IAG.ASX reported FY16 cash NPAT of $867m and EPS of $0.36 and a final dividend of $0.13
FY17 guidance is for slightly softer insurance margins and DPS of $0.28 placing stock on a forward yield of 5%.
We’re comfortable buying IAG.ASX on a pullback to $5.50
QBE 1H16 NPAT of US$265m was 10% below consensus. Growth in insurance margins remain elusive and return on invested capital shows little sign of improving in the low bond yield world.
Forecast FY17 dividends are likely to be at or near US$0.51 per share, placing the stock on a forward yield of 5%.
In summary, BHP posted a solid result with both NPAT and EBIT beating consensus. With the final dividend coming in at US14cps, FY16 total dividends of US30cps, the total dividends for the year are below expectations. In FY17 we remain hopeful we’ve seen the bottom of the cycle for BHP earnings.
If you don’t review the graph of iron ore very often, you may appreciate the images below.
12 month close $56
20-year history.
SGP.ASX delivered 7%+ EPS growth and reported profit of $890m, which was in line with market expectations. FY17 should deliver growth of 5 – 7%, placing the stock on a forward yield of 5.2%, based on $0.25 of dividends.
We’re cautious of the valuation and future earnings certainty in SGP and therefore, would prefer to look for an entry point at lower prices. Our algorithm engines will alert us, when and if a suitable buy point occurs.
SHL.ASX FY16 earnings per share growth of 21% was better than market expectations. FY17 the stock trades 22x on an expected yield of 3.4%
We own this name in the model from lower levels and see the stock price well supported and suitable for a buy write strategy.
CWN FY16 NPAT $406m is down 23% on the same time last year. Normalised EBITDA was up 4% and EBIT up 2% on last year.
FY17 outlook on our numbers suggests that Crown could grow EBITDA earnings per share around 5% to $900m and payout $0.60 per share in dividends. This places the stock on a forward yield of 4.2%.
We retain our long exposure and feel there’s added value yet to come from the proposed break up of CWN.
CSL.ASX reported FY16 revenue of $6.1b on EBITDA of $1.65b. The $500m share buyback is less than conducted in the previous 2 years but will still provide marginal buy side support to underpin the stock. In FY17 we see revenue growing to $6.5b and EBIT in the range of $1.8b suggesting the underlying business can continue to grow at around 12%. This places CSL.ASX on a 12 month forward PE of 27x with a yield of 1.4% assuming dividends per share of $1.30.
An okay result and a stable outlook underpins CSL as a buy write . We own it at lower levels in the model and generated significant call premium earlier in the year when selling December call options.
DMP.ASX now trades on a forward yield 1.5% assuming EPS of $1.40 into FY17. This places the stock on 50x multiple and the market assumes the business can continue to grow EPS by 30%+ per annum.
Current market cap $6.5b
BHP.ASX announced FY16 EBITDA $12b and underlying EBIT $3.5b. There was over $7b in impairments and management’s cost out performance in Copper, Coal and Petroleum will help to improve BHP’s earnings and cash flow into FY17 and FY18.
On forward basis we have BHP in FY17 paying out $0.35 DPS, placing the stock on a 2.2% yield.
No signal present: We currently hold BHP in the model and have sold Nov $22.50 calls to enhance the return.
GPT.ASX reported first half earnings of $270m or $0.15 per share. This reflects 6% growth on the same time last year. Retail and office rent growth was okay, yet the logistics rental growth was flat.
FY17 EPS growth should remain in the 5 – 6% range, placing the stock on a forward yield of 4.4% based on $0.24 dividends per share (DPS).
We like this name as a buy write.
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