Investment Research Updates

Company Updates: ALQ, CSR, PLS, LTR, CKF, MQG, CAR, MTS

01/07/2022

ALS Limited (ALQ) announced yesterday it had entered into a bid implementation deed with smaller competitor HRL Holdings, which will see ALQ acquiring all of the HRL shares it doesn’t already own through an off-market takeover at $0.16 cash per share. ALQ said that the transaction provides an attractive opportunity to expand its services across Life Sciences in Australia and New Zealand. HRL’s two key food markets of dairy and honey align with ALQ’s global food strategy which aims to identify more specialist areas which are typically higher margin activities. ALQ shares fell 1.93% to close at $10.68.

CSR Limited (CSR) announced yesterday it will commence buying back up to $100 million shares in line with the company’s long-term strategy to improve shareholder returns. The buyback follows strong recent results across its Building Products business, which has benefitted from improved operational and customer outcomes across diversified market positions. Given the business’s strong balance sheet, CSR has been able to increase returns to shareholders while also investing in growth initiatives. CSR shares fell 2.87% to close at $4.06.

30/06/2022

Pilbara Minerals Limited (PLS) revealed yesterday it plans to increase its Pilgangoora Operation’s production capacity by 17% to 680,000 dry metric tonnes per year following a final investment decision. The increased production will cost PLS approximately $300 million to construct primary rejection, crushing and ore sorting facilities. PLS also announced in a trading update yesterday that its Pilgangoora Operation is expected to produce between 123,000 dmts to 127,000 dmts of spodumene concentrate for the June quarter, up 54% from 81,431 dmts in the prior quarter. PLS shares fell 3.77% to close at $2.30.

Liontown Resources Limited (LTR) announced yesterday its Board had given the green light to develop the Kathleen Valley lithium project following a binding agreement with vehicle manufacturer Ford to help fund the project. Under the terms of the loan, Ford will provide $300 million for the development of the project, while LTR will supply 150,000 dry metric tones of lithium spodumene concentrate for five years starting from 2024. LTR’s offtake agreements now represent approximately 90% of the project’s production capacity, which stands at up to 450,000 dmts per annum of spodumene concentrate. LTR shares rose 5.16% to close at $1.12.

29/06/2022

Collins Foods Limited (CKF) released its FY22 results yesterday, with group revenue improving 11.1% vs pcp to $1,184.5 million, with underlying EBITDA increasing 12.6% to $209.2 million. The European segment saw a strong recovery, with a 16.8% increase in underlying revenue to $190.4 million on a same store basis, while the Australian segment saw a revenue increase of 6.1% to $955.5 million. The board declared a fully franked dividend of 15 cents per share, bringing the full-year dividend to 27 cents per share. CKF shares rose 11.52% to close at $9.97.

Macquarie Group Limited (MQG) announced yesterday it plans to raise $400 million through the launch of Macquarie Group Capital Notes 6, its latest hybrid issue set to commence trading on 18 July. The new issue is expected to be priced between 3.7% and 3.9% above the BBSW reference rate. MGQ noted the new issue is consistent with the group’s strategy to actively manage capital and diversify its funding sources. MQG shares rose 0.58% to close at $167.23.

28/06/2022

Carsales.com Limited (CAR) revealed yesterday it plans to raise $1.2 billion to acquire the remaining 51% stake of US listing business Trader Interactive. CAR expects the transaction to result in low double-digit EPS accretion in the first full year with further upside thereafter. The acquisition will be funded by a fully underwritten 1 for 4.16 entitlement offer for eligible institutional and retail shareholders. Approximately 68 million new shares will be offered at $17.75 per new share, representing a 14.5% discount to the last closing price of $20.76 on Friday, 24 June. CAR shares will remain in a trading halt until the completion of the institutional offer. CAR shares remained flat to close at $20.76.

Metcash Limited (MTS) released its FY22 results yesterday, with group revenue improving 6.4% vs pcp to $17.4bn, with EBIT increasing 17.7% to $472m. The Hardware segment was the standout, with sales increasing 20.5%, driven by growth in IHG and Total Tools sales, with DIY demand remaining elevated. Liquor sales increased 8.7% on strong retail network demand with growth across IBA and contract customers, while Food sales gained 1.4%. MTS announced the construction of a new DC in Victoria to support Food and Liquor, with expected completion in mid-2024. Group sales have increased 8.6% in the first seven weeks of FY23, with price inflation present across all segments. MTS shares rose 4.12% to close at $4.30.

 

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