Market Update & Important Indicators
U.S. stocks slipped Monday, pulling back one session after the Dow posted its biggest one-day gain in more than three months. Traders said market activity was relatively subdued following Friday's surge, which saw the Dow soaring 267 points, or 1.5%, after the government's employment report for April indicated the economy was pulling out of its first-quarter slump.European stocks ended mixed on Monday with most of the major exchanges finishing in the red as Greece's nagging debt troubles weighed on Europe's broader stock markets. The big exception to major indexes showing losses was the Stoxx Europe 600 which finished up 0.3% at 401.3.
Stocks in China charged 3% higher Monday, recovering from their worst week in five years to lead gains across Asia after the country's central bank cut interest rates to help the sluggish economy. The Hang Seng Index was up 0.5%, rebounding from a 2% loss last week. Tokyo's Nikkei Stock Average was up 1.3% at 19620.9, following two straight weeks of losses.
Metals on the LME were down across the board with copper falling 0.4% to US$2.89/lb and zinc dropping 2.1% to US$1.05/lb. Gold fell 0.3% to US$1,183/oz, while Brent declined 0.7% to US$64.91/bbl. The AUD/USD was steady, trading at 0.789.
In This Issue
Atrum Coal (ATU) | SPEC BUY
Atrum Coal (ATU) has signed a binding agreement with China Coal Technology and Engineering Group Corp (CCTEG) for the supply and finance of anthracite specific mining and processing equipment. Stage One of the funding package is US$100m with a total value over two tranches valued at US$350m. This finance package considerably reduces funding risk and signifies further support from major anthracite market participants for the Groundhog project. The key upcoming milestone for the project is approval for the ~100t bulk sample, due mid-late June 2015. SPEC BUY recommendation maintained with a $2.40 target price.
Austal (ASB) | BUY
The boost to revenue from the declining A$ has been offset by the well-flagged schedule delays to LCS-6, leaving our FY15 EBIT forecast little changed at $71.3m. With U.S. revenue visibility extending to 2020, there is ample time to put the lessons learnt on the first couple of ships to good use, and we expect improved margins in the medium term, particularly as support work is added to the mix. ASB has seen a re-rating, a trend likely to be maintained if the Company continues to deliver consistent earnings and additional construction and support contracts here and abroad. For this reason we maintain our buy call, despite the share price having closed in on our $2.00 valuation.
Recent Contacts & Presentations
Rewardle (RXH), Alexium (AJX), Ausdrill (ASL), Tox Free (TOX), OBJ Limited (OBJ), Cash Converters (CCV), Decmil (DCG), TFS Corporation (TFC), Imdex (IMD), Mobile Embrace (MBE), Dacian (DCN), Saracen (SAR), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), MZI Resources (MZI), High Peak Royalties (HPR), Spookfish (SFI)