The Match Out: ASX slides, Altium (ALU) result best of the bunch so far - stock +20%

• The S&P/ASX 200 fell -85 points / -1.21% to close at 6914
• Energy (+1.30%) and Utilities (+0.23%) the only sectors in the green.
• Consumer Staples (-3.8%) and Financials (-2.05%) hit hard while Healthcare (-1.73%) was also weak.
• Banks were down between 2.69% (ASX: BOQ) and -1.71% (ASX: ANZ) today with the sector having the biggest impact on the index.
• Altium (ASX: ALU) +19.75% shot the lights out with a great FY22 result and strong guidance.
• Breville (ASX: BRG) -0.09% ended lower although was strong early after saying full-year net income rose 16% from the previous year, meeting consensus.
• Endeavour Group (ASX: EDV) -12.33% whacked after reporting cost pressures, the pubs doing well, the bottle shops more challenging.
• Monadelphous (ASX: MND) +5.86% up after beating consensus and guiding well for FY23 - miners are going to pay less in dividends from here, and put more in the ground – good for services stocks.
• Ansell (ASX: ANN) +8.59% popped and held the gains on stronger than expected FY22 earnings largely driven by lower employee costs.
• Service Stream (ASX: SSM) -17.16% very weak on a softer than expected profit result and no guidance until their AGM.
• HUB24 (ASX: HUB) -1.92% was lower although their result was good, a slight reduction in FUA guidance the only real negative.
• Iron ore futures were higher in Asia, up +2.5% supporting the material stocks.
• Gold was flat – has been a frustration in recent times trading US$1736/oz at our close.
• Asian markets were down, the Nikkei in Japan fell -1.11%, while Hong Kong was off the same and China fell -0.65%.
• US Futures are lower – they held up for most of our session then lost ~0.50% in the last hour or so of our session.

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Results Today – a Snapshot

Altium (ASX: ALU) $35.84

ALU +19.75%: The Printed Circuit Board (PCB) design platform reported FY22 results after market yesterday and they were above our expectations. Revenue delivered at $221m (+3% ahead) and EBITDA $81.1m (+8% ahead) while their FY23 guidance is also +8% better than consensus. They have a longer-term revenue target for $500m by FY26 and yesterday they said that the target is now on an organic basis versus the prior assumption that was supported by a 10-20% boost from acquisitions, so while M&A is still in play, that would add to that target – in other words, a further upgrade by stealth is the way we would describe it. The rest of the result was very solid, margins expanding and the broader trends here are good and growing - this is the best result we’ve seen in this period so far, plus they implied that guidance was conservative.

Altium (ASX: ALU)

HUB24 (ASX: HUB) $24.48

HUB -1.92%: A slight beat from the investment platform business today with total revenue of $192.5m up 78% YoY and around 4% better than our expectations. Underlying EBITDA of $70.4m was also a beat (~5%) while profit was around 30% ahead, although we are talking low numbers so it’s not that relevant. On the flipside, they did revise down their platform funds under administration (FUA) target to $80bn - $89bn by FY24 (previously $83bn - $92bn by FY24), due to impacts from adverse market movements, but that is outside of their control. Margins are going in the right direction getting a boost from higher cash rates and all in all, it was a very solid result from HUB. We have management in on Thursday. 

HUB24 (ASX: HUB)

Service stream (ASX: SSM) 85c

SSM –17.16%: A weaker than we hoped FY22 update from SSM, particularly given how upbeat management were the last time we spoke with them, suffice to say, that’s why the stock fell 17% today. Revenue of $1.565bn was strong and ahead of expectations however EBITDA from operations at $91.1m was around 5% weak while adjusted NPAT of $31.4m was around ~20% below consensus – the dividend of 1cps was also light on – we were expecting ~2cps. This is a FY23 story given the acquisition and integration of Lend Lease Services division in the period which dramatically increased the size of the business, and to that end they said guidance would be provided at their AGM in October – that’s also a disappointment as it infers they don’t have a great line of sight on the business. Overall, a weak update that we were disappointed in and we are again reconsidering our position in SSM.  

Service stream (ASX: SSM)

Endeavour (ASX: EDV) $7.25

EDV -12.33%: The pub and bottle shop owner was hit today on their FY22 result that painted a mixed picture, their hotel’s division doing well while their retail business is a bit tougher as the reopening tailwinds are coming through more than expected i.e. more people getting out and about while the return of buying drinks and sitting at home due to rising cost of living has not yet occurred. They guided to a tough 1H23 with additional cost inflation (COVID, supply chain, tech investment in systems and digital, wages +4.5%, impact of Vic gaming taxes) with these trends more of an issue for their retail business. Not a lot to like in this result really with EBIT margins on the retail business sitting at just 6.6%. 

Endeavour (ASX: EDV)

Monadelphous (ASX: MND) $12.11

MND +5.86%: FY22 was better than expected across most key metrics, EBITDA of $111m compared to $104m forecast while NPAT of $52.28m was around an 8% beat to consensus and up 11% YoY. They said the outlook for core markets continues to be strong, with the mining services company flagging a strong capex outlook in iron ore, battery metals and LNG, which supports the longer-term growth outlook for maintenance services. One trend we’ve seen in recent times is the miners guiding to lower dividends and more $$ in the ground, and companies like MND & NRW Holdings (NWH) will likely be the beneficiaries here.

Monadelphous (ASX: MND)

Breville (ASX: BRG) $21.45

BRG -0.09%: Mostly an inline result across key metrics, profit up 16% was good with the Americas strong and getting better in the 2H, but weakness elsewhere. They do have an elevated inventory position that we knew about, although it does seem particularly high. They stressed that their products are not seasonal and will not need to be discounted in future. A solid update nonetheless but a few moving parts here ATM.

Breville (ASX: BRG)

Broker Moves

• Altium Raised to Outperform at RBC; PT A$38
• Altium Raised to Neutral at Macquarie; PT A$31.40
• Adbri Cut to Neutral at Macquarie; PT A$2.15
• RAM Essential Services Rated New Hold at Barclay Pearce Capital
• NSR AU Rated New Underperform at Barclay Pearce Capital
• oOh!media Rated New Buy at Barclay Pearce Capital; PT A$2.01
• NRW Holdings Rated New Buy at Barclay Pearce Capital; PT A$2.79
• Altium Raised to Neutral at Jarden Securities; PT A$30.60
• Nick Scali Cut to Underweight at Jarden Securities; PT A$9.20
• Adbri Cut to Neutral at Jarden Securities; PT A$2.55
• Nib Raised to Neutral at Citi; PT A$7.80
• Reliance Worldwide Cut to Hold at Jefferies; PT A$4.20
• Star Entertainment Raised to Buy at Jefferies; PT A$3.40
• Reliance Worldwide Cut to Hold at Morgans Financial Limited

Major Movers today

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