Goodman Group (GMG) is an integrated commercial and industrial property group that owns, develops and manages real estate including warehouses, large scale logistics facilities business parks and offices globally.

The group also offers a range of investment property funds, giving investors access to specialist fund management services and commercial and industrial property assets.

The company is broken up into three main division: Investment, Development & Management

The company operates in Australia, New Zealand, Asia, Europe and the United Kingdom. GMG is a stapled security comprising a unit in the trust and a share in the management company.

FY12 Results

GMG’s FY12 results showed another year of continued growth.  Operating profit was $463 million, up 21% on FY11. Operating EPS was 30.5 cents a security, which was an 8% improvement on the FY11 result.

The group was also able to increase its dividend on FY11 by 3% to 18 cents a security. GMG’s results were impressive and the group guided for continued growth in FY13, with an expected operating profit increase of 13.2% to $524 million.

The assets

A breakdown of the GMG’s divisions shows the quality of its assets. The investment division managed to maintain an occupancy ratio of 96%, a retention rate of 80% and like-for-like rental growth of 2.8%.

These are tremendous results given the state of global economy and are real reflection of the quality of the property portfolio and the quality of GMG’s customers.

The group’s development division has over $1.9 billion in work in development spread around Europe, Asia, and Australia. GMG also expects to grow its work in development to $2.5 billion in this half, with entry into the North America market adding to diversity.

The development segment takes a low risk strategy on new developments, getting an average of 80% pre-commitment on all new projects. This ensures that that the group is not left ‘holding the bag’ with excess properties.

The management division grew its assets under management by 12% in FY12. We expect continued growth in this segment as the hunt for yield continues.

Outlook

GMG’s FY12 results were impressive, with all divisions recording solid growth. The group is also expecting double digit growth in FY13.

We are inclined to believe that they will achieve these results, given the quality and diversity of its asset base. Overall we think GMG has good growth prospects and quality assets that will see continued share price appreciation.

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Transfield Services (TSE) delivers essential services to key industries in the resources and industrial, infrastructure services and property and facilities management sectors.

A leading global provider of operations, maintenance, and asset and project management services, TSE’s operations span Australia, New Zealand, the United States, the United Arab Emirates, Qatar, New Caledonia, South East Asia, India, Chile and Canada.

Late August the company released its FY12 results and announced the departure of CEO Peter Goode.

Earnings disappoint

TSE’s FY12 results showed a return to profit that fell short of market expectations. The company reported FY12 NPAT profit of $85.0 million which was a swing from the $19.2 million loss a year earlier.

However on an underlying bias NPAT was down 15.1%.  Revenue over the period jumped 13.9% to $3.14 billion. Another worrying sign was return on capital employed, which fell to its lowest level in over five years, to 8.8% from 12.4% in FY11.

Easternwell and Goode

Back in December 2010 TSE purchased Queensland-based resources services provider, Easternwell, for $575 million. The business has generally disappointed with FY12 earnings missing the guidance the company provided in April.

The business is going to be under continued pressure as conditions in the mining sector remain subdued on the back demand weakness out of China.

We make mention of the Easternwell business because we think that the incoming CEO may look at writing down some of the $346 million in intangibles assets currently on the books.

Outlook

TSE’s underwhelming FY12 results and lacklustre guidance of $125 million -$135 million are not good signs for the company. The share buy-back, which we believe has been underpinning the stock price, has now ended, so that’s one piece of support that is no longer there.

Whilst TSE is less leveraged to the mining sector than other service contractors, it has some exposure which will come under pressure. We believe these concerns, combined with the possibility of writedowns in the future, will weigh on TSE’s share price in the near-term.

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Mirabela Nickel (MBN) is a mining company focused on the production and sale of nickel concentrate.

The miner’s key asset is the Santa Rita nickel operation in Bahia, Brazil.

MBN has faced a number of headwinds in recent times, ranging from lower nickel prices, higher cash costs and a deteriorating cash position.

Cost pressures

Sentiment towards MBN has nosedived since it announced an 11% surge in December quarter cash cost to US$7.42/lb.

Although cash costs fell slightly to US$7.37/lb in the March quarter, investors are still questioning whether the group can fulfil its aim of getting cash costs down to US$6/lb by year end.

Cost reductions are expected to come from higher nickel production volumes (through improved grades and increased plant throughput), as well as lower staff costs and rationalisation of contractor costs.

