Origin – Reaffirmed FY18 Guidance

Posted on | by Leon Hinde | Leave a Comment on Origin – Reaffirmed FY18 Guidance

 ORG indicated it’s targeting a Crude Oil price of US$40 per barrel distribution break-even for FY20.

ORG hosted its 2017 investor day,  this week, at which time they reaffirmed their FY18 guidance with respect to capital expenditure, debt management and APLNG.

The market is encouraged by the potential for up-to $500m in cost savings,  ($110m OPEX and $400m CAPEX), over the next 2 – 3 years.

ORG will likely reinstate dividend distributions, building to $0.40 per share in FY19 and $0.50 in FY20.

These targets have ORG trading on a FY19 forward yield of 5%.

We continue to see ORG as a buy on the dip opportunity and look to keep exposure to the name in portfolios over the next 3 to 5 years.

Origin Energy

 

 

 

 

 

Healthcare – Preferred Holdings

Posted on | by Leon Hinde | Leave a Comment on Healthcare – Preferred Holdings

CSL, SHL, RMD & RHC remain our preferred healthcare names.

Resmed is looking a little expensive and we’d like to repurchase on the next retracement.

Sonic Healthcare:  we expect 5 – 8% EPS growth and consider this a good buy/write addition to portfolios.

Ramsey Healthcare – Accumulate with $74 price target

CSL:  15 – 20% EPS growth remains attractive and adding a covered call option enhances the yield.

CSL

 

 

Buy AGL – Generate 10 – 12% cash-flow

Posted on | by Leon Hinde | Leave a Comment on Buy AGL – Generate 10 – 12% cash-flow

Our Algo Engine triggered a buy signal in AGL back in July at $23.00.

We see the current retracement from $26 back to $24 as another opportunity to add AGL to portfolios.

We hold AGL in our ASX 50 model and  we’re encouraged by the double-digit EPS growth outlook and the  5% dividend yield.

We’ve also added a covered call option to boost the cash-flow yield to 10 – 12% p/a.

AGL

S32 – Spins-Off South African Energy Coal

Posted on | by Leon Hinde | Leave a Comment on S32 – Spins-Off South African Energy Coal

South32 announced plans to run its South African Energy Coal (SAEC) business separately from the rest of the company from April 2018.

We see this announcement as a net positive for shareholders.

Risks to South 32’s earnings relate to their exposure to commodities which have performed strongly over the near term.

S32 trades on a forward yield of 4.1% and we hold the stock in our ASX 50 model.

South 32

Algo Buy Signal – AMP

Posted on | by Leon Hinde | Leave a Comment on Algo Buy Signal – AMP

Our Algo Engine generated a recent buy signal in AMP.

With the price action finding support at $4.75 and now trading into the $5.15 range, we continue to see upside momentum.

AMP looks well positioned to benefit from domestic trends in mandated super and search for yield in infrastructure & property.

AMP is currently in our ASX 20 and ASX 50 model portfolios.

AMP

S32 – Valuation Review

Posted on | by Leon Hinde | Leave a Comment on S32 – Valuation Review

We assume no change to S32 earnings guidance but will review commentary on 5 December when S32 is set to host a capital markets day in Perth.

We expect management to update production guidance for its core operations for FY18.

FY18 revenue should be flat on FY17 at $7b and EBIT will also be in-line at $1.7b. We have S32 trading  on a 4% forward yield

We see the potential for earnings upgrades should spot metal prices stay at current levels. Strength in alumina, manganese, coking coal and thermal coal is helping to underpin our outlook.

 

 

Ramsay Healthcare – Long Term Value

Posted on | by Leon Hinde | Leave a Comment on Ramsay Healthcare – Long Term Value

Ramsay Healthcare has been making a “lower high” pattern since selling off from the $75 high in August.

We’re reluctant to look at counter trend trades, however, with the broad thematic of the healthcare space being one of our preferred sectors, we now look to re-enter long positions in RHC.

Over the next 12 months we look for RHC to trade back towards $72 – $75 level on the back of the recent comments from the CEO, where he confirmed the company should deliver 8 – 10% EPS growth.

Ramsay Healthcare

 

 

 

 

Sydney Airport & Transurban React to Lower Yields

Posted on | by Leon Hinde | Leave a Comment on Sydney Airport & Transurban React to Lower Yields

With the short end of the interest curve in the US moderately increasing and the longer end not reacting, we’re seeing a flattening in the US yield curve.

The message this sends,  is the bond market believes US rates will rise short term but the global economy is still fragile and inflation is low, therefor the prospects of longer term rate increases are quite low.

These events are helping to support interest rate sensitive names such as SYD and TCL.

SYD will pay a $0.16 dividend on the 29th of Dec and TCL will pay $0.26.

SYD is in the ASX 50 model and TCL is on both the ASX 20 and ASX 50 model.

We consider both names fully valued at current prices and recommend overlaying a covered call option to enhance the return.