Coca Cola – FY18 Earnings

Coca Cola is under Algo Engine sell conditions and there was nothing in yesterday’s FY18 earnings release that would suggest a recovery is near. FY18 NPAT earnings fell 7% to $388.

We look for the CCL share price to remain weak and $7.50 is the next level of support based on a stable dividend outlook.



Brambles – Valuation Review

Brambles has announced the sale of its IFCO business to Triton & Luxinva for US$2.51bn. The proceeds will be used to:-

$300m return of cash through a $0.29 special unfranked dividend and up to  $1.65bn on-market buy-back. The balance will go towards reducing debt.

Our key concern with BXB is the recent earnings result showed underlying EPS growth of 2% and with the stock trading 22x earnings, it looks expensive.




Alumina – Algo Sell Signal

Alumina is now under Algo Engine sell conditions and we expect the share price to struggle below the $2.80 level.

Alumina prices are likely to weaken over the next 12 months which will weigh on the cash receipts from the AWAC joint venture.

2018 net profit after tax was reported at US$690m. AWC declared a total dividend for the year of US$0.227, which was ahead of market expectations.

Stay short AWC with a stop loss above the $2.80 resistance.



Buy IPL $3.00 – $3.20 Range

IPL is under Algo Engine buy conditions following the higher low formation at $3.20.

The stock price has been sold off following concerns around the impact of the Queensland floods. In particular, the short term closure of the Phosphate Hill plant and the impact to rail transport.

With the stock now trading 10x FY20 earnings we see much of the downside risks, already priced in.

Accumulate  IPL between $3.00 and $3.20