MBN therefore has little margin for error in its attempt to bring costs down, and we would expect a harsh reaction from investors if the group falls short on this aim.

Cash problems despite capital raising

MBN’s problems led to a very low cash balance of US$41 million as at May 9. At the end of March, cash on hand totalled US$60 million.

In less than two months cash reserves slid ~33% due to the rapid deterioration in the nickel market.

Ratings agency, S&P, picked up on this in late March when it downgraded MBN’s credit rating due to concerns over a prolonged period of negative operating cash flow.

It therefore came as no surprise when MBN announced a $120 million capital raising in mid-May.  The group said the funds would be used to strengthen its balance sheet.

Whilst the raising may have alleviated short-term funding pressures, the group is still likely to face cash flow problems given its operational issues and the dire outlook for nickel prices.

Outlook

As an unhedged producer, MBN is particularly sensitive to the recent weakness in nickel prices.

Lower selling prices compound the problems for higher cost miners. In MBN’s case, we have seen just how severely cash reserves can get depleted from a weaker nickel market.

The group’s deteriorating financial position necessitated a capital raising, but we are of the view that its cash flow problems are likely to persist unless nickel prices stage an unexpected recovery in the near-term.

We at Australian Stock Report believe these headwinds are likely to weigh on MBN’s share price for a while yet.

 

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Boral Limited is a manufacturer and supplier of building and construction materials in Australia and internationally.  Boral supplies building products to the residential and commercial building markets, operates clay brick business in the U.S. (for clay roof tiles and fly ash) along with the production of plasterboard, timber products and concrete products. The group is listed on the Australian Stock Exchange and is a member of the S&P/ASX 200.

Boral has downgraded its profit guidance for the second time in a little over two months.

It now expects net profit to be between $100 million and $110 million, down from the previously downgraded guidance of $128 million to $153 million.

Interim CEO Ross Batstone said in a statement “a number of recent events have come together to weaken Boral’s trading performance in the fourth quarter which add to the impact of ongoing weakness in the Australian new housing construction market.”

Boral also noted that the business continues to operate comfortably within its Banking covenants.

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Transpacific Industries Group Ltd. provides integrated industrial cleaning and waste management solutions to customers across Australia and New Zealand. The Company also imports and distributes heavy-duty commercial vehicles. The group is listed on the Australian Stock Exchange and is a member of the S&P/ASX 200.

 

Transpacific Industries downgraded its FY12 profit guidance from $17.3 million to between $8 million and $13 million.

The group also lowered its EBITDA to between $435 million and $442 million. It had previously guided an EBITDA between $445 million and $459 million.

The company blamed the fall in EBITDA on a decrease in Cleanaway’s volumes, exacerbated in Queensland by customers deferring the disposal of waste pending expected removal of the landfill levy from July 1, and subdued activity in the manufacturing sector.

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Carsales.com Limited (CRZ) is an Australian business offering online access to automotive classifieds.

It is the largest consumer website in the country that covers automotive, plant machinery, motorcycle, caravan, marine and

display advertising.

Revenue is principally derived from online advertising, which includes dealer and private sales, and display adverting, where

corporate customers such as insurance companies place ads on CRZ’s website.

The group also has a data and research services division, which provides solutions to customers including importers, dealers

and industry bodies.

Industry leader

CRZ prospers even in uncertain economic times because it has been at the forefront of the continuing migration from print to online advertising.

Being proactive in identifying market trends has helped CRZ maintain leadership in its market.

Although the online advertising industry has low barriers to entry, CRZ’s trusted brand and new product offerings are key

reasons it has been able to stay ahead of the pack.

Reflecting this point, 75% of the time looking at auto ad websites was done on a carsales-owned site, this according to CRZ’s 1H12 results presentation.

1H12 earnings

CRZ’s 1H12 results continued a pattern of robust earnings and revenue growth.

For the most recent half, net profit rose 20% on-year to $27.6 million. Revenue was up a similarly healthy 22%.

CRZ declared an interim dividend of 11.3 cents per share, up from 9.4 cents in 1H11. Since FY07, half year net profit has increased at a compound annual growth rate of 40.6%, whilst revenue has grown at 28.9%.

Dealer revenue growth of 16% was delivered on the back of a steady increase in used vehicle enquiries and strong growth in new vehicle enquiries.

Private ad growth was up a more modest 7%, but with the release of new product initiatives throughout the half, coupled with a premium price rise in November, CRZ is well positioned for the second half.

