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BUY RECOMMENDATIONS
IMA is a mineral sands producer in Western Australia. Projects at Boonanarring and Atlas are within highly
prospective regions. Results are soon expected from the Atlas project amid recent extensions at
Boonanarring North. Positive results could add to an impressive reserve base. IMA is profitable and
growing. The cycle is working for IMA, but the potential for further resource upside is appealing.
HOLD RECOMMENDATIONS
Exopharm (EX1)
EX1 is a clinical stage biopharmaceutical company involved in regenerative medicine. Pre-clinical data from
an osteoarthritis animal study found plexaris and cevaris to be safe and well tolerated after multiple dosing in
rodents. The manufacturing process is sound. Recent share price weakness caused by incomplete data from a
recent trial may provide an opportunity to gain exposure, or for existing holders to accumulate.
This diversified insurance group acquires brokers to feed its network in Australia, New Zealand and the UK.
Underlying revenue of $93.8 million in the 2021 first half was up 25 per cent on the prior corresponding
period. Underlying earnings per share grew by 36 per cent to 5.9 cents. It re-affirmed underlying EBITDA
guidance at the top end of its $65 million to $70 million range.
SELL RECOMMENDATIONS
BUY RECOMMENDATIONS
BOE has entered into binding agreements to buy 1.25 million pounds of uranium on the spot market at
around $US30.15 a pound. We believe the acquisition of a strategic uranium inventory will provide longer
term benefits. The company says it’s been proactively positioning its Honeymoon project to be Australia’s
next uranium producer of up to 3.3 million pounds a year. Honeymoon is fully permitted. We believe the
outlook for nuclear power is bullish, particularly if it’s classified as green energy by the European Union, as
recent rumours and speculation might suggest.
Zip Co (Z1P)
This buy now, pay later company offers multiple products and is enjoying strong growth. Since acquiring
Quadpay in August 2020, blended group revenue yields have risen more than 56 per cent in six months and
capital efficiency has doubled. Our valuation is $15.31. The shares finished at $8.28 on April 8.
HOLD RECOMMENDATIONS
Altium (ALU)
This multinational software corporation delivered weaker than expected first half 2021 results, in our view.
While fiscal year 2021 guidance implies a strong second half recovery, it’s still 2 per cent below our forecast
and 4 per cent below consensus. Fiscal year 2025 targets have been maintained. ALU’s long term goal of
industry transformation remains appealing, but we continue to remain cautious about the timing of a
COVID-19 recovery, which keeps ALU on hold for now.
MCR is making solid progress towards re-establishing nickel mining operations and offers exploration
upside. In our view, management is doing a top job in progressing the Kambalda project that’s largely
reflected in the share price. MCR is now entering the higher risk construction phase.
SELL RECOMMENDATIONS
The energy giant is ramping up investment expenditure. However, its joint venture restructure at the Burrup
Hub gas processing project and Sangomar oil project are delayed, while the search continues for a new chief
executive to replace the retiring Peter Coleman. In my view, the risks appear skewed to the downside. We
believe investors may be able to buy the stock at lower levels moving forward.
BUY RECOMMENDATIONS
The airline is cutting costs and likely to save about a $1 billion a year from fiscal year 2023. We expect the
business to return to cash flow positive from the June quarter of calendar year 2021. About 70 per cent of
domestic passengers fly Qantas. Internationally, Qantas remains strong. It has limited start-up costs, and can
rapidly add incremental capacity to the market. It can capitalise on the relatively soft competitive landscape
and gain market share.
HOLD RECOMMENDATIONS
Worley (WOR)
In our view, capital expenditure forecasts across Worley’s three key segments – energy, chemicals and
resources – are the best indicator of current business conditions and future revenue growth. According to our
analysis, capital expenditure forecasts imply Worley’s revenue will decline 7 per cent in fiscal year 2021, but
increase 7 per cent in fiscal year 2022 and 3 per cent in fiscal year 2023. Margin expansion driven by cost
reductions and operating leverage could also drive further earnings growth. However, we remain cautious
given an uncertain outlook amid potential for market conditions to rapidly change.
SELL RECOMMENDATIONS
Xero (XRO)
This accounting software company has acquired Swedish e–invoicing provider Tickstar that enables users to
integrate with Pan-European Public Procurement On-line (PEPPOL) infrastructure. PEPPOL enables cross
border e-procurement and e-invoicing. We see this as a strategic move that could assist Xero’s subscribers to
become PEPPOL compliant. However, we don’t expect the acquisition to provide material growth, or be an
earnings contributor in the medium term. XRO shares have performed strongly in the past month, so
investors can consider taking a profit.
Boral (BLD)
The building products maker has set an earnings before interest and tax improvement target of $300 million
under a transformation program. Australian earnings should improve from here given 2020 was impacted by
COVID-19 and bushfires. Nevertheless, we believe BLD’s valuation appears stretched at this point.
The above recommendations are general advice and don’t take into account any individual’s objectives,
financial situation or needs. Investors are advised to seek their own professional advice before investing.