2 dividend-payers that slipped on ASX – Suncorp Group and Automotive Holdings Group

Update on new programs: Suncorp Group Ltd edged slightly lower on ASX on September 21, 2017 as the group provided an address from its CEO along with a market update. The group’s FY17 NPAT of $1,075 million represented a 3.6% increase over 2016; and the good top line growth, disciplined management of margin, and a sensible balance between reducing overheads and investing in the future led a healthy foundation for time ahead. SUN’s Insurance business also achieved an underlying result well ahead of the prior year 2016. The group has been able to mitigate the impact of major events like Cyclone Debbie, to a great extent in FY17 with the help of reinsurance programs; and has extended those arrangements into FY18. The generous dividend payments and ability to come-up with better products among peers can help Suncorp flourish further. Given this, the group has shed light on its two significant programs of work that include Business Improvement Program (aiming to digitise the customer experience, optimise sales and service, end-to-end process improvement, claims redesign and smarter procurement) to deliver net benefits of $10 million, $195 million and $329 million over the next three years, and acceleration of the Marketplace to deliver benefits faster. The group has also signalled to increase the dividend payout ratio for the period in view of the additional one-off investment associated with the programs. SUN will revert back to the 60-80% target range in FY19.

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Efforts on cost improvement: On 11 August 2017, the Board of Australian Agricultural Company Limited

Efforts on cost improvement: On 11 August 2017, the Board of Australian Agricultural Company Limited (ASX: AAC) announced about the resignation of Managing Director and Chief Executive Officer, Jason Strong. The Board has engaged Egon Zehnder to lead an executive search for a new Managing Director, with a plan to fill the appointment before the end of calendar year 2017 and anticipates the search will include both external and internal candidates.    

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Graincorp Ltd.’s On track for strong FY17

On track for strong FY17: Graincorp Ltd.’s (ASX: GNC) stock moved up 5.6% on August 30, 2017 driven by market sentiments. The group had earlier reported an EBITDA of $236 million in the first half of 2017 as compared to $134 million in the prior corresponding period (pcp), and consequently the underlying NPAT rose to $100 million from $32 million of pcp. The group expects to reach their full year EBITDA estimate of $385 million-$425 million and underlying NPAT of $130 million-$160 million. Growing Australian grain harvest and better export volumes, coupled with the group’s network efficiency efforts and managing costs have contributed to the robust result during the period. The group’s average receivals per site increased to 70,000 tons from 40,000 tons of last harvest, driven by a modern and efficient network through Project Regeneration. GNC is also enhancing their sales mix with a better focus on higher margin products. Better canola supply drove their oil supply with lower procurement costs. However, the company has highlighted that continuous pressure on its margins and unfavourable foreign exchange movements have been posing challenges.

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3 Food stocks – Graincorp, Australian Agricultural Company and Costa Group Holdings

On track for strong FY17: Graincorp Ltd.’s (ASX: GNC) stock moved up 5.6% on August 30, 2017 driven by market sentiments. The group had earlier reported an EBITDA of $236 million in the first half of 2017 as compared to $134 million in the prior corresponding period (pcp), and consequently the underlying NPAT rose to $100 million from $32 million of pcp. The group expects to reach their full year EBITDA estimate of $385 million-$425 million and underlying NPAT of $130 million-$160 million. Growing Australian grain harvest and better export volumes, coupled with the group’s network efficiency efforts and managing costs have contributed to the robust result during the period. The group’s average receivals per site increased to 70,000 tons from 40,000 tons of last harvest, driven by a modern and efficient network through Project Regeneration. GNC is also enhancing their sales mix with a better focus on higher margin products. Better canola supply drove their oil supply with lower procurement costs. However, the company has highlighted that continuous pressure on its margins and unfavourable foreign exchange movements have been posing challenges.

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For FY17, Sandfire Resources NL Boost from commodity price

Boost from commodity price: For FY17, Sandfire Resources NL (ASX: SFR) reported a 62% increase in net profit after tax at $77.5 million (FY16: $48.0 million). As a result, SFR stock moved up 3.5% on August 30, 2017. Strong sales and positive copper price adjustment gains resulted in sales revenue of $532.5 million (FY16: $485.8 million), and payable metal sales totalled 62,663 tonnes of payable copper and 34,333 ounces of payable gold (65,832 tonnes of payable copper and 33,302 ounces of payable gold for FY16). The robust financial result was supported by consistent operational performance, lower costs and a significantly improved copper price, which together allowed the company to retire all its debt and almost double its year-end cash position to $126.7 million. The result equates to earnings per share of 49.16c (FY16: 30.54c). The DeGrussa Copper-Gold Mine posted another strong production performance for FY2017 with copper production of 67,088 tonnes and gold production of 38,623 ounces, at a reduced C1 cash operating cost of US$0.93/lb.   

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