JHX up 20% profit on last year

James Hardie Industries SE manufactures building products, including fiber cement siding, backerboard, and pipe. The company has significant operations in the US, but is listed on the Australian Stock Exchange.

James Hardie has reported a US$140.4 million full year operating profit, a 20% rise on year. The result was slightly ahead of analyst expectations of US$137.7 million.

Sales for the full year rose by 6% to US$1.24 billion.

CEO Louis Gries described operating earnings for the full year as solid with revenue up in Europe and the U.S. but with some rises in some costs constraining profitability.

The company declared a final dividend of US$0.38 a share.

To Access FREE Daily Trading Recommendations, Click Here!

CBA $1.75 billion Cash Profit In Third Quarter

Commonwealth Bank of Australia provides banking, life insurance and related services for individuals, small businesses and medium sized commercial enterprises.

The Bank provides corporate and general banking, international financing, institutional banking and stock broking and funds management such as superannuation product.

Financial Stock CBA reported a $1.75 billion cash profit in the third quarter, a 3% rise from the prior corresponding period.

The bank did note that subdued credit demand and high funding costs continued to eat into its profit margins.

CEO Ian Narev said in a statement “consistent with the uncertain outlook that we indicated in the Group’s half-year results in February, we have retained our conservative business settings, including tight expense control, a conservative funding profile and strong provisioning levels”

For FREE Daily Trading Recommendations, Click Now!

Coca-Cola Amital Expects First-Half Net Profit To Grow By 4%-5%

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.

Metcash Limited (MTS) is a marketing and distribution company operating in the food and other consumer goods sectors.

MTS is divided into four business units: IGA Distribution, Campbell’s Wholesale, Australian Liquor Marketers and Mitre 10. All of the business units are full owned by MTS with the exception of Mitre 10, which is 50.1% owned.

Last year, MTS completed a takeover of New South Wales supermarket chain, Franklins. The deal was finalised after the Full Court dismissed the ACCC’s appeal to block the merger on the 30th of November.

Margin squeeze

The domestic supermarket industry is dominated by Woolworths and Wesfarmers-owned Coles, with MTS coming in at a distant third.

Significant price deflation has crimped profit margins across the industry, but MTS has been hit harder than its bigger rivals.

Based on semi-annual figures, MTS’ EBITDA margin has contracted over 20% between November 2009 and November 2011.

In that same time, Wesfarmers and Woolworths have seen their EBITDA margins rise 5.4% and 1.7%, respectively.

There may be many other reasons behind the discrepancy, but it is apparent that MTS is struggling to keep up with the aggressive discounting being implemented by Wesfarmers and Woolworths.

Business restructuring

In early April, MTS shocked investors by announcing a $34 – $43 million restructuring charge related to the consolidation of its businesses and the closure of 15 regional Campbells Cash & Carry (Campbells) branches.

Additionally, MTS will book a $75 – $90 million non-cash restructuring charge related to the underperformance of two JVs in Queensland.

The write-downs followed a disappointing 1H12 for MTS, in which its underlying profit rose just 1.4% on-year to $116.6 million.

Campbells was the most disappointing business unit, with EBITA decreasing 35% to $16 million and EBITA margin dropping 73 basis points (bps) to 1.2%.

IGA Distribution – the largest of all the business units – saw its EBITA rise only 0.8% and EBITA margin slipping 5bps to 4.73%.

Outlook

Conditions for supermarket retailers like MTS have been terrible over the past two years and things are unlikely to turn around in a hurry.

MTS is in the unfortunate position of having to contend with two industry behemoths in Coles and Woolworths.

Metcash: Stocks To Watch

These companies have been forced into aggressive price discounting in order to attract customer sales, and this has come at a huge cost to MTS’ margins.

In response, MTS has looked to streamline its business through consolidation and the closure of its Campbells branches.

However it will be a stock to watch as there are questions as to whether more write-downs may be needed down the track if trading conditions deteriorate further and/or price deflation continues to cut into MTS’ margins.

Click Now for FREE Trading Recommendations

Leighton (LEI) Reaffirms Half Year Guidance

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”

To Access FREE Daily Trading Recommendations, Click Here!

Weekly Buy Recommendations: Crown (CWN)

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.

Click Now for FREE Trading Recommendations

Alesco Corporation Takeover Offer from Dulux Group

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.

To Access FREE Daily Trading Recommendations, Click Here!

