The Match Out: ASX up, so far so good, the vibe from reporting is actually okay!

The vibe so far in reporting is a net positive one with more beats than misses, and more companies rallying post results despite some festering concern around what’s to come in FY24. That’s not to say everything is positive, but by-in-large, we’re doing okay and this was supportive of the ASX today which snapped a 2-day losing streak. Weaker data out of China continues to put pressure on the PBOC to stimulate, and while it remains largely elusive, the local resource stocks seemed to find some support from intra-day lows on optimism around such a move.

• The ASX 200 finished up +28pts/ +0.39% at 7305
• The Healthcare sector was best on ground (+3.16%) while IT (+1.76%) & Staples (+0.40%) were also strong.
• Property (-0.49%) and Materials (-0.27%) the weakest links.
• Market Matters Webinar this Thursday & midday covering portfolio positioning and more – Register Here
• Seek (ASX: SEK) -4.27% fell after FY24 guidance was below expectations, guiding to EBITDA in the $520-560m range while consensus was already at $582m, a ~7% miss at the midpoint. More on this tomorrow morning, however, it was down ~10% at the lows. We own.
• Treasury Wines (ASX: TWE) +2.81% delivered an inline result with margins a key highlight.
• Lendlease (ASX: LLC) +0.97% reported yesterday and there are some tweaks lower in target prices around today + earnings in the outer years stemming from asset sales and how these we factored into guidance.
• CSL Limited (ASX: CSL) +3.73% higher on a slight beat to FY23 and good trends in plasma collections, FY24 guidance maintained.
• National Bank (ASX: NAB) +1.31% announced a surprise $1.5bn on-market buy-back at their quarterly update.
• GUD Holdings (ASX: GUD) +14.87% delivered a small beat on FY23 earnings, gearing lower than expected but no FY24 guidance – trends in key parts of the business improving HoH.
• Sims Group (ASX: SGM) +6.3% was inline for FY23 however there was some concern leading into today’s update, hence the pop, guidance a little mixed reflecting the tough environment for the metal recycler.
• Life 360 (ASX: 360) +12.34% ripped higher at their 1H result on strong revenue growth (and smaller loss), while they upgraded FY guidance, not looking for adjusted EBITDA $9-11m for the FY.
• Temple & Webster (ASX: TPW) -4.51% down on a change of tack that impacted their FY24 guidance, they are now back to spending for growth.
• Macquarie fell on their sword today upgrading REA Group (ASX: REA) to neutral from sell equivalent ($178 PT) – they had identified this as a preferred SELL call in a note that we discussed here
• Downgrades about for Beach Energy (ASX: BPT) -1.24%, UBS cut their 1-year EPS forecast by a whopping ~50% following yesterdays result.
• Carsales (ASX: CAR) +2.92% rallied again following a strong update yesterday, beats and bumps are being rewarded for multiple days.
• Worley (ASX: WOR) +1.15% broke to 5-year highs – they report on the 23^rd August – the trends here are very positive but more optimism is being priced in by the day – hope they handle it! We own.
• Iron Ore was ~2% higher in Asia today supporting Fortescue (ASX: FMG) +0.97% after a soft few sessions.
• Gold was down overnight and is now testing ~US$1900.
• Asian stocks were mixed, Hong Kong down -0.80%, Japan +0.50% while China was off -0.27%
• US Futures are largely flat

ASX 200 Chart

Market Matters Webinar – Thursday 17^th August @ Midday

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Treasury Wines (ASX: TWE) $11.71

TWE +2.81%: higher today after reporting FY23 results that were inline with expectations and the guidance given in late May. FY23 EBITS of $583.5 was +11% on the year despite revenue being broadly flat at $2.49bn. Margins expanded from 21.1% to 24.1% and they are guiding to 25%+, which will help to support their long-term financial objectives of sustainable top-line growth & high single-digit average earnings growth. Margins were the key positive in today’s update, despite cost inflation, while cost of restructuring, corporate costs and Americas premium volume declines were the obvious negatives.

• TWE is coming off a low base and todays update should see better times ahead, driven by their Penfolds brand.

