BHP 1QFY17 Production Results

Posted on | by Leon Hinde | Leave a Comment on BHP 1QFY17 Production Results

The 1QFY17 production result for BHP was weaker than the market had expected. Weather related issues were mainly the cause.

BHP maintained FY17 shipping guidance for Iron Ore at 265-275mt. Petroleum volumes are anticipated to improve in the year ahead following recent issues with weak production from the Gulf of Mexico assets and lower shale volumes.

Forecast FY17 revenue to be in the range of $35b, EBIT of $7b, DPS of $0.50, which places the stock on a forward yield of 3%.

Many analysts have a bearish outlook for commodity prices in Fy18 and as a consequence, lower forecast EPS and DPS for the majors. Our view differs slightly and we think any pullback early next year will most likely create a solid “buy on the dip” opportunity for both BHP and RIO.

Our algorithm engines will track these and other major resource names for potential entry conditions.

BHP.ASX

bhp

 

Australian Bank Earnings Preview

Posted on | by Leon Hinde | Leave a Comment on Australian Bank Earnings Preview

2H16 reporting season for WBC, NAB and ANZ starts on 27th of October with NAB kicking off.

We’ll be keeping an eye on expenses and cost discipline along with trends within the bad debt exposure. There’s a strong likelihood that dividends will be cut slightly, especially in WBC and NAB. Westpac is on a payout ratio above 80%. They may look to scale this back a little.

Overall revenue is likely to flat at best and profits will show some deterioration on the same time last year.

 

 

 

US Earnings – Netflix Surges 19%

Posted on | by Leon Hinde | Leave a Comment on US Earnings – Netflix Surges 19%
  •  NETFLIX surged over 19% to new high for the year at $118.80 as the video streaming service reported stronger-than-expected earnings, and a total of 3.6 million new subscribers for the quarter. This brings NETFLIX total number of subscribers to over 86 million worldwide.

They reported earnings of 12 cents a share, which double analysts estimates of 6 cents a share as revenue for the quarter climbed to $2.16 billion from $1.58 billion during the same time last year. The company attributed the strong earnings to a popular schedule of original programming.

Now that the technical price level of $117.00 has been cleared, the next key price target will be  $131.00; the all-time high posted in December 2015.

Netflix (NFLX.NAS)

nflx

Recent Buy Ideas Revisited

Posted on | by Leon Hinde | Leave a Comment on Recent Buy Ideas Revisited

Sonic Healthcare (SHL.ASX)

shl

Amcor (AMC.ASX)

amc

James Hardie (JHX.ASX)

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Lend Lease (LLC.ASX)

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Newcrest (NCM.ASX)

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Resmed (RMD.ASX)

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For more analysis on our recent buy recommendations and market stratagey, please keep an eye out for tomorrow’s mid-week market update video report. It will be sent out tomorrow morning as a blog post.

 

 

 

 

Australian Bank – Earnings Preview

Posted on | by Leon Hinde | Leave a Comment on Australian Bank – Earnings Preview

The upcoming bank results will likely demonstrate that revenue and profit growth estimates may be too high.

We are expecting cost control to become an increasing focus for investors analysing bank results. Pressure continues to build on Boards to reconsider their dividend positions. Payout ratios at 80% appear too high given the added capital requirement banks face in the next 18 months.

WBC and NAB are likely to modestly reduce dividends. Out of the 4 majors, ANZ is the only bank with positive a technical structure.

ANZ.ASX

anz

 

Transurban Group 1Q17 Traffic Growth

Posted on | by Leon Hinde | Leave a Comment on Transurban Group 1Q17 Traffic Growth

Overall the traffic results for TCL.ASX were in line with expectation. New projects over the next 2 – 3 years help to underpin the valuation, along with the rising dividend.

We expect to see the traffic growth rate steadying, which then requires a favourable back drop in bonds, i.e slow gradual interest rate rises in the US, to allow TCL to track sideways.

We’ve been buyers on the recent dip and we see TCL as a sell back above $11.75. For portfolio investors it will pay to cover TCL with an $11.75 call into next year with a view towards collecting the $0.25 December dividend plus the call premium.

Fy17 revenue of$2.2b, on EBITDA of $1.65b, DPS $0.50 places the stock on a forward yield of 4.7%. Fy18 DPS should increase by a further $0.05 to $0.55 per share.

TCL.ASX

tcl

 

Property Exposure – Are You Watching?

Posted on | by Leon Hinde | Leave a Comment on Property Exposure – Are You Watching?

The recent market rotation towards growth assets and in particular, materials and financials, has resulted in selling utilities and property trusts. In many cases, these names have seen 10 to 20% correction.

The following post takes a quick look at some of the relevant chart patterns.

SCG.ASX (forward yield 4.9%)

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SGP.ASX (forward yield 5.5%)

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WFD.ASX (forward yield 3.5%)

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DXS.ASX (forward yield 5.2%)

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GMG.ASX (forward yield 3.7%)

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GPT.ASX (forward yield 5%)

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MGR.ASX

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On the utilities, we think that both Sydney Airports and Transurban should be back on the radar and maybe looking oversold.

SYD.ASX (forward yield 5%)

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TCL.ASX (forward yield 4.8%)

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Tabcorp – FY18 Earnings Upgrade

Posted on | by Leon Hinde | Leave a Comment on Tabcorp – FY18 Earnings Upgrade

Tabcorp (TAH.ASX) will likely see $20m+ in earnings upgrade from the NSW Government’s decision to reverse its ban on greyhound racing from FY18.

FY17 revenue of $2.3b looks flat on the same time last year, with EBIT of $350m and EPS $0.23. Out into FY18 the investment case picks up. FY18 revenue $2.35b, EBIT jumps to $370m on $0.25 of EPS and a forward yield of 5%+. With a  relatively high payout ratio and 20x PE, the stock looks slightly expensive and we prefer to be a buyer on a dip back below $5.00

TAH.ASX

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CWN.ASX

Crown looks attractive at or near $13.00 with gaming revenue picking up in Macau and the pending breakup of the ASX listed Crown business splitting into 3 separate entities, unlocking value for shareholders.

cwn