CIMIC – Dividends Set to Resume

Posted on | by Leon Hinde

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

Posted on | by Leon Hinde

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.

 

 

Transurban Group – Algo Buy Signal

Posted on | by Leon Hinde

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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Virgin Money – Growth in 2021

Posted on | by Leon Hinde

Virgin Money Uk has been on our radar following the merger and rebranding that took place last year.

Virgin Money is investing heavily in technology and executing well on the merger of the old Clydesdale Bank with the Virgin Money business. Analysts are forecasting 10%+ in profit growth for 2021 and the current 8x PE is un-demanding.

The dividend yield is 3% based on 2020 earnings and likely to increase into 2021.

We see price support at $3.20

Treasury Wines – 40% Sell Off

Posted on | by Leon Hinde

On 9th December last year we warned…

TWE is under Algo Engine sell conditions and we highlight the recent softness in US sales data as a concern. Downside target $15.50 – $16.50

Since then the stock price has plunged to $12.30 and we now expect further weakness before consolidating within the $11 – $12 price range.

ASX Market Valuation Review

Posted on | by Leon Hinde

Growth expectations for the FY20 ASX200 earnings have eroded from around 6% to only 2%.

Ex-resources, the PE valuation for the ASX200 now stands at 19.5x versus the 10-year average of 14.5%. 

Low bond yields and modest levels of global growth continue to support defensive names. Capital management remains an important factor in underpinning stocks, as share buybacks help to drive average EPS growth.

Our current ASX top 20 holdings include:-