Aristocrat Leisure – 1H19 Earnings

Posted on | by Leon Hinde

Aristocrat Leisure reported a strong 1H19 result with the North American division the standout. The result also benefited from a lower AUD/USD exchange rate.  Normalised profit after tax $422  + 16% in reported terms and +7.7% in constant currency. Up from $361m the same time last year.

In FY20 we forecast revenue to grow by 8% and EPS growth at a similar level. Based on this, we have ALL on a  forward dividend yield of 2.2%.

Risks to the business include increased regulation, competition and slowing
customer demand. We look to buy ALL on the next Algo Engine buy signal.

The company goes ex-dividend $0.22 on the 29th of May.

 

Computershare Sell-Off

Posted on | by Leon Hinde

Computershare had their investor day today and the market has reacted negatively to a softer earnings outlook.

We’ve been on the short-side of this trade following the lower high formation and the Algo Engine sell signal earlier this year. The CPU business is exposed to a number of structural headwinds and we expect further weakness in the share price.

 

Computershare – Algo Engine Sell Signal

Posted on | by Leon Hinde

Computershare is under Algo Engine sell conditions and has been forming a lower high pattern since topping at $20.50, September last year.

We continue to view the market’s assessment of the future earnings growth picture, as miss-guided. The factors that have lead to the recovery in earnings are transitory and the 20X PE and 2.5% yield, makes CPU too rich for our liking.

Our downside price forecast over the next 12 – 18 months is $15.00.

 

China – is there value?

Posted on | by Leon Hinde

Following the approximate 10% sell-off within the various ETFs which provide exposure to Asia large cap and more specifically China, we now have a series of Algo Engine buy signals to consider.

The IZZ.AXW iShares China Large Cap and the IAA.AXW iShares Asia 50 are  two high quality considerations. If investors are seeking a tilt towards the faster growth tech sector, we suggest adding the Betashares Asia Technology Tigers to your watch list.