Weekly Buy Recommendation: Telstra (TLS)

Telstra Corporation Limited (TLS) is a provider of telecommunications and information products and services, arguably best known as Australia’s dominant telco company.

Its principal activities are the provision of telephone lines; national local, and long distance, and international telephone calls; mobile telecommunications; data; internet and on-line; wholesale; telephone directories; and pay TV.

TLS owns a 50% stake in Foxtel while Newscorp (NWS) and Consolidated Media Holdings (CMJ) hold 25% each.

Results confirm turnaround

TLS’s 1H FY12 results showed a return to EBITDA growth after years of stagnation. EBITDA grew 3.7% to $4,750 million when compared to the $4,580 million in FY11.

Total revenue climbed by 1.1% to $12,419 million, whilst operating expenses declined 1% to $7,751 million over the same period.

One of the major earnings drivers for the company is its mobiles products; revenue was up 10.9% to $4,393 million year on year. Revenue from this product line alone makes up of one-third of TLS’ revenue.

The growth in Mobiles is impressive, especially when considering EBITDA margin of 34% was considerably higher than Optus’ 25.9% and Vodafone & Three’s 16.3%.

TLS has the only 4G network in Australia and with many new mobile phones being designed with 4G capabilities, the company can continue to experience strong growth in this market.

$11 billion NBN booty

Earlier this month TLS finalised its definitive agreements with NBN Co and the government for its participation in the NBN rollout.

The agreement will provide the company with approximately $11 billion in post-tax net present value over the long term life of the agreement.

The $11 billion includes compensation from the government for decommissioning its copper network and allowing the NBN to use some of its infrastructure.

In a strategy update on April 19^th, TLS said it expected to generate $2 – $3 billion in free cash flow over the next three years, subject to the NBN roll out schedule and market conditions.

TLS also said that it didn’t have the franking capacity to increase dividends before 2014 and that it had no immediate plans for a share buyback.

Arguably a better longer-term share price driver for a company is the implementation of a dividend increase over a buyback.

A dividend increase signals confidence in the long-term prospects of a company, and that TLS’ management has recognised this is a positive thing for shareholders.

Widening yield differential signals positive outlook

TLS is currently trading on a forecast yield (28c for FY12) of over 8.5%, fully franked. This is equivalent to 12.1% pre-tax.

TLS has been able to maintain a 28 cent per share dividend since FY07 and has forecast the same amount for FY12 and FY13.

Given the healthy sums of cash TLS is generating and following this month’s strategy update, we would anticipate a dividend increase from 2014.

When considering the next likely move in interest rates is down, we believe income-oriented investors will increasingly prefer TLS’s dividend yield over potentially lower interest rates on their savings accounts.

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

Click Now for FREE Trading Recommendations

Biota Holding (BTA) To Merge with Nabi Biopharmaceuticals And List

Biota Holdings Limited focuses on the research and development of new human drugs for the treatment of viral respiratory diseases.

Biota’s marketed products are used for the treatment of influenza along with an influenza diagnostic test kit.  The Company is also developing products for the treatment of RSV and rhinovirus.

Small Cap Biota Holding announced that it plans to merge with Nabi Biopharmaceuticals to form a combined company to be listed on Nasdaq.

Chairman Jim Fox said “We believe this is a necessary step to increase our options for the development and commercialization of our product portfolio and will ultimately improve the recognition of the underlying value of our product portfolio for our shareholders.”

Under the merger Biota shareholders will own about 74% of new company, whilst Nabi will own the remaining 26%.

Click to Receive FREE Daily Trading Recommendations!

Santos Limited (STO) First Quarter Revenue Up 50%

Santos Limited explores for and produces natural gas, crude oil, condensate, naphtha and liquid petroleum gas.  The Company conducts major onshore and offshore petroleum exploration activities at oil and gas fields in Australia (Cooper/Eromanga Basins), the United States (Gulf of Mexico), Indonesia and Papua New Guinea. The Company also transports crude oil by pipeline. The company is Australian based and is member of S&P/ASX 200.

Santos reported first-quarter revenue of $754 million a 50% jump compared to the prior corresponding period.

CEO David Know said that “Higher production, combined with strong oil and gas prices, has delivered a solid first quarterly result, setting a strong foundation for 2012”.

The company maintained its annual production guidance of between 51 million and 55 million barrels of oil.

For FREE Daily Trading Recommendations, Click Now!