JB Hi-Fi 1H20 Earnings
JB Hi-Fi delivered 1H20 NPAT of $174m, which represents 9% growth vs the same time last year.
JB Hi-Fi issued FY20 NPAT guidance of $265 to $270 million, which implies 1.0% to 6% growth, slightly below market consensus.
Alacer Gold – Further Detail…
Alacer Gold provides an interesting growth opportunity. The company holds a significant portfolio of highly prospective exploration land holdings across Turkey (totaling approximately 125,000 hectares), some of which are progressively advancing to prospective projects.
The release of the CY19 financials show NPAT beat on a one-off tax adjustment, whilst revenue was in line. EBIT of US$171m was also broadly in line with market expectations.
The company has recent exploration success at Çakmaktepe & Ardich sites. We see scope for a material pickup in earnings from FY21.
AZJ – Buy Write Option Strategy
Aurizon Holdings is under Algo Engine buy conditions.
The share price is supported by a combination of the ongoing share buyback program and 100% dividend payout, which places the stock on a forward yield of 4.9%.
AZJ goes ex-div $0.115 on the 25th Feb. Adding a $5.75 June call option boosts the annualized cash flow to 10%.
Alacer Gold – Buy Signal
Alacer Gold is under Algo Engine buy conditions and we see value at $5.50. If gold remains under pressure in the next few trading sessions we may see AQG at our entry target.
CIMIC – Dividends Set to Resume
We continue to see long-term value in CIMIC, supported by structural tailwinds within the infrastructure sector. The company recently announced they’re writing off 1.8bn and exiting their Middle East business to focus on Aust, NZ, and Asia.
Yesterday’s profit release was in line with guidance at $800m of underlying NPAT. FY20 is forecast to see between 1 – 6% growth and a new guidance range of $810-850m has been provided.
Dividends are expected to resume in FY20 and investors should be positive on the strong Q4 cash flow. CIM is trading on 11x forward earnings and a forward dividend yield of almost 6%.
ORG & BHP – Opportunity Approaches
Chinese energy importers are considering force majeure declarations as the short-term demand for energy is impacted by recent events.
A combination of weaker demand and lower prices sets up an opportunity for investors. Our preference is ORG & BHP and investors should average into any exposure by controlling the position size.
It’s still possible that a second wave of Coronavirus impact may materialize and markets may once again be under pressure.
Lendlease Group – Value Approaching
CBA – Earnings Report 12th Feb
Commonwealth Bank is priced for a strong result on February 12, so the potential for disappointment is high. The stock remains under Algo Engine sell conditions and despite the prospect of a $2.5bn on market share buy-back, we remain on the short side of the stock.
CBA has re-rated to a P/E multiple of 17x and a dividend yield of 5%.
Computershare – high conviction “sell”
Computershare is under Algo Engine sell conditions.
CPU trades on 20x PE and a 2.6% dividend yield with a backdrop of falling earnings growth. We expect EPS growth to trend towards “flat” numbers at best.
Our valuation forecast is for CPU to find support at or near $14.50.
Transurban Group – Algo Buy Signal
Transurban is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
We see upside in TCL to $16, at which time investors should consider selling out-of-the-money call options to enhance the income return.
For more information on the derivative strategy, please call our office on 1300 614 002.
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