Gold Road Resources – Update

Posted on | by Leon Hinde

Gold Road Resources is under Algo Engine buy conditions and along with NCM is our preferred gold exposure.

The company provided financial statements for the 6 month period ending June 30, which displayed revenue $135mn, EBIT, $36mn and EPS of $0.026.

Key points include:

Gold Road repaid all debt whilst retaining the undrawn facility of A$100M (US$71M). Net cash and equivalents of A$84M (US$60M) at 30 June 2020.

71,865 ounces produced* at attributable AISC of A$1,233/oz (US$875/oz)2.

Quarterly free cash flow of A$23.8M (excl. unsold bullion
and dore).

ASX – August Volumes

Posted on | by Leon Hinde

ASX is under Algo Engine buy conditions.

August cash equity volumes and average daily futures contract volumes were well down on the same time last year, -13% and -19% respectively.

FY21 earnings are likely to be flat at best and with the stock on a forward yield of 2.8%, we see it as “fully valued”. Owning the stock and selling an at the money covered call option is generating 8% cash flow.

We see value in buying ASX on any market weakness.

Ramsay Healthcare

Posted on | by Leon Hinde

Ramsay Health Care

RHC delivered 8% revenue growth in FY20, with a strong 1H more than offsetting the 4% decline experienced in 2H.

Australia suffered the greatest contraction in 2H, down 8% on the same time last year. UK revenue growth remained solid, up almost 5%.

Based on normalization in FY22 earnings, we have the stock trading on a forward yield of 2.2%.

CSL – Buy

Posted on | by Leon Hinde

CSL is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

CSL & the Australian Government signed a Heads of Agreement to supply 51mn doses of the University of Queensland’s COVID-19 vaccine.

CSL & AstraZeneca also signed a Heads of Agreement for manufacture & distribution of 30mn doses of AZN’s COVID-19 vaccine (AZD1222).

We expect EPS to increase by 8 – 10% in FY21 and FY22. This supports a forward dividend yield of 1.1%.

Buy CSL within the $265 – $280 support range.