Wesfarmers – 1H19 Review

Posted on | by Leon Hinde

Wesfarmers WES 1H19 earnings beat market consensus, with EBIT of $1.62bn and underlying net profit increasing by 10% on the same time last year.

The company announced a special dividend of $1.00 per share.

Bunnings sales grow by 5% and underlying earnings in the division increased by 7%.

Wesfarmers trades on a fair valuation at 17x earnings and a 5.2% forward yield. The stock provides investors optionality around an acquisition given the groups’ strong balance sheet.

Some caution needs to be exercised, should we see a weaker retail environment in the coming months.

We’re buyers of WES on the next pullback.

Crown Resorts – 1H19 Earnings

Posted on | by Leon Hinde

Crown Resorts {CWN.ASX} reported 1H19 earnings and the result was negatively impacted by increased expense ratio and lower revenue from VIP turnover.

The A$400m buyback announced as at the FY18 result, has a further $270m to go.

CWN  remains under Algo buy conditions and with the stock trading on  a 5% forward yield and low single digit EPS growth, we continue to see value.

 

 

Lendlease – 25th Feb Key Date

Posted on | by Leon Hinde

Lendlease is a current holding in our ASX 100 model portfolio.

The market has discounted LLC share price due to substantial impairments on troubled projects within their engineering business.

The group reports earnings on the 25th of Feb and we expect to hear whether an exit of this business is likely.  Investors have lost patience regarding a turnaround and a trade sale or spin-off of the division will be well received by the market.

If confidence is restored and investors can look through the short-term troubles, LLC could re-rate back towards $15.00

 

 

 

Westpac – 1Q19 In Review

Posted on | by Leon Hinde

Westpac WBC reported 1Q19 earnings on Monday and despite the benefit of mortgage re-pricing pushing net interest margins higher, earnings exhibited no growth compared to the same time last year.

1Q19 cash profit came in at $2bn.

All banks, (excluding ANZ & MQG), are under Algo Engine sell conditions and we see little reason in the short term for these negative trends to reverse.

 

 

Coca Cola – Reports 21st Feb

Posted on | by Leon Hinde

Coca Cola CCL is set to report earnings on the 21st of February. The stock is under Algo Engine sell conditions following a series of lower high formations,  during the past two years.

The most recent sell signal was in January at $8.75. If we assume flat EPS growth into FY19 we have CCL now trading on a 5% yield.

Weakness in the upcoming result may push the share price below the $8.00 level, at which time, we would look to run a buy write strategy.

 

 

BXB 1H19 Result – Algo Sell Signal

Posted on | by Leon Hinde

Brambles BXB reported 1H19 earnings which showed solid revenue growth but only a modest 2% profit growth.

EBIT from 1H19 continuing operations of US$504m.

We expect FY19 underlying profit growth to show low single digit improvement on the same time last year.

The stock looks slightly expensive at 19x and 3% yield. We’re looking for a pullback to sub $10.50 before reconsidering.

The IFCO separation remains on track for completion this year and will help  underpin the share price.

 

Whitehaven Coal – Algo Sell Signal

Posted on | by Leon Hinde

Whitehaven WHC Coal was removed from our ASX100 model portfolio on the 31st January following the Algo Engine sell signal at $4.99

The company announced last Friday, net profit after tax increased 19% to $306m for the six months ended December 31.

The market reacted negatively to the higher production costs and the lower production guidance for the remainder of the financial year.

The stock price has now sold off over 10%, since being removed from the model.

Whitehaven WHC announced a special dividend of 5¢, in addition to the 15¢ interim dividend. This is up slightly on the same time last year.

 

Link – Algo Sell Signal

Posted on | by Leon Hinde

Link LNK is under Algo Engine sell conditions following the lower high formation at $8.00.

The 1H19 earnings were broadly in line with consensus expectations, however, we see headwinds from a weaker domestic business and general margin pressure across Link’s core operations.

Short LNK with stops above $7.40.