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In this article, we will discuss five stocks that reported their financial results on 26 February 2020). The five companies are from the consumer discretionary sector. On 26 February 2020, the S&P/ASX 200 Consumer Discretionary (Sector) ended at 2,656.9 points, down by 44.2 points or 1.66 per cent from the last close.
Think Childcare Group (ASX:TNK)
Think Childcare Group, the operator of high-quality childcare centres, delivers its services through an integrated business model. The group comprises of Think Childcare (TNK) & Think Childcare Development (TND).
On 26 February 2020, the group delivered full-year results for FY2019 (period ended 31 December 2019). TNK’s revenue was $113.54 million, up by 35.8 per cent from $83.63 million reported in the previous corresponding period.
As a result of AASB 16 adoption, the group’s statutory profit after tax was impacted materially. The statutory profit after tax for the period was $2 million as against $5 million in the pcp.
Adopting the new accounting standard resulted in EBITDA reaching $25.2 million, an increase of $13.1 million as lease operating costs were recognised in depreciation and interest.
It was said that the underlying EBITDA reflected the real picture of the business, which was recorded at $14.2 million. Similarly, the Board believes that underlying NPAT showed the correct picture of profitability, which was recorded at $4.5 million, down 9% from the pcp due to the $1.3 million one-off cost.
On 27 February 2020, TNK was trading at $1.330 (at 01:23 PM AEDT), up by 0.758% from the previous close.
Redbubble Limited (ASX:RBL)
Redbubble Limited is the owner and operator of an online marketplace which aids buying and selling of art and designs on various products.
The company released half-year FY2020 results for the period ended 31 December 2019 with total revenue for the period recorded at $213 million, up 25 per cent over the previous year. RBL’s marketplace revenue of $180 million was 27 per cent higher than the pcp.
The company recorded a gross profit of $66 million, which increased by 27 per cent over the pcp. The company generated an operating EBITDA profit of $10.1 million, showing an improvement of $3.2 million over pcp, including adjustments due to AASB 16.
RBL noted that the marketplace revenue was driven by steady trading conditions at TeePublic. However, the headwinds experienced at Redbubble in December were persistent throughout the month.
It was said that the company had seen Redbubble marketplace record impressive topline growth, better than first half FY2019 trends, in the 3Q quarter-to-date (QTD) period.
The company’s management completed the review of business strategy. It was highlighted that the business had formed robust fundamentals, and management is committed to investing and realising full potential.
It is believed that content marketing and SEO remain the growth drivers for the business. RBL’s business is propelled by high-quality content, new product launches, and content partnerships for licensed fan art.
Moreover, the review has strengthened RBL’s conviction that current growth initiatives need continued investment, and the company sees significant across these initiatives that would drive its growth ambitions.
On 27 February 2020, RBL was trading at $1.035 (at 01:23 PM AEDT), down by 1.429% from the previous close.
SeaLink Travel Group Limited (ASX:SLK)
SeaLink Travel Group Limited is an operator of multi-modal transport & tourism and offers world-class services and holiday experiences.
On 26 February 2020, SLK reported results for the half-year FY2020 (period ended 31 December 2019). The company’s revenue increased to $132.9 million as against $127.2 million in the pcp, recording a growth of 4.6 per cent.
Statutory results of the business were down significantly as against the pcp, owing to acquisition-related costs and higher depreciation. On a statutory basis, EBIT for the half-year period was $13.4 million as against $17.7 million in the pcp, and profit after tax for the period was $8.7 million compared to $13 million in the pcp.
On a normalised basis, EBIT for the half-year period was $18.1 million as against $17.8 million in the pcp, and profit after tax for the period was $13.6 million compared to $13.1 million in the pcp.
In January 2020, the company had announced a fully franked interim dividend of 6.5 cents per share, which is payable on 31 March 2020.
SeaLink’s revenue growth was driven by continued progress in Kangaroo Island ferry, with freight to Kangaroo Island showing growth while passengers numbers went down by 1.1%. As a result of weather-related issues, the revenue from Kangaroo Island coach touring was below expectations but grew over the pcp.
On 27 February 2020, SLK was trading at $4.310 (at 01:23 PM AEDT), down by 0.691% from the previous close.
PointsBet Holdings Limited (ASX:PBH)
Founded in 2015, PointsBet Holdings Limited is an online bookmaker providing betting products and services to the clients directly via a cloud-based tech platform.
On 26 February 2020, PBH released its half-year FY2020 results (period ended 31 December 2019). The company’s revenue for the period was $27.4 million, up 127 per cent from $12.06 million in the previous corresponding period.
PBH posted a loss of $32.25 million for the year compared to $10.30 million in the pcp. The company noted that the turnover for the half-year was $533.1 million, up 154% from $209.7 million in the pcp.
Source: PBH Presentation
Gross win was recorded at $47.3 million, up 117% from $21.8 million, while the net win was $29.8 million, up 124% from 13.3 million, both over the pcp. Its active client base grew to around 102k, up 123% from 45.8k, and registered clients grew by 194% to ~185.13k from 63.02k, both over the pcp.
During the period, the company entered into a 20-year partnership with Penn National Gaming, thus securing digital market access in the US states of Indiana, Ohio, Missouri, Louisiana and West Virginia.
On 27 February 2020, PBH was trading at $4.190 (at 01:23 PM AEDT), down by 3.899% from the previous close.
Michael Hill International Limited (ASX:MHJ)
Michael Hill International Limited manages a retail jewellery chain across Australia, Canada, the US, and New Zealand. The company operates more than 300 stores under the brand names Emma & Roe and Michael Hill.
Michael Hill recently reported its results for the half-year ended 29 December 2019. The company posted a statutory net profit after tax of $21.4 million, up 19.6 per cent from the previous corresponding period.
Source: MHJ HY Presentation
Pre-AASB 16, underlying EBIT for the period was $31.6 million, up by 6.9 per cent from the previous corresponding period. The growth was driven by a rise in operating revenue and targeted reduction in costs, thus mitigating the impact of compressed margins due to competition, FX and rising gold prices.
The company’s same store sales were up by 6.3 per cent for the period to $317.7 million as against $298.9 million, owing to the efforts in recapturing lost market share and to deliver positive sales growth over both quarters.
Concerning the outlook, it was noted that recent local and global environmental factors had pressurised the consumer market. MHJ intends to focus on cost reduction, productivity, omni-channel growth, and stemming the brand position.
On 27 February 2020, MHJ was trading at $0.580 (at 01:23 PM AEDT), in line with the previous close.
