I like Orica Limited (ORI)
Founded in Australia and headquartered in Melbourne, Orica Limited (ORI) is one of the world’s largest providers of commercial explosives and blasting systems to the mining, quarrying, oil and gas, and construction markets, a supplier of sodium cyanide for gold extraction, and a specialist provider of ground support services in mining and tunnelling. Orica has a workforce of around 11,500 employees and contractors, servicing customers across more than 100 countries. Raymond Chan explains why Morgans has upgraded ORI to ADD this week.
“Ahead of its financial year 2021 result on 11 November, ORI has announced A$345-370 million of after tax one-off items which will now see it produce a statutory loss. Despite the write-downs, the balance sheet is strong following A$140 million of non-core land sales and strong cashflow conversion.
“The new SaaS accounting standard will increase underlying EBIT in financial year 2021 by A$20 million (equates to a % upgrade).
“With operating conditions now improving, new management has a refreshed strategy to drive profitable growth in the future and trading on an undemanding financial year EV/EBITDA multiple of 6.8x, we upgrade to an ADD rating,” Raymond said.
I like BEACON LIGHTING (BLX)
“Beacon Lighting (BLX) provides lighting solutions to Australian consumers,” Michael said.
“They’re a beneficiary of new building and home improvements.
“Earnings and margins continue to grow for this business.
“Its share price has trended higher over the year. Despite recent weakness in the share market, it still looks capable of heading higher.
“Over the past few months, we can see that there was some resistance around $2.03. BLX then broke above that convincingly in August. “After making that break on high volume, the shares then settled back to retest the breakout zone. “Good volume has then come back in the last few days and BLX is once again on the move. “However, if any weakness from the broader market should bring the price back again, then it should ideally keep the share price above $2.03. That way it will still be respecting the overall uptrend,” Michael said.
