At first glance these three companies look very different, but they all have one trait in common – seriously poor trading conditions in their respective industries. Arrium Ltd (ASX: ARI) suffers from weak steel demand and iron ore prices while Flight Centre Travel Group Ltd (ASX: FLT) and Super Retail Group Ltd (ASX: SUL) grapple with weaker discretionary spending and consumer confidence.
Arrium today announced it had successfully refinanced a number of its debts, postponing their due dates beyond 2015 and increasing its average length to debt maturity to 3.2 years (up from 2.3). With its next debt maturity not occurring until 2H 2016, Arrium has a fair length of time to pay down debt and focus on maintaining company performance in the face of weak iron ore prices.
Although not a company I would be buying at the moment, Arrium is trading close to a three-year low and turned in reasonable results in the latest half-yearly report. An oversubscription to its debt refinancing attempts also reflects a vote of confidence on the behalf of its bankers.
This travel sales prodigy today announced a joint venture with privately-owned Vietnamese travel and hospitality group Thien Minh. At a cost of $1.5 million US dollars, Flight Centre will become a 49% partner in the JV with three members on the board. The company plans to progressively launch a number of new tour businesses in Indonesia, Malaysia, Singapore, Hong Kong, China and Japan which will give Flight Centre superb exposure to a number of rapidly growing economies.
Despite China’s gradual decline in commodity consumption growth, that nation and others in South-East Asia look likely to enjoy the fastest-growing prosperity anywhere in the world for the next decade, making this joint venture an excellent opportunity for Flight Centre.
Super Retail Group
Despite seeing its share price hammered amid poor consumer confidence and weaker trading conditions, Super Retail Group released its second trading announcement in two months today, indicating further weak performance in its various chains. Despite that, expected earnings should still come in some 5% higher than last year, and the group is confident that weaker results are due to weaker external conditions rather than poor internal performance.
Super Retail Group’s price has dropped 29% in the last 52 weeks, but its earnings have increased by 5%. With no changes to management or the company’s innate competitiveness, it looks like a serious bargain. Super Retail group isn’t the only bargain going begging, with the latest pick from The Motley Fool’s top analyst also providing some serious upside to investors. You can get your FREE report here, and find out why The Motley Fool boasts a market-beating record of stock picks!
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Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.
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