Bega – FY20 Earnings

Bega Cheese is under Algo Engine buy conditions following the recent signal at $4.50.

FY20 Full year earnings exceeded consensus and the key numbers are;

Revenue increased by 5% to $1.5 billion
Operating cash flow $138 million
Net debt reduction by $52 million to $236 million
Export sales increased 15% to $523 million
Inventory reduction by $15 million to $257 million
Normalised EBITDA decreased by 2% to $103.0 million

Cleanaway – FY20 Earnings

Despite disruptions from COVID-19 Cleanaway reported an underlying EBITDA of $516m, up 12% on the same time last year.

FY21 EPS growth is forecast to increase by 2 – 3%, placing the stock on a forward yield of 1.8%.

The valuation is looking expensive at 30x earnings, however, the defensive exposure remains attractive in a low yield environment and the balance sheet is in good shape.

Afterpay – FY20 Earnings

Afterpay is under Algo Engine buy conditions after generating the first of a series of buy signals starting in November 2019.

FY20 sales $11bn, income $519m, EBITDA $44m and the net loss after tax $23m.

Momentum continued into 1H21 as expected and active customers increased to 10m.

Market cap now stands at more than 30x forward revenue.

Alumina – Earnings Review

Alumina is under Algo Engine buy conditions and is a current holding in our ASX 100 model.

We recently focused on adding AWC to portfolios at $1.50 per share and have become somewhat concerned regarding the implications of the ATO back tax issues the company now faces.

Taking a closer look at 1H20 earnings, underlying NPAT was above consensus at $US88.

China’s recovery continues to support pricing momentum and AWC has lagged the alumina price rebound. Over the next 1 Р2 years, China is expected to have a metallurgical alumina deficit.

With the above in mind, we expect the $1.50 support level to hold but suggest a stop-loss on a break below.

The stock remains under review although we acknowledge the bullish outlook among institutional analysts.

FY21 dividend yield is 2.2%.