Eric Insurance - tough operating environment impacts results

A summary of 1H17 results

Ausdrill FY17 results – strong cash flow generation supports higher capex spend

A summary of 2Q17 results

McPherson’s (MCP) has reset to a lower AUD environment, and improved profitability by refocusing towards higher margin businesses. Free cashflow generation has reduced net debt by 27% year on year. While top line results are weaker than expectations, credit metrics are broadly in line given the debt reduction.

CML posted a strong result with FY17 EBITDA of $13.3m which was ahead of revised guidance as both scale and volume improved. Management are focused on transforming funding by moving to majority bank funded debt in the next 12 to 24 months. CML’s bonds are currently trading higher than the 104% call price at which they are likely to be redeemed at the next call date in May 2018, we believe they offer fair value at current price

Qantas - robust FY17 results

FY17 represented a year of consolidation as the company worked on its diversification strategy and expansion into new markets. In our opinion, the 7.40% June 2020 secured bonds offer good value at mid price of $103.6 and YTW of 5.81%. Furthermore, we believe that these bonds provide portfolio diversity as litigation funding is relatively uncorrelated to general economic conditions

FY17 represented a year of consolidation as the company worked on its diversification strategy and expansion into new markets. In our opinion, the 7.40% June 2020 secured bonds offer good value at mid price of $103.6 and YTW of 5.81%. Furthermore, we believe that these bonds provide portfolio diversity as litigation funding is relatively uncorrelated to general economic conditions

While in a declining industry, PMP’s continues to participate in industry consolidation to improve its position. It has a conservative financial policy which seeks to maintain minimal net debt. The group generates solid free cashflow and expects to be net debt free by FY19

Improved liquidity and underlying business quality has led to better credit metrics, with just over a year to run, we believe this bond offers good relative value compared to its peers