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Bendigo Bank launches $300m cap raise (ALU, QBE, BEN)

James Gerrish

Market Matters

A fairly quiet start to the week given the US is on holidays tonight, the ASX closing little changed after 4 straight sessions of gains. A number of stocks reported today which we cover below, however the calendar really ratchets up from tomorrow for the remainder of the week – Wednesday the busiest with more than 30 companies out with numbers.

At a sector level today, IT stocks back on top while Telstra weighed on the Communications sector following the news last week that TPG and Vodafone would merge, creating a strong No 3 players.

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Overall, the ASX 200 fell -5pts / -0.07% today to close at 7125. Dow Futures are trading up +55pts/+0.24%

ASX 200 Chart

ASX 200 Chart


Altium (ALU) +1.94%: Out with 1H20 earnings after market today, although they did go into a trading halt during the match which is strange. In any case, the guidance is really key in this business and what the market will focus on, and to that end they guided to full year revenue to be at the lower end of the previously guided range of US$205 - US$215, consensus currently sits at $US210m so it’s a miss.

For the 1H they generated revenue of $US93.4, up 19% on 1H19 which is the slowest rate of top line growth since H117. They did sight the impact of the Coronavirus, and they do generally have a second half skew however the market may take this is a negative when trade kicks off tomorrow as they generally beat on the upside…

Altium (ALU) Chart

QBE Insurance (QBE) +4.31%: A rare reporting day in the sun for QBE today after they reported FY19 underlying NPAT of $733m and a final dividend of 27cps, taking the full year dividend to 52cps. The market was looking for NPAT nearer $700m with the better result underpinned by an improvement in their expense ratio, the company touting the benefits of their 3 year cost out program. Premium increases are working their way through the book with average rate increases of 6.3%, which is their biggest in a while. Overall, a decent result outshining both IAG & SUN in the process.

QBE Insurance (QBE) Chart

Bendigo Bank (BEN) Trading Halt: The regional out with 1H20 results this am and as widely expected, they also launched a $300m capital raise to boost their balance sheet. In terms of the result, they experienced 1% loan growth on the half, which included a 3% increase in residential lending offsetting a decline in commercial lending. Like the other banks, expenses are up, in BEN’s case by 1% which was actually a good result although not included here was a big $61m software impairment, basically they are writing down old to then build new. This is one of the reasons why merging with another regional like a BOQ would make sense given the increasing demands for costly systems to remain competitive.

In terms of dividend for the half, it was cut to 31 cps down from 35cps and it probably won’t increase for some time. In short, the outlook includes rising expenses and downward pressure on margins. The cap raise will see the stock lower from here.

Bendigo Bank (BEN) Chart

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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