% interest in online gambling site Betfair >> 24.5% interest in Cannery Casino Resorts in the US >> 50% interest in Crowns Aspinall’s (UK) which operates three regional casinos in Newcastle Swansea and Northampton >> Normalised operating revenue grew 5.6% to $2.89 billion >> Net profit before significant items came in at $473.2 million, a 14% jump on FY12 >> The groups’ total dividends over the year were 37 cents a share, fully franked, which was in line with the previous year’s payment >> The groups EBITDA margins were very impressive, especially in Melbourne where it grew 140 basis points in the 2H13 to 28.5%. The expanding margins a result of a continued cost-out focus and came despite a negative margin mix shift between higher proportion of VIP play relative to the main floor >> The group’s recent refurbishment of the Burswood casino started to pay benefits, with main floor gaming growth of 9.7%. This result especially pleasing given the weakening Perth consumer environment
Share Tip AGL Energy Limited
AGL Energy Limited (AGK) listed as an asx share tip on October 14th is Australia’s second largest retailer of electricity and gas behind Origin Energy (ORG). It services over 3.3 million retail electricity and gas customers in the eastern and southern Australian states representing a 27% market share. The company is Australia's largest private owner, operator and developer of renewable generation assets. AGK has major investments in hydro and wind, as well as ongoing developments in key renewable areas including solar, geothermal, biomass, bagasse and landfill gas. Key Points: Good FY13 Results:
>> Revenue came in at $9.72 billion, a 30.3% increase on the prior year’s results. The growth was mainly the result of the acquisition of power plant Loy Yang A, but the retail division did make a solid contribution >> The increased revenue translated to an underlying profit of $598.3, a 24.1% climb on the FY12 results >> The higher earnings and a focus on working capital helped operating cash flow climb around 30% over the year to $602 million >> Gearing (Net Debt/Net Debt + Equity) at the end of the financial year was 27.8%, this was higher than the previous year, but the result of the worthwhile Loy Yang A acquisition >> The solid financial year saw the group increase its total dividends payment to 63 cents a share, fully franked, a 3.3% increase on FY12 >> Over the last two years AGK has traded on a PE discount of around 17% to its major rival ORG >> That discount now sits at 29% and given the solid FY13 result by AGK we don’t think it is justified >> The groups forecast dividend yield of 4.2% is also superior to ORG’s 3.5%, which we think will play a factor in narrowing the valuation gap
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Nov 2014 - Nov 2016
Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 6.45%*
DISCLAIMER: *Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014 *Return figures are gross returns and do not take into account fees or brokerage costs. *Returns are calculated based on a $50,000 hypothetical portfolio, risking 2% of the overall portfolio balance ($1,000) as a starting point for each trade. *Due to slippage and gapping, losses can sometimes exceed $1,000 on an individual trade. *Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published. *ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015
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