ASX – August Volumes

Posted on | by Leon Hinde

ASX is under Algo Engine buy conditions.

August cash equity volumes and average daily futures contract volumes were well down on the same time last year, -13% and -19% respectively.

FY21 earnings are likely to be flat at best and with the stock on a forward yield of 2.8%, we see it as “fully valued”. Owning the stock and selling an at the money covered call option is generating 8% cash flow.

We see value in buying ASX on any market weakness.

Ramsay Healthcare

Posted on | by Leon Hinde

Ramsay Health Care

RHC delivered 8% revenue growth in FY20, with a strong 1H more than offsetting the 4% decline experienced in 2H.

Australia suffered the greatest contraction in 2H, down 8% on the same time last year. UK revenue growth remained solid, up almost 5%.

Based on normalization in FY22 earnings, we have the stock trading on a forward yield of 2.2%.

CSL – Buy

Posted on | by Leon Hinde

CSL is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

CSL & the Australian Government signed a Heads of Agreement to supply 51mn doses of the University of Queensland’s COVID-19 vaccine.

CSL & AstraZeneca also signed a Heads of Agreement for manufacture & distribution of 30mn doses of AZN’s COVID-19 vaccine (AZD1222).

We expect EPS to increase by 8 – 10% in FY21 and FY22. This supports a forward dividend yield of 1.1%.

Buy CSL within the $265 – $280 support range.

Orica – Valuation Review

Posted on | by Leon Hinde

Orica is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

FY21 revenue is likely to remain flat at $5.8bn and EBIT is forecast to increase 3-5% to $630mn. This supports a forward yield of 2.8%.

Earnings are likely to be well supported due to higher volumes and the strength in the mining industry, especially from the gold mining market.

Earnings may surprise to the upside and we continue to hold ORI into the next earnings release.