Ansell Gets A Boost From The Lower Aussie

Posted on | by Todd | Leave a Comment on Ansell Gets A Boost From The Lower Aussie

Since posting an intra-day low of $20.30 on August 15th, shares of Ansell have traded 12% higher to reach $22.81 in early ASX trade today. 

The August low coincided with their FY17 earnings report. Part of that report focused on the level of earnings based in USD and how an stronger AUD could dampen results. 

The AUD/USD has now dropped over 5% since trading at .8125 on September 8th. As a result, ANN shares have pushed higher. 

We currently see ANN trading at 18X earnings and estimate FY18 EPS around USD .95 cents. 

As such, we consider ANN a good buy/write strategy up to $23.50 to increase cash flow and enhance portfolio returns. 

Ansell

 

Ansell – FY17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Ansell – FY17 Earnings

FY17 results for ANN were mixed with revenue growth of 2- 3 %. Cash conversion was strong and lower capex supported the dividend.

With this report, it’s difficult to draw any clear comparisons to past results as added expenses and divestment of businesses segments renders historical divisional comparison meaningless.

We view FY18 guidance as conservative and see the 3% forward yield as an attractive risk reward proposition.

A streamlined operation and moderating raw material costs should see Ansell’s share price trade higher over the next 12 -24 months.

Chart – ANN

 

 

Has The AUD Reached The RBA’s Pain Level?

Posted on | by Todd | Leave a Comment on Has The AUD Reached The RBA’s Pain Level?

At the start of the year, the market consensus was for the Aussie Dollar to fall against the major currency pairs during 2017. So far this year, the AUD/USD has climbed 10% and almost touched .8000 last week.

At 1pm today, RBA chief Philip Lowe will be giving a speech in Sydney. Since many exporters look at .8000 as a pain level, it’s reasonable to expect Mr Lowe to comment about the level of the Aussie.

The strengthening AUD/USD has created a headwind for domestic companies with earnings exposed to the softening USD.

Four companies that we follow which have seen their share prices dampened due to a stronger Aussie are: BXB, CPU, ANN and JHX.

Australian Dollar

Ansell – Buy Now

Posted on | by Leon Hinde | Leave a Comment on Ansell – Buy Now

Our Algo Engine triggered a buy signal in Ansell on the 7th February at $21.50 and the stock is now trading $23.22.

The recent selling weakness, where price has retraced from $25 back to $23, provides another buy side entry opportunity. The company will commence a $400m share buyback program later this month which should help to underpin the share price.

Stop-loss orders should be applied on a break back below $22.50. Buy and hold investors seeking added yield, may prefer to take a slightly longer-term view and sell-out-of-the-money calls at $25 into November.

Chart – ANN

Ansell: Looking Good For A Buy/Write Strategy

Posted on | by Todd | Leave a Comment on Ansell: Looking Good For A Buy/Write Strategy

Shares of Ansell (ANN) reached a 5-month high of $25.30 yesterday as a Chinese consortium agreed to buy part of their non-core asset group for $800 million.

In announcement after the agreement, ANN officials outlined a plan to buyback up to 10% of the company’s common stock over the next 12 months.

We believe this development will underpin the share price to the downside. However, $26.00 could could be a difficult level to clear, even with the buyback.

With today’s sharp sell off into the $23.00 handle, ANN shares are a good candidate for a buy/write strategy. Selling the $26.50 calls into December will enhance the returns, and keep investors exposed to the August dividend of approximately 32 cents.

Ansell

 

ALGO Signal- Ansell

Posted on | by Todd | Leave a Comment on ALGO Signal- Ansell

The Algo engine generated a sell signal for Ansell at the close of trade yesterday.

From a technical perspective, Ansell’s closing price of just under $23.00 is very close to the 50% retracement  of the high of $25.65 traded on January 9th and the low price of $20.60 posted on February 20th.

While we still like the longer-term growth prospects of the company, we are seeing signs that the general market may be rotating lower over the medium term.

As such, we believe its reasonable to expect that investors will be able to buy Ansell back below the $22.00 handle.

The current price of $23.35 offers a good opportunity to sell close-to-the-money call options to enhance portfolio returns.

Ansell – Buy Signal

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

Ansell has purchased Nitritex, a UK-based manufacturer of premium clean-room and healthcare Life Sciences consumables. The deal is relatively small at US$60m and will be  near-term earnings accretive.

The transaction adds to income generated outside the US and extends to the Ansell’s expertise across the Life Sciences segment.

We’re buyers of Ansell on the current price pullback. Value exists in the $22.50 – $23.50 range.

FY17 revenue $1.65b, EBITDA of $285m, net profit $170m, EPS $1.10 and DPS $0.46 places the stock on 2.5% forward yield.

We expect underlying business growth into FY18 and FY19 of 6% – 9%.

Chart – ANN

 

Healthcare Algo Buy Signals

Posted on | by Leon Hinde | Leave a Comment on Healthcare Algo Buy Signals

At this point in the market we prefer healthcare names as a sector allocation for new money. Here are the recent buy signals generated by our Algo Engine.

With SHL, CSL and ANN we’ve added covered calls to boost the annualised cash flow to over 10%, whilst still allowing for capital growth if exercised at the strike price of the sold call.

 

Chart – SHL
Chart – COH
Chart – RHC
Chart – ANN
Chart – CSL