CSL Limited (ASX: CSL) $272.80

CSL +3.73%: Strong today following a marginal beat in FY23 at the earnings line ($2.44bn v $2.19bn exp) as plasma collections were solid, volumes up 31% and now at record levels while the costs associated with collections fell. This includes donor compensation and labour, declined ~14% over the previous year and ~17% down from the peak in March 2022 – an interesting trend. They re-affirmed FY24 guidance with better-than-expected FY24 capex guidance, offset by slowing plasma collections growth. The increase in plasma supply is key here, as it underpins the company’s ability to manufacture plasma products and enables CSL to meet the underlying patient demand for core plasma products.

• CSL still sees NPATA at constant currency of about $2.9-$3.0bn (mkt was already at top end) driven by revenue growth of 9-11% in constant currency terms.
• A good result no doubt, but not a significant game-changer.

National Australia Bank (ASX: NAB) $28.70

NAB +1.31% : A quarterly trading update today for the primarily business bank + a surprise $1.5bn share buy-back which was key to the stock’s performance. Overall, with the little detail that was provided, the trends are aligned with others in the sector with higher provisioning, lower NIM’s for the quarter (-3bps to 1.72%) but a strong capital position. Overall revenue declined 2% thanks to the lower margins, higher costs due to higher staff-related expenses and continued IT investment, partly offset by productivity. Unaudited Cash Earnings of $1.90B (-1% QoQ), implying that NAB is well positioned to meet consensus expectations for 4Q23.

• As was the case with CBA, NAB shows confidence in its outlook by launching capital management, and this speaks positively to the resilience of the broader economy.  

Temple & Webster (ASX: TPW) $6.57

TPW -4.51%: the furniture & homewares e-commerce company announced FY23 results today which were largely in line or better, however, shares fell on softer guidance. Revenue fell -7% YoY to $395m, in line with consensus. NPAT dropped -40% to $8.3m though this was still a ~12% beat on analyst numbers given the downbeat expectations. The big tick for TPW was EBITDA margins of 3.7%, hitting the 3-5% target range, so it came as a surprise to the market that the company will look to spend big on marketing in an effort to grow sales at the expense of EBITDA margins. TPW has a lofty $1b in sales target in 3-5 years, but will need to be happy with margins of 1-3% in the meantime, banking on the scale benefits of more sales in the long term.

• The sales targets and market spending is a big change of strategy when investors have been focussed on profitability.

GUD Holdings (ASX: GUD) $11.74

GUD +14.87%: the auto parts and pumps company traded to 12-month highs today after announcing its FY23 results. Revenue of $1b was in line with expectations but NPAT was a ~4% beat to consensus at $118.7m. The big win was the contribution from APG, a business they acquired in FY22, which showed strong growth in the second half as backlogs in the car industry clear. Supply chain issues that have plagued GUD are also starting to clear which is further supporting margins and cash conversion. The company recently sold their pumps business which has taken some pressure off the balance sheet in the meantime.

Broker Moves

• Carsales.com Cut to Accumulate at CLSA; PT A$30
• Beach Energy Cut to Hold at Morgans Financial Limited; PT A$1.60
• JB Hi-Fi Cut to Hold at Morgans Financial Limited; PT A$49
• GWA Group Cut to Accumulate at CLSA; PT A$2.25
• Carsales.com Raised to Neutral at Jarden Securities; PT A$25.10
• Beach Energy Raised to Buy at CLSA; PT A$2
• Bendigo & Adelaide Cut to Neutral at Citi; PT A$9.25
• GWA Group Raised to Outperform at Macquarie; PT A$2.30
• Beach Energy Cut to Neutral at Goldman; PT A$1.70
• GPT Group Raised to Overweight at JPMorgan; PT A$4.80
• Beach Energy Cut to Sell at Citi; PT A$1.55
• Beach Energy Cut to Sell at Canaccord; PT A$1.50
• REA Group Raised to Neutral at Macquarie; PT A$178

Major Movers Today

Have a great night

The Market Matters Team

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