The Match Out: Market higher, our take on today's results - there was plenty of them!
Following a stronger than expected result from retail goliath Walmart overnight, the retailers led the ASX higher today with both the consumer discretionary & consumer staples sectors leading the line, while a decline in CSL weighed on the healthcare sector. Overall, reporting continues to be better than expected, Aussie corporates showing resilience and guidance is holding up in a general sense, meaning that dips are being bought at the index level.
- The ASX 200 finished up +22pts/ +0.31% at 7127
- The Consumer Staples sector was best on ground (+1.73%) while Consumer Discretionary (+1.40%) & Property (+1.27%) were also strong. i.e. the sectors that have been beaten up leading into reporting.
- Healthcare (-0.83%) and Energy (-0.59%) the weakest links.
- Resources printing massive profits however the obvious question is, are we peak cycle?
- Commonwealth Bank (ASX: CBA) -1.84% down with the decline related to the dividend of $2.10 fully franked, which is worth $3 in the right hands.
- CSL Limited (ASX: CSL) -1.32% was choppy amid confusion around guidance – we cover below.
- Super Retail (ASX: SUL) +4.7% rallied on a decent beat for FY22 and they’ve started FY23 well.
- Santos (ASX: STO) -2.4% fell despite a beat on profit - although it was largely driven by a lower tax rate.
- Dexus (ASX: DXS) +1.86% still sees challenging conditions in Office but they still managed to grow earnings.
- Corporate Travel (-1.44%) reported a slight miss for FY22 – nothing too sinister
- ReadyTech (ASX: RDY) -0.62% beat company guidance by around 4% - guidance for FY23 was solid and implies mid-teen growth.
- Downer (ASX: DOW) -5.17% said Covid + wet weather impacted operations.
- Brambles (ASX: BXB) +5.08% beat expectations for FY22 and guided well for the year ahead.
- Bapcor (ASX: BAP) +1.18% navigated a difficult year with the surprise loss of their long-standing CEO, still managed to hit their numbers.
- Magellan (ASX: MFG) -5.87% showed first signs of lower margins and that had investors spooked.
- Wesfarmers (ASX: WES) +2.23% and Metcash (MTS) +2.91% rallied on the back of a positive read-through from Walmart’s result overnight – we covered this here
- Iron Ore was ~1.5% lower in Asia today.
- Gold is still chopping around US$1780.
- Asian stocks were higher, Hong Kong up +0.96%, Japan +1.25% while China was up +0.50%
- US Futures are flat.
ASX 200 Chart
CSL Limited (CSL) $292.50
CSL -1.32%: A choppy day for CSL with FY22 profit coming in at $2.25bn which was about a ~2% miss to expectations however it was the guidance for FY23 of net profit at constant currency of about $2.4 billion to $2.5 billion that caught the market by surprise early. The consensus was for a profit of $2.79bn however their guidance today did not include the contribution from recently acquired Vifor, they’ll put this out soon. The miss had traders selling early but when you read the detail, the result was not the miss that the headline numbers would have you believe. Our best guess is the result implies growth of 6-12% for the year, coming off a base that was about 2% below expectations, with more details around Vifor contribution to be out in due course.
ReadyTech (RDY) $3.20
RDY -0.62%: FY22 results this morning and we had the CEO & CFO in for lunch today. Revenue and underlying EBITDA was ~4% ahead of company guidance while they talked to strong momentum coming out of FY22 into FY23. The key highlight was the FY23 revenue guide that implies mid-teens growth again (off a growing base) and an increase in their FY26 revenue target to over $160m. While we don’t own RDY (yet) this is at the top of our Market Matters Hitlist for our Emerging Companies Portfolio.
Santos (STO) $6.91
STO –2.40%: A good result at the profit this morning, a beat to consensus expectations however it was largely due to a lower tax expense i.e. low-quality beat. Operationally they have done well while the interim dividend was lower than expected, although they extended a further $100m to their current buyback which helps lift payout closer to expectations. A decent result and they are delivering operationally, which is more than we can say for Beach (BPT).
