Brambles – Add Call Option

Posted on | by Leon Hinde

Brambles remains under Algo Engine buy conditions.

FY20 earnings were in-line with market consensus with EBIT flat on the same time last year. On a constant currency basis, EBIT increased 4%, which was in-line with management guidance for 3 – 5% growth.

BXB generates a large percentage of its revenue from consumer
staples and grocery supply chains, making it a relatively safe harbor for investors. At 22X forward earnings and a 2.2% yield, there’s not much upside in the share price on a 12-month outlook.

We suggest investors add a covered call option to enhance the income return.

CSL – Rallies 15%

Posted on | by Leon Hinde

We’ve been highlighting the buy-side opportunity in CSL from the $270 support level. The share price has since rallied 15% and traders can now consider locking-in the gains.

Investors may wish to stick with the longer-term momentum and reassess following the FY20 earnings release today.

Orica – Take Profit

Posted on | by Leon Hinde

After accumulating Orica on the $16.50 higher low formation, we now see the share price trading within our $18 – $19 price target.

With the trade offering over 10% return, locking in the gains is the “no-lose” scenario.

Investors will be waiting until Q4 for the 6 months to September earnings update. The last reported results for the six months to 31 March 2020, showed statutory Net Profit After Tax (NPAT) of $165 million compared to $33 million in the prior corresponding period. Earnings Before Interest and Taxes (EBIT) were up 2%.

Note: 25 JUNE 2020 ORICA COMPLETES SUCCESSFUL LONG-TERM US PRIVATE PLACEMENT.

Orica completed a new US$451 million and A$70 million (A$725 million equivalent) issue of fixed-rate senior unsecured notes (“Notes”) in the US Private Placement (USPP) market. Initially launched as a US$250 million issue to refinance a USPP maturing in October 2020, the transaction achieved a final order book of US$1.3 billion representing an oversubscription of more than 5x.

Investors may choose to focus on the strong balance sheet and strength within the mining industry as reasons to stick with the longer-term thematic underpinning Orica.

JB Hi-Fi – FY20 Earnings

Posted on | by Leon Hinde

JB Hi-Fi is among the best-performing stocks within our ASX 100 model portfolio. The stock was added back on the 3rd of November 2017 after switching to Algo Engine buy conditions.

JB Hi-Fi delivered FY20 underlying NPAT of $332mn above the top end of the guidance range of $325 to $330 million.

The 2H20 dividend of $0.90 was above consensus. Overall, the result was ahead of expectations, however, near-term risks to discretionary spending are high.

Altium – FY20 Reviewed

Posted on | by Leon Hinde

Altium creates software to help people design circuit boards for electronic devices. Altium has aspirational targets of $US500 million in annual revenue and 100,000 subscribers by 2025.

FY20 EBITDA was better than consensus with FY20 revenue of $189m, + 10% on the same time last year, EBITDA $72m. The company generated record subscriber growth, surpassing its 50,000 subscriber goal.

Full-year unfranked dividend increased to $0.19 and earnings before interest and tax climbed 13% to $US64m for the year ended June 30.

A highlight for the company in the last 12 months was the launch of its cloud-based electronic design subscription platform Altium 365. For 2021, the company forecast revenue growth to be in the range of $200 – $212mn or an increase of 10%.