Would you pick these Industrial Stocks- YPB, IPH, MND and BIN in this reporting season?

With the much anticipated month of August finally here, market enthusiasts are looking forward to the earnings report of the  companies, their pipeline projects and significant announcements, to understand their present grade in the share market uproar and custom-choose their favourite stocks to invest in this reporting season.

In this article, we would discuss four Industrial Stocks, listed and trading on the ASX and learn about their recent media announcements and present stock performances. Before which, it is important to know what Industrial Stocks are:

The Industrial goods sector is related to the production of goods that are utilised in the construction and manufacturing processes. The companies categorised under the Industrials sector are mostly engaged with construction, waste management, aerospace and defence, cement and metal fabrication and tool production units. The performance of the sector is largely dependent on the supply and demand for building construction in industrial, commercial and residential units.

                                                         YPB Group Limited (ASX: YPB)

Company Profile: YPB was found in China in 2011 by John Houston and was listed on the ASX in 2014. The company is tech-savvy and provides anti-counterfeit and retail engagement solutions to ensure authenticity. In 2018, the company acquired the global rights to the readable technology of the multi-patented Motif Micro smartphone.

Stock Performance: YPB’s stock last traded on 29 July 2019 and on 30 July 2019, requested ASX to put its stock on halt, pending the release of an announcement related to a material capital raising. The stock, on its last traded day, was priced at A$0.012 with a market capitalisation of A$11 million generating a YTD return of a negative 25 per cent.

Further, on 1 August 2019, the stock of the company has been suspended from quotation at its request, pending an announcement related to clarification of the company’s recent release on ProtectCodesTM milestone. The voluntary suspension has been requested by YPB until the beginning of the trading session on 2 August 2019.

Also, on 1 August 2019, YPB notified that it had received commitments of A$1.6 million to be concluded as a private placement to be undertaken at 0.714 cents per share, with funds to be utilised to repay existing debt, fund marketing costs and business development activities and working capital.

Quarterly Activities Report: On 31 July 2019, YPB released its activity report for the quarter ended 30 June 2019. The Q2 net operating cash burn was down by 18 per cent on Q119 period. The development of ProtectCodeTM made it a marketable product and a precursor to launching Motif Micro commercially. The co-launch of Vintail with Seppeltsfield Wines was a highlight for the period. Esquel Group had adopted YPB’s tracer thread. Connect, launched in 2015, was capable of capable of recording authentication scans and engaging globally with users.

The table below depicts the cash flow statement for the period:   

Particulars Amount (A$’000)
Net cash used in operating activities 793
Net cash from financing activities 500
Cash and cash equivalents at end of quarter 129
Estimated cash outflows for next quarter 1,819

                                                        IPH Limited (ASX: IPH)

Company Profile: A holding company for intellectual property and associated companies which offer a wide range of IP services and products, serving a diverse client base of Fortune Global 500 companies, MNC’s, public sector units, SME’s and professional services across the globe, IPH was listed on the ASX in 2014.

Stock Performance: On 1 August 2019, the IPH’s stock last traded, up by 0.48 per cent at A$8.38, with a market cap of A$1.65 billion and ~197.34 million outstanding shares. The YTD return of the stock is 53.87 per cent.

Court approves SOA: On 1 August 2019, IPH announced that the Federal Court had approved the Scheme of Arrangement, making it legally effective wherein IPH would acquire all of the shares in the capital of Xenith IP Group Limited (ASX: XIP) which it does not already hold.

Key dates for the SOA event (Source: IPH’s Report)

The SOA Overview: Under the proposed Scheme, XIP stakeholders would receive a Standard Consideration of $1.28 cash and 0.1261 New IPH Shares for each Xenith Share. Besides this, a flexibility of ‘mix and match’ would be provided wherein shareholders of XIP may choose to either receive Maximum Scrip Consideration of almost 0.3116 New IPH Shares or a Maximum Cash Consideration of $2.15.

                                        Monadelphous Group Limited (ASX: MND)

Company Profile: An engineering group providing construction, maintenance and industrial services to the resources, energy and infrastructure sectors, MND has been involved in a few of Australia’s biggest and most complex projects and facilities. Besides Australia, MND has offices in China and PNG.

Few MND Projects (Source: MND’s Website)

Stock Performance: On 1 August 2019, the MND’s last traded, down by 1.743 per cent at A$18.6, with a market cap of A$1.78 billion and ~94.29 million outstanding shares. Further, the YTD return of the stock is 38.68 %.

Vesting of Performance Rights: On 2 July 2019, the company notified that 82,771 performance rights had vested and were exercised into MND’s ordinary shares on 1 July this year. The resulting shares had been allocated via the Monadelphous Group Limited Employee Share Trust. The remaining 165,636 performance rights on issue included – 82,804 performance rights, which had a vesting date of 1 July 2020 and 82,832 performance rights, which had a vesting date of 1 July 2021.

New on Board: On 12 June 2019, MND announced that it had appointed Ms Sue Murphy AO as a Non-Executive Director of the company, effective 11 June 2019.

                                                  Bingo Industries Limited (ASX: BIN)

Company Profile: From being a small family-owned skip bin business in Western Sydney, BIN is presently a fully integrated recycling and waste management company, with the largest network of resource recovery and recycling centres across NSW and Victoria.

Stock Performance: On 1 August 2019, the BIN stock last traded, down by 0.83 per cent at A$2.39, with a market cap of A$1.6 billion and ~662.26 million outstanding shares. The YTD return of the stock is 32.05 per cent.

Investor Day Presentation: BIN conducted its Investor’s Day on 26 June 2019, and in the presentation highlighted its 2018 acquisition of Dial A Dump Industries (DADI), a recycling and waste management services provider in NSW. DADI had received ACCC approval on 28 February 2019, subject to BINGO’s undertaking to divest the company’s Banksmeadow post-collections facility. The integration was progressing well, and it would take up to two years to fully integrate the two businesses.

As per the company, the acquisition of DADI would take the post-collections and recycled revenue contribution from 47 per cent to almost 70 per cent of group revenue.

Combined Site Locations (Source: BIN’s Report)

Besides this, the plan for development of the company’s Recycling Ecology Park at Eastern Creek had commenced, with construction due to commence in 1H FY20 and complete in 2H FY20, with a capex of almost $30 million.

On the outlook front, BIN believes that the cost synergy target of $15 million remains achievable with revenue upside synergies likely over a two-year period. The company is underway to deliver initial synergy uplift of $7.5m per year in early FY20 period.

Having understood the recent progresses that these four industrial companies have made, investors can select their best-fitting stocks and add them in their investing kitty, while the market experts await the unfolding of the remainder of 2019.


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