- Last month, Boral extended its debt financing facilities through the issuance of New USSP (US$200 million), and by obtaining approvals for new bilateral two years bank loan facilities amounting to AU$365 million, bolstering its solid liquidity.
- Strong balance sheet and robust liquidity position recorded in 1HFY20 period are likely to provide headroom for growth opportunities to Orica.
- Recently, Incitec concluded capital raising through SPP and concluded AU$600 million Placement, the fund would be utilised in the repayment of drawn balances of syndicated debt facilities.
Value investing strategy encompasses investing in those companies that trade for less than their inherent value. Also, value investors rummage through entities they deem the market is undervaluing. They are usually investors with long-term goals making an investment in firms with high calibre.
In the following article, we would go through ASX listed materials sector stocks, and their recent updates:
Boral Limited (ASX:BLD) is involved in the supply and manufacturing of construction and building materials. Recently, the Company hired Zlatko Todorcevski as its new Chief Executive Officer (CEO) & Managing Director.
In another update, on 4 June, Boral noted a judgement from the Supreme Court of Queensland regarding the litigation with Wagners Holding Company Limited. The court passed the final orders and stated that the pricing notices filed by BLD on 1st March 2019 and 1st April 2019 were not effective and valid as per the Cement Supply Agreement between the parties. In contrast, the Pricing Notice issued on 2nd October 2019 was valid.
As notified on 15 May, the Company has increased and extended its debt financing via undertaking following:
- Approvals to extend US$665 million of its current debt facility of US$750 million to June 2024 from July 2021.
- US$200 million new US Private Placement (USPP) note issue.
- Approvals for new bilateral two-year bank loan facilities totalling AU$365 million
The Company experienced fall in revenues in most businesses during the first four months of 2H FY20. This was due to volume and cost pressures associated with bushfires in Australia in January followed by COVID-19 impacts more broadly.
On 24 June 2020, BLD settled the day’s session flat at AU$3.81. The stock of BLD has delivered returns of 49.42% and 114.53% in the past 30 days and 3 months duration, respectively.
Orica Limited (ASX:ORI) offers commercial explosives and innovative blasting systems to oil and gas, and mining markets, to name a few.
On 8 May, Orica released half-years results, recording decent growth in NPAT during the period ending 31 March. A few highlights from the same are as follows-
- During 1H FY20, ORI reported net profit after tax amounting to AU$165 million on a statutory basis as compared to AU$33 million of pcp. Earnings Before Interest and Taxes (EBIT) for the period rose by 2%.
- In the half-year, Orica declared the major strategic acquisition of Exsa, which is leading distributor and manufacturer of industrial explosives of Peru. The Company is firmly focused on integrating terrific team and assets into its business.
- ORI possesses strong balance sheet, with gearing of 33.7% and the Company also maintains a robust liquidity position ensured by positive cash flows.
- ORI’s Board announced an unfranked interim ordinary dividend amounting to 16.5 cps, reflecting a payout ratio of 40%.
- Orica is focused on cash preservation, which include inventory management, with temporary site closures. ORI is committed to support suppliers in a responsible manner.
- ORI has disciplined approach to assess opportunities in core capital and high growth engines.
On 24 June 2020, ORI ended the market session at AU$16.720 per share, with a fall of 1.299% against its previous close. The stock of ORI has delivered returns of -1.22% and 18.46% in the past 30 days and 90 days’ timeframe, respectively.
Incitec Pivot Limited
Incitec Pivot Limited (ASX:IPL) is the manufacturer of a wide range of explosives, fertilisers and industrial chemicals. Recently, IPL announced that one of its directors, Jeanne Marie Johns has made a change to her interest in the Company, by acquiring 101,671 fully paid ordinary shares on 12th June 2020 and 15,000 fully paid ordinary shares on 16th June 2020.
Further, on 12 June, IPL notified the market that it has completed its share purchase plan (SPP) and raised AU$57.5 million. This follows successful completion of an institutional placement of AU$600 million. The Company would use the proceeds raised from SPP and the institutional placement for the repayment of drawn balances of syndicated debt facilities.
During 1H FY20 for the period closed 31 March, the Group revenue stood at AU$1,848 million, with a growth of AU$106 million or 6% over pcp. Incitec Pivot recorded NPAT (net profit after tax) standing atAU $65 million, reflecting a rise of 54%. IPL also decided to not pay dividend for 1H FY20 considering current economic uncertainty caused by COVID-19.
On 31st March, Incitec had enough liquidity and headroom, with the subsequent debt maturity in August next year and available undrawn debt facilities standing at AU$924 million.
At the close of trading session on 24 June 2020, IPL settled at AU$1.960 per share, with a fall of 0.759% against its previous closing price. The stock of IPL has delivered returns of 2.60% and 18.26% in last 30- and 90-days period, respectively.