5 Beats and 5 Misses of Earnings Season

  • Aug 31, 2018 AEST
  • Team Kalkine
5 Beats and 5 Misses of Earnings Season

5 Beats and 5 Misses of Earnings Season – Beats: QAN, BBN, A2M, CSL, SFH

QANTAS AIRWAYS LIMITED (ASX: QAN) - The company has a record operating cashflow of $3,413m which generated stronger net free cashflow. Based on the strong FY18 performance, the Board of Directors declared to reward its shareholder returns up to $500 million, comprising of the fully franked dividend of 10 cents per share to be paid on October 10, 2018 with a dividend ex-date of September 05, 2018. The company anticipates that it is on track to achieve $500-600 million of EBIT by 2022. Also, the low net debt of $4.9B provides Qantas financial stability. The market price of the stock is $6.390 as at Aug 31, 2018. The company delivered an EBIT of $1.1 billion in FY 2018 through its domestic flying operations which is 25 percent higher against the previous corresponding period i.e. FY 2017.

BABY BUNTING GROUP LIMITED (ASX: BBN) - The group had an increase in sale of 9.0% to $303.1 million which has led to the improved growth of 12.5% for FY 2018. The company delivered net profit attributable to members of $8.68 million for FY18, as compared to previous year which was down by 29.1 percent. It was mainly impacted by the rise in operating cost in relation to the strategic investment for the future growth and price deflation through market discounting. Driving ROE at 9.2% in FY18 from 13.1% in the previous year. Besides this, the current ratio stood at 2.06x in FY18 which is broadly in line with the previous year. The company expects that in FY19 they will have 6 new stores opened including the Toowoomba store which opened in July 2018 representing the positive outlook of the company which takes the market price of the stock to $2.440 as at Aug 31, 2018. 

THE A2 MILK COMPANY LIMITED (ASX: A2M) – A2M has made strong progress on delivery of its strategy and posted strong results with the group’s revenue from ordinary activities which was up 68.06% over prior corresponding period, to $925.05 million. Diluted EPS was 26.3 cents compared to 12.29 cents last year. NPAT surged about 116% while EBITDA has been up 101%. On the margin front, EBITDA margin and NPAT margin expanded by 497 bps and 472 bps to 30.7% and 21.2%, respectively in FY18 against the previous year. It reflects strong growth across all region along with lower effective tax rate during the year. The group did not declare any dividends, despite the healthy result. With continued growth in market share in Australia and China the company sales have grown substantially to $724.2 million with an increase of 84%. The market price of the stock is $11.560 as at Aug 31, 2018.

CSL LIMITED (ASX: CSL) – The company has reported an increase of revenue from $6,947 millions in FY17 to $7,915 million in FY 18 which is an increase of 11% against the 2017 numbers. On the same line EBIT has increased from $1,779million in FY 17 to $2,380 million in FY18 posting a change of 33% against the previous year. This increased the NPAT from $1,337 million to $1,729 which 28% increase form previous year. The strong demand for company’s recombinant and plasma products is expected to go ahead in FY 2019. As a result, the group expects an increase of 9% in the revenue for FY 2019 and NPAT to increase between 10% and 14% of the FY18 number. The company has posted decent results and upbeat guidance for the upcoming year. The market price of the stock is $227.870 as at Aug 31, 2018.

SPECIALTY FASHION GROUP LIMITED (ASX: SFH) – The company’s underlying EBITDA result is at the upper end of guidance with $19.9m in FY18 vs $11.1m in prior year. While on the other side, sales revenue increasing from $125.1 million in FY17 to $131.9 million. This helped in the growth of gross profit margin of 59.0%. It was noted that investors’ confidence was taken away as the group was witnessing a heavy sell-off last year and led to negative sentiments in the market but the group’s plan of offloading of five retail brands to Noni B Limited made the market bullish again. The company confirmed that its existing external funding liability has been agreed which will result in the bank loan facility reducing from $22 million to $15 million from 1 July 2018. The market price of the stock is $1.260 as at Aug 31, 2018.

