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18 Share Tips - 23 July 2018

18 Share Tips - 23 July 2018

By Anthony Black 23.07.2018

Ian Dorrington, Argonaut

Triton Minerals (TON)

Chart: Share price over the year
TON has signed a letter of intent with MCC International Incorporation for the engineering, procurement and construction (EPC) of the Ancuabe Graphite Project in Mozambique. This is a key milestone, enabling TON to move forward with a preferred construction partner. It can now commence discussions on an EPC linked loan facility.

Botanix Pharmaceuticals (BOT)
Chart: Share price over the year
The US Food and Drug Administration has approved the first cannabidiol (CBD) based product for treating epilepsy. It’s an important step forward in accepting cannabis-derived medications as viable treatments. BOT uses a synthetic form of CBD in treatments. In our opinion, this makes the use of CBD, as an active pharmaceutical ingredient, more attractive as it’s a manufactured compound. 
Agrimin (AMN)
Chart: Share price over the year
The pre-feasibility study for the Lake Mackay sulphate of potash project is, in our opinion, economically robust. We value the project at $1.29 a share, but we have discounted it by 25 per cent to take into account the risk of securing funding and executing the project. Based on our price target of 97 cents, we have moved to a hold recommendation. The shares were trading at 91.5 cents on July 19.
Fortescue Metals Group (FMG)
Chart: Share price over the year
The iron ore giant will spend $US1.275 billion on building a new mine in Western Australia. The project will include an additional 143 km rail spur, a new 30 million tonne a year dry ore processing facility and associated infrastructure. Production is due to start in December 2020. FMG will deploy capital in stages, with the bulk of spending expected in fiscal year 2020. Hold for now.

Woodside Petroleum (WPL)
Chart: Share price over the year

Analysts are suggesting the stock is currently priced for perfection. First quarter production was solid, although marginally below some forecasts. Consider taking profits given a strong recent run on the back of a higher crude oil prices. Shares in the energy giant were trading at $34.18 on July 19.
Myer Holdings (MYR)
Chart: Share price over the year

Third quarter sales were below estimates, with the company saying an unseasonably warm start to winter had a negative impact. Analysts are focusing on strong online sales now harming in store sales. Shares in the department store giant were trading at 41.7 cents on July 19.

Tony Locantro, Alto Capital


Proteomics International Laboratories (PIQ)
Chart: Share price over the year

This emerging biotech recently announced its largest analytical contract worth $US260,000 to conduct a study for treating allergic asthma. The company is moving closer to a cash flow positive position. Revenues from the PromarkerD diagnostic test kit for diabetic kidney disease are expected in late 2018. PIQ remains one of my preferred biotech opportunities. The shares finished at 24 cents on July 19.

Mako Gold (MKG)
Chart: Share price over the year

MKG recently reported impressive gold results at the Napie Project in Cote d’Ivoire. This emerging West African gold junior has also built a project portfolio in Burkina Faso and has identified a number of large gold systems. The stock appears to have strong growth potential. Current weakness provides an opportunity. The stock closed at 20.5 cents on July 19.


Red Metal (RDM)
Chart: Share price over the year

This diversified explorer has secured a new zinc project 130km along trend from MMG’s Dugald River Mine in north Queensland. Exploration activity continues in South Australia. In my view, a weaker share price provides another opportunity to gain exposure to a high risk/high reward suite of projects. The shares finished at 12 cents on July 19.

Stavely Minerals (SVY)
Chart: Share price over the year

SVY is hunting for a big copper-gold porphyry system in Victoria, and a recent report by an industry expert suggests the right methods are being utilised. It’s rare for a junior explorer to hunt such a high impact target, and further drilling results are keenly awaited. Some promising gold results have been released close to the Ravenswood Mine in Queensland.


Westpac Bank (WBC)
Chart: Share price over the year

I remain bearish on the banks as the residential real estate correction continues in the eastern states. Westpac recently announced it would cease new lending to self managed super funds looking to invest in property. While yield will always be sought, I see better value elsewhere and suggest trimming bank holdings.

Wesfarmers (WES)
Chart: Share price over the year

The retain giant has performed very well, with the share price rising from $41.07 on April 16 to close at $49.76 on July 19. But I see looming headwinds for the retail sector, with falling house prices and potential interest rate hikes dampening consumer sentiment. I would consider locking in profits.

Tony Paterno, Ord Minnett


Rio Tinto (RIO)
Chart: Share price over the year

The global miner is trading below our net present value and offers strong free cash flow. We like the company based on its tier 1 assets, strong balance sheet, production growth outlook and improving shareholder returns. The sector isn’t replenishing its project pipeline, which supports commodity prices. We believe the consensus upgrade cycle will continue over the medium term. Low debt across the sector and a favourable macro backdrop supports strong shareholder returns. 

Metcash (MTS)
Chart: Share price over the year

Food deflation is easing, and there’s signs that some food inflation is occurring at a faster rate than anticipated. We expect upside from cost savings and from earnings and multiple valuations. We also expect MTS to benefit from a capital management initiative to buy back about $125 million in shares and from future capital management programs.


AusNet Services (AST)
Chart: Share price over the year

Remains one of our preferred regulated utility companies on good dividend cover and valuation support. It continues to target further cost efficiencies. We expect the company to grow its unregulated asset base to the targeted $1 billion by 2021, and to implement further dividend increases without exceeding debt metrics. However, the stock is trading close to our price target.

Pendal Group (PDL)
Chart: Share price over the year

We expect the share price of this global investment management business to trade below historical valuations in the near term given Westpac intends to sell its remaining 10 per cent holding. We remain cautious about the cost base as the business transitions from the BT brand to Pendal. The master relationship agreement (MRA) with Westpac, which represents more than $10 billion in funds under management, is due for a fee review towards the end of the year.


Coca-Cola Amatil (CCL)
Chart: Share price over the year

The beverage maker is trading well above our discount cash flow valuation. A higher price/earnings multiple subtracts from its appeal on a risk/reward basis. CCL faces structural challenges in product and channel. We expect a subdued Indonesian market to weigh on near term earnings. 

Japara Healthcare (JHC)
Chart: Share price over the year

The share price of this aged care operator doesn’t adequately compensate for risk, in our view. We’re concerned about the heightened degree of execution risk given development expansion plans. First half 2018 net profit after tax of $10.3 million was down from $14.6 million in last year’s prior corresponding period. The shares have fallen from $2.225 in late November last year to trade at $1.832 on July 19.

Please note that simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of You should seek professional advice before making any investment decisions.


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