Outlook

Following a buoyant first half, CRZ forecast a similarly strong second half.

The group maintains a dominant share of the online car ad market, and with new product initiatives lined up for 2012, is unlikely to relinquish its grip any time soon.

CRZ is cashed up, and with no debt, has the flexibility to pursue external growth opportunities and support its dividend. Whichmakes it a stock to watch in the future.

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Coca-Cola Amatil Limited manufactures, distributes and sells carbonated soft drinks along with still and mineral waters, fruit drinks, ready-to-drink coffee and tea and flavored milk drinks. The Company also rents and services commercial refrigeration equipment to food/beverage manufacturers. The company is listed on the Australian Stock Exchange under CCL.

Coca-Cola Amital has announced that it expects its first-half net profit to grow by around 4%-5% for FY12, before significant items.

Managing Director Terry Davis said in a statement “Given the difficult trading and consumer environment we are pleased with the operating performance in the year to date.”

Mr Davis also made reference to very strong growth in the groups Indonesia and PNG businesses.

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Leighton Holdings Limited offers a variety of project development and contracting services to public and private sector clients in the Asia-Pacific region.

 

Leighton provides design management, civil engineering construction, building, mining, process engineering, telecommunications, waste management and infrastructure operation and maintenance and property development and management. Leighton is listed on the Australian Stock Exchange and is a member of the S&P/ASX 200.

Leighton reaffirmed its guidance of $100- $150 million in underlying net profit for the six months to 30 June 2012. The group also confirmed its full year profit of $400-$450 million.

The company noted that for the March quarter it expects a loss of $80 million due the performance of Airport Link and the Victorian Desalination Project.

CEO Hamish Tywhitt said that “the Leighton Group’s diversification strategy, underlying strength and positive outlook is reflected in our work in hand which remains around $45 billion with a further $11.5 billion that runs out beyond five years”

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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 48.09% stake in the group.

CWN also has an interest in several different projects including:

• 33.65% interest in Melco Crown entertainment, 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 Aspers Holdings (UK) which operates three regional casinos in Newcastle Swansea and Northampton

The company also recently increased its stake in Echo Entertainment to 10%.

Latest Results

CWN’s 1HFY12 results were impressive considering the challenging consumer environment.

The company reported normalised NPAT of $211.6 million, which was an increase of 28% on the prior corresponding.

CWN’s Australian casinos reported revenue growth of 10.7% to $1,387.9 million, with normalised EBITDA up 5.2% to $362.4 million.

A breakdown of the two main facilities showed that Crown Melbourne’s normalised EBITDA added 3.7% to $269.4 million, whilst Burswood EBITDA gained 8.7% to $116.6 million.

The company declared an interim dividend of 18 cents, which equates to a health yield of over 4%.

CMJ and Echo Entertainment

Today it was reported that James Packer will sell his controlling stake in Consolidated Media Holdings (CMJ).

Whilst it is just a rumour, a takeover is looking like happening sooner rather than later given CWN’s increased 10% stake in Echo Entertainment (EGP).

EGP’s assets include Sydney’s Star City and Jupiter’s Hotel and Casino in Queensland; however it is Star City that would be the most appealing to CWN.

Star City is CWN’s major, if not only, rival in the highly coveted VIP segment. A merger of the two companies would alleviate any pressure aggressive competition would have on the segment’s margins.

Looking forward

CWN”s results speak for themselves, they were able to grow earnings in a tough consumer environment.

The reported move of James Packer selling his controlling interesting in CMJ has already sparked further takeover rumors in regards to EGP.

Mr. Packer also increased his own personal stake in CWN from 46% to 48.1%, showing his confidence in the company.

We believe that the takeover of EGP would be seen as a positive move for CWN.

As such we think CWN is a stock to watch in the coming months.

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Alesco Corporation Limited is small cap stock that is involved in the marketing and distribution of industrial products to the building and renovations, construction and mining, scientific and testing and automotive industries.

The Company distributes products such as cabinets and panelling, earthmoving and truck tires, garage door openers and laboratory testing equipment.

Alesco Corporation has received a $188.4 million takeover offer from Dulux Group.

Dulux Group currently holds almost 20% of Alesco shares and has offered $2.00 a share for each remaining share.

The offer represents a 42.9% premium from Alesco’s last closing price and will only proceed if the Dulux gain 90% of share on issue.

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