ASX200 – Valuation Review
ASX200 valuations remain stretched at 20x earnings. The All Industrials Ex-Financials is now trading 30x. Meanwhile, earnings still lack growth.
EPS growth for FY20 is negative 20% and FY21 EPS growth is likely to be flat.
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 – 2 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%.
Fortescue – FY20 Earnings
Fortescue Metals Group is under Algo Engine buy conditions and is among the best-performing holdings within our ASX 100 model portfolio.
FY20 revenue was up 27% to $13bn and EBIT was in line with consensus at US$8.3bn, up 38% on the same time last year.
Forward dividend yield is 4.8%, plus any special dividends announced in FY21.
Spark – Valuation Review
Spark Infrastructure is under Algo Engine buy conditions following the higher low support at $2.10.
1H20 earnings delivered slightly better growth than expected with full-year DPS guidance unchanged at $0.135. EBITDA increased 4% to $430m.
Cash flow was weaker than expected and we see slight downside pressure on the dividend in FY21 & FY22.
Ansell – FY20 Earnings
Ansell is under Algo Engine buy conditions and is a current holding in our ASX 100 model.
FY20 earnings showed revenue up 8% to US$1.64bn, and EBIT up 4% to US$220m. The company upgraded FY21 guidance for 8% underlying EPS growth.
ANN should continue to see strong top line growth and we recommend investors add to the position on the next Algo Engine buy signal.
Forward dividend yield is 2.2%.
SPDR S&P Global Dividend Fund
SPDR S&P GLOBAL DIVIDEND is a holding in our “ASX All ETF” model portfolio.
We see value at the current $15.50 price range.
The S&P Global Dividend Aristocrats is designed to measure the performance of high dividend yielding companies within the
S&P Global Broad Market Index (BMI) that have followed a policy of increasing or stable dividends for at least 10 consecutive years.
Vanguard Global Infrastructure ETF
Vanguard Global Infrastructure Index switched to Algo Engine buy conditions and we’ve now added this to our portfolios.
APA Group – Buy
APA is under Algo Engine buy conditions and provides a defensive yield.
Buy $10.80 – $11.00 price range.
Brambles – Opportunity Approaches
Brambles FY20 earnings were in-line with market expectations and the relatively defensive income mix is appealing.
Buy BXB on weakness, $10.50 is support.
Bega – Buy
Bega Cheese reports earnings on 27 August. We like the idea of buying the dip ahead of the result.
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