Collected Wisdom

This week we look at Premier Investments, Regis Resources and Karoon Gas.

Summary: Analysts welcomed Premier Investments' results, noting to the continued expansion of Smiggle and Peter Alexander, while gold miner Regis Resources and Karoon Gas are both rated buys.

Key take-out: Premier Investments met analysts expectations with a solid annual result, but the strong share price has analysts split between buy and hold.

Key beneficiaries: General investors. Category: Shares.

This is an edited summary of the Australian investment press: It includes investment newsletters, major daily newspapers and broker reports. The recommendations offered represent the views published in the other publications and may not represent those of Eureka Report. This article is general advice only which has been prepared without taking into account your objectives, financial situation or needs. Before acting on it you should consider its appropriateness, having regard to your objectives, financial situation and needs.

Premier Investments Ltd (PMV)

Since his controversial exit from David Jones, Premier Investments CEO Mark McInnes has added substantial value for PMV’s shareholders, taking the retailer's share price from the mid $6 range, to where it sits today - $12.58 at the time of writing.

On September 18, McInnes and PMV chairman Solomon Lew delivered an all-round solid FY15 result which was broadly in line with analysts' expectations.

The major highlight for analysts was the success of the international expansion of the colourful stationery retailer Smiggle. All were pleased by the UK expansion with 24 stores now operating with a further 16 to come prior to Christmas this year. Also targeted within the next 14 months are stores in Wales, Scotland, Hong Kong and Malaysia.

Widely commented on by analysts also was the success of sleepwear retailer Peter Alexander. With 14 new stores opening last year sales grew by 14.9 per cent. Peter Alexander’s dachshunds Betty and Butch will be stretching their legs as the group plans to roll out a further eight new stores this coming year.

Due to the already strong share price analysts calls on PMV are mixed with a 50/50 split between buys and holds. The average 12month price target is $12.34 with the highest set at $14.05 and lowest at $10.91.

  • The view on PMV is 50/50 split between buy and hold.

Regis Resources (RRL)

The Western Australian gold producer handed down their results last week (September 16) for FY15. The gold miner with operations near Laverton, WA and Orange in western NSW, managed to surpass analyst expectations with a solid result with net profit of $87 million for the year.

It’s been a tough twelve months for MD Mark Clark and co after the share price drop from $1.90 to $1.20 in March off the back of a poorly received guidance update. So the reinstatement of a dividend was a welcoming sign for shareholders and analysts alike. RRL will pay a dividend of six cents per share on October 28. The company's first since 2013.

Off the back of this result and with the tough times potentially behind them one analyst has even removed RRL from the high risk category but of course stated no miner was without its risks. A lot of the success will come down to the rise and fall of the gold price which currently sits at US$1,132.61 per ounce at the time of writing. RRL’s cheapest mine currently producing at $A950 per ounce and its most expensive at $A1,070. Costs in Australian dollars and revenues in USD has been an excellent tailwind. With the currency now at $0.71 the equivalent gold price is $1595.

The average 12 month average price target is $1.65 with the most bullish case at $2.05 and the most bearish at $1.20. At the time of writing the share price was $1.575. Of the ten analysts surveyed five had a buy recommendation, four a hold and only one had a sell.

  • Investors are generally advised to buy Regis Resources at current levels.

Karoon Gas Australia (KAR) 

Last Thursday (September 17) the global oil and gas exploration company gave an update on its Santos Basin operation located 200km off the Brazilian coastline. Karoon significantly downgraded their projects Kangaroo and Echidna - Karoon owns 65 per cent of each.

However analysts were encouraged rather not put off by the news, believing Kangaroo is not economically viable. Additionally a number of analysts have pointed towards KAR’s hefty cash balance, which sits in US dollars, believing the market has undervalued this for now.

At the time of writing KAR’s share price was $1.79 and the lowest 12 month price target from analysts was $2.30. On this bearish case the analyst is implying an upside of 22 per cent from current levels. The average 12 month price target is $2.94 with the most enthusiastic case set at $3.50.

  • Investors are generally advised to buy Karoon Gas at current levels.

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