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This week’s summary highlights key on-market transactions by CEOs and CFOs in ASX 200 companies, following the August reporting season. All trades occurred between 23 and 28 August, with directors having up to five business days to notify the ASX.
Johns Lyng Group (ASX:JLG)
Share Price Movement: -27% (27 Aug)
Johns Lyng Group saw its share price drop by 27% following the release of its FY24 results. Although the company slightly exceeded its guidance at the underlying EBITDA level, driven primarily by stronger-than-expected performance in its catastrophe segment, the core business underperformed, and operating cash flow was notably weak. This disappointing core performance led to a weaker near-term outlook, surprising the market with lower catastrophe earnings and thinner margins.
Analysts have noted that the quality of earnings was lower than expected, primarily due to the core business's underperformance. However, this was somewhat offset by the better-than-expected results in the catastrophe segment. Following the results, the average price target among analysts was reduced by 5.3%.
Johns Lyng Group shares are now down 40% year-to-date, trading at levels not seen since March 2021. While there is still confidence in the company's medium-term growth prospects, near-term challenges include margin pressures and weaker performance in the company's business-as-usual (BaU) operations.
Insignia Financial Ltd (ASX:IFL)
Share Price Movement: -15.7% (22 Aug)
Insignia Financial Ltd experienced a 15.7% decline in its share price after reporting its FY24 results. While the company posted a 13.6% increase in underlying net profit, reaching $216.6 million, this was partially supported by a $15 million one-off item. Despite the solid headline numbers, several concerns emerged, including significant cash outlays for its optimisation and remediation programs. These expenditures are expected to reach up to $167 million in FY25 and $214 million over two years, respectively.
Free cash flow pressures have also led the Board to pause dividends, a decision that surprised the market, which had expected a 10.5 cents per share dividend for 2H24. Additionally, all of Insignia's divisions reported weaker-than-expected FY24 numbers, though these were offset by the one-off gain.
Analysts have noted that Insignia Financial Ltd is trading at around 7x FY25 net profit, suggesting it may be undervalued. However, the outlook remains cautious, with expectations of no underlying earnings growth between FY24-26 due to client outflows and lower margins. The absence of dividends over the next two years could lead to reduced interest from income-focused investors.
JB Hi-Fi Ltd (ASX:JBH)
Share Price Movement: +8.3% (12 Aug)
JB Hi-Fi Ltd saw its share price rise by 8.3% after posting a better-than-expected FY24 result. Although net profit after tax fell 16% year-on-year, it still exceeded market expectations. The result was driven by solid sales and higher gross margins, supported by effective promotions and strong supplier relationships. JB Hi-Fi also surprised the market with a special dividend of 80 cents per share, bringing the total dividend to 341 cents per share—38% above some estimates.
The average price target among analysts increased by 6.4% following the results. While there was optimism about the company's ability to sustain growth and margins, some analysts were cautious about valuation, increased competition, and broader economic challenges.
It’s worth noting that both the CEO and CFO of JB Hi-Fi tend to make significant share sales in August, following the release of results. In late August 2023, CEO Terry Smart sold $931,368 worth of shares, while CFO Nick Wells sold $896,060 worth, both at around $44.50 per share. This follows a similar pattern from 2022 when they collectively sold $2.8 million in shares at around $41.70 per share.