Dexus (DXS) $9.33
DXS +1.86%: Always good to hear from Australia’s biggest Office landlord at a time when there is simply so much uncertainty / competing views around the future of office in a post-pandemic world. For FY22 they achieved Adjusted Funds From Operations (AFFO) and distributions of 53.2 cents per security, up 2.7% on the prior year, while there was a 41% increase in Net Profit After Tax (NPAT), largely a result of property revaluations. Gearing is key when thinking about risk and it remains low for DXS at 26.9% on a look-through basis with 65% of debt hedged across FY22 + an average hedge maturity of 5.9 years – i.e. low debt levels and a decent amount hedged against future interest rate risks. For FY23, their guidance implies a decline of 5% on FY22 due to the impact of higher interest rates and asset sales, but clearly not too bad. They say incentives have stabilised from 1H22 at ~30% and occupancy has ticked up to 95.6% but leasing done in 4Q was very soft. Certainly still challenging but they are managing it well.
Corporate Travel (CTD) $21.15
CTD -1.44%: performance is improving for Corporate Travel, finishing the year with a wet sail. Revenue more than doubled in the year to $389m, a slight miss to expectations. Net profit of $3m was light as well, however, this is expected to improve and early signs in FY23 show that it already has despite Asia reopening slower than expected and travel facing a number of issues. The EBITDA run rate in Q4 was $143m, putting them on track for the $265m guided in FY24.
Bapcor (BAP) $6.85
BAP +1.18%: a good FY22 result for the auto aftermarket parts company, a little ahead of consensus across the board. The company did well given the CEO changeover midyear, maintaining guidance throughout the year and hitting the numbers needed. There was little guidance but noted a positive start to FY23 and normalizing working capital trends expected.
Super Retail Group (SUL) $10.70
Super Retail Group (SUL) $10.70
SUL +4.70%: The retailer posted a strong FY22 set with NPAT falling ~20% but still coming in ahead of consensus. They hit record sales for the year including +5% growth in like-for-like sales in the second half. The final dividend of 43c was around 40% ahead of the market consensus. FY23 has started positively with group sales +12% for the YTD, Macpac leading the charge up 42%!
Magellan (MFG) $14.12
MFG -5.87%: it’s been a difficult year at Magellan, and it showed in their results. NPAT for the year was $399.7m, down 3% and a small miss to expectations. The market took issue with margins which fell to ~62bps in the second half, after running at 65bps at the end of the first half, despite a larger portion of funds being held by retail clients which typically have higher margins. The balance sheet is strong with $420m in cash so the company has the capacity to drive better performance. The new CEO will need to prove his worth though, the market is looking for more detail on their strategy.
Broker Moves
- SCA Property Cut to Hold at Moelis & Company; PT A$2.95
- Temple & Webster Cut to Hold at Canaccord; PT A$5.60
- SG Fleet Rated New Buy at Barclay Pearce Capital; PT A$3.18
- Carsales.com Cut to Neutral at UBS; PT A$24.60
- Challenger Raised to Neutral at Citi; PT A$6.70
- Seek Raised to Add at Morgans Financial Limited; PT A$29.40
- Tassal Group Cut to Neutral at Credit Suisse; PT A$5.23
- Challenger Raised to Neutral at JPMorgan; PT A$6.20
- Sims Cut to Neutral at Citi; PT A$16
- Seven West Cut to Neutral at JPMorgan; PT 65 Australian cents
- Mt Gibson Cut to Neutral at Macquarie; PT 50 Australian cents
- Challenger Raised to Buy at Jefferies; PT A$7.15
- ACL AU Rated New Underperform at Barclay Pearce Capital
Major Movers Today
Have a great night
The Market Matters Team
Make informed investment decisions
At Market Matters, we write a straight-talking, concise, twice-daily note about our experiences, the stocks we like, the stocks we don’t, the themes that you should be across and the risks as we see them. Click here for your free trial.
The Match Out will be available each day after the market close. Follow my profile to be notified when the latest report is live.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and Partners heading up a team that manages direct domestic and international equity & fixed-income portfolios for wholesale investors.
........
Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision, please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.
2 topics
James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...
Expertise
James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...
Expertise
Comments
Comments
Sign In or Join Free to comment