Half Yearly Performance and Outlook of Diversified Players - BKL, GOZ, MNF, WGN

Investors look at the companies’ periodical results and tally their estimates with the reported performance. During the earnings season, volatility of the stocks generally remains high, as when a company reports better than the estimates, the price goes up and vice versa.

Here in this article, we are discussing four diversified companies that have recently released their earnings update.

Blackmores H1FY20 Performance in Line with Expectations

Blackmores Limited (ASX: BKL) is engaged in the development, production, sales and marketing of health products such as vitamins and herbal and mineral nutritional supplements for humans and animals.

On 25 February 2020, BKL announced its half-yearly results for the period ended 31 December 2019, registering underlying sales revenue of $302.7 million, a decline of 5% on a y-o-y basis. The company posted its underlying EBIT at $28.3 million, down 44% y-o-y. NPAT, on an underlying basis, stood at $18 million, which is also down 47% compared to the prior corresponding period (pcp). Performance across Australia was impacted by the regulatory change in China, as well as additional material and packaging costs.

Sales performance of the company was broadly in line with expectations and the market update provided on 12 February 2020.

Outlook - Promising Long-Term Future

The Board and management team are very confident and optimistic about the long-term future of Blackmores.

In H2FY20, the company expects revenue to be similar to that achieved in the first half of FY20. The bottom-line is anticipated to be impacted on account of the significantly higher costs associated with manufacturing and other factors, including Coronavirus. The company expects its NPAT between $17 million and $21 million for full financial year (FY20).

Stock Update: The stock of BKL closed the day’s trade at $68.050 with a market capitalisation of $1.19 billion on 26 February 2020. At current market price, the stock generated a dividend yield of 3.21% on an annualised basis. The price to earnings multiple noted at 31.83x on its trailing twelve months basis.

Growthpoint Properties FFO Up 11.8% in First Half

Growthpoint Properties Australia (ASX: GOZ) is an investment company, which injects funds across the commercial real estate space in Australia.

GOZ declared its half yearly results for the period ended 31 December 2019, wherein the business funds from operation (FFO) went up by 11.8% on pcp while FFO per security grew marginally by 0.8%. Net tangible assets (NTA) per security stood at $3.66, up 4.6% from H1FY19.

Net property income stood at $121.4 million, up 9.1%, while like-for-like NPI grew by 2.7% on pcp terms. The company maintained a robust occupancy rate at 98%. During the half, the company leased 111,000 square metres, representing 15% of the total portfolio income. The business signed a 25-year lease with largest single-tenant, NSW Police Force.

Outlook - Reaffirms FY20 Guidance

As per the FY20 guidance, the company estimates its FFO per security of at least 25.4 cents and 23.8 cents of distribution per security (DPS), depicting a growth of 3.5% over FY19. The Board also anticipates that Australian economic growth is likely to remain below trend while development pipeline of the business is expected to provide attractive returns over the next couple of years.

Stock Update: The stock of GOZ settled at $4.270 with a market capitalisation of $3.31 billion on 26 February 2020. At current market price, the stock generated a dividend yield of 5.45% on an annualised basis. It has a price to earnings multiple of 8.280x on its trailing twelve months basis.

MNF Group Registers Robust H1 Results, Driven by Strong Demand for Core Products

MNF Group Limited (ASX: MNF) is an Asia-Pacific-based technology company, which develops and operates a global communications network and software suite enabling some of the global leading innovators to deliver new-generation communication solutions.

On 25 February 2020, MNF announced its half-yearly results for the six months to 31 December 2019, highlighting –

• Revenue up 14% to $112 million.
• Gross margin grew 26% y-o-y to $45 million.
• Gross margin stood at 40.2%, as compared to 36.5% in H1FY19.
• NPAT stood at $3.7 million, up from $3.1 million in the previous corresponding half.
• The business reported higher staff costs, managed services and technology costs largely due to the inclusion of the TIAB team.
• The business continues to transform into a recurring revenue business, as recurring revenue grew by 52% to $48.3 million.
• Strong organic growth driven by number portability and cross-selling of new services.
• The company announced a fully franked dividend of $ 0.025 per fully paid ordinary share with a payment date of 2 April 2020 for the six-month period ended 31 December 2019.

Outlook - Reaffirms FY20 EBITDA Guidance

The company expects EBITDA in the range of $36.0 million to $39.0 million, while NPAT is anticipated between $10 million and $12 million. The NPAT guidance includes revised forecasts for restructuring costs, lower R&D Tax benefit and non-cash employee share plans and amortisation costs.

Stock Update: The stock of MNF closed the day’s trade at $4.050 with a market capitalisation of $353.84 million on 26 February 2020. At current market price, the stock generated a dividend yield of 1.55% on an annualised basis. It has a price to earnings multiple of 27.01x on its trailing twelve months basis.

Reduced Cement Volumes Impact First Half Performance of Wagners Holding

Construction materials provider Wagners Holding Company Limited (ASX: WGN) caters to its clients with innovative generation building materials using its composite fibre technologies and concrete businesses (earth friendly).

WGN announced its half-yearly results for the period ended 31 December 2019, wherein the company reported total revenue of $122.32 million, down 1.2% on pcp, owing to reduced cement volumes and no major project work in this half. Gross profit stood at $67.4 million, declined from $74.4 million in the previous corresponding half. EBITDA stood at $11.4 million, down from $22.4 million in the same period a year ago.

The half year witnessed higher pressure across the concrete market in South East Queensland. The period witnessed increased R&M primarily due to increased utilisation of transport and quarry assets.

FY20 Outlook – Continued Challenges to Impact Earnings

The company reduced its earnings expectations, considering continued challenges in the construction materials business in South East Queensland and uncertainty over the timing of commencement of major projects.

Consequently, the company expects -

• EBIT in the range of $12.5 million to $17.5 million;
• NPBT of $3.9 million to $ 8.9million;
• NPAT of $2.7 million to $6.2 million.

The NPBT and NPAT estimates include an additional interest charge of $3.5 million as a result of the adoption of AASB 16.

Stock Update: The stock of WGN settled at $1.430 with a market capitalisation of $275.18 million on 26 February 2020. The stock generated a negative return of 29.67% and 4.91% in the last three months and six months, respectively. The stock is available at a price to earnings multiple of 51.22x on its trailing twelve months basis.

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