5 Beats and 5 Misses of Earnings Season – Misses: CGF, ORG, GEM, CTX, SDA;

CHALLENGER LIMITED (ASX: CGF) – The company expects the ROE to increase but believes that it will not touch the target of 18%. The year FY 18 also saw an increase in the expenses by 5% impacting the group’s normalized NPAT which went up only by 6% to $406 million, while the statutory NPAT was down 19% to $323 million. The pool of superannuation savings in Australia has grown at a compound annual rate of 8%, over the last 10 years. The group expects to double its superannuation asset in the next 10 years and the group now holds fourth largest pension market in the world. The market price of the stock is $10.885 as at Aug 31, 2018. The Group recorded in Annuity sale at a CAGR of 22% during 1HFY10- 1HFY18. With FY 18 dividend of 35.5 cents per share the dividend payout ratio is 52.1%. With most recent dividend ex-dates as August 31, 2018 of 18 cents payable at September 26, 2018.

ORIGIN ENERGY LIMITED (ASX: ORG) – For Origin the FY19 outlook appears to be much weaker than expected while the net profit jump missed consensus expectations. The management had observed that the EBITDA for its energy markets may fall to $1.5 billion or $1.6 billion for the current financial year of FY19 compared to FY18’s increase to $1.81 billion which is up by 21%. With intense competition the group is unable to cross the hurdle of higher costs. Though the statutory profit increased from a negative ($2,226) million in FY 17, to $218 million in FY 18 the company did not declare any dividends in both FY 17 and FY 18. For FY 2019 the medium-term outlook supports recommencement of dividends which is subject to board approval and no significant change in business conditions. The market price of the stock is $8.005 as at Aug 31, 2018.

G8 EDUCATION LIMITED (ASX: GEM) – The company reported revenue to be 7.6% higher at $396.4 million against $368.3 million in the previous corresponding period. The underlying EBIT is of $48.1 million which is down 21.2% on prior period in line with the half year consensus. Decline in EBIT was the result of increase in wage cost of $7.2 million, given the regulatory amendments made in the staff ratios. There has been occupancy improvement from the January base. For the half year, EBITDA to cash conversion has been at 99%. Net cash flow from Operating activities was reported at $30 million, an increase of 23% YOY. The total revenue increased from $368.3 million in CY 17 H1 to $396.4 million but the underlying NPAT had gone down from $33.7 million in CY 17 H1 to $25.6 million reporting a decline of (23.9%). As per the proportionate dividend policy the most recent dividend declared is of 4.5 cents with dividend ex-date as September 13, 2018 and dividend pay date as October 5, 2018.

CALTEX AUSTRALIA LIMITED (ASX: CTX) – The June 2018 realized CRM was indicated to be below the forecast CRM of US$12.00/bbl, due to lower actual refiner margins in the second half of June 2018, with lower yield due to a trip of the FCCU unit in the second half of June 2018 and higher crude premiums relating to a late June cargo. In respect of CRM sales from production for the month of June 2018, the company advises its realized lagged Caltex Refiner Margin (CRM). The interim dividend was down by 5% for the half year of 2018. The company reported an EBIT change of 39% from $408 million in FY 17 to $568 million in FY 18. However, coming to the net debt the number increased from $730 million to $1,041 million reflecting a 43% change which is not a positive sign. The market price of the stock is $30.195 as at Aug 31, 2018.

SPEEDCAST INTERNATIONAL LIMITED (ASX: SDA) – Under the telecommunication services the company is set to acquire Globecomm for US$135 million. The groups revenue increased from US $246.3 million in 2017 to US$304.9 million in 1H 2018 which is growth of 24%. Due to dilution from the UltiSat acquisition in November 2017, EBITDA margin was impacted by 180 basis points to 19.8% in 1H 2018 compared to 21.6% in 1H 2017. The remote communication and IT solutions provider Speedcast International was down this week. Underlying net profit after tax amortization (NPATA) has gone up 37% to US$21.1 million. Fully franked interim dividend of AU$2.40 cents per share was declared for the six-month period ended 30 June 2018 payable at October 12, 2018. There has been increase in net debt by US$42 million in 1H18, which increased from US $388 million at Dec 31, 2017 to US $430 million as at June 30, 2018.

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