Rudi’s View: IOOF, Amcor And Japara Healthcare

Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Sep 20 2018

In this week's Weekly Insights (this is Part Two):

-It's Different This Time, Not A Bubble
-August Reporting Season: The Final Act
-Shame, Shame On You, IOOF

-Rudi Talks
-Rudi On TV
-Rudi On Tour

[Non-highlighted parts appeared in Part One on Wednesday]

August Reporting Season: The Final Act

By Rudi Filapek-Vandyck, Editor

August Reporting Season: The Final Snippets I wrote last week. That was until I discovered there was a little bit of additional insight left that still deserved to be pointed out, hence why this week contains one final addition to the final set of observations published last week.

At the end of the day, I very much feel I am now writing for future scholars of the recent reporting season, also because financial markets are very much in the grip of international tensions between the Trump administration and Xi Jinping's China.

And that doesn't seem to disappear anytime soon.


Beauty, as they say, is always in the eye of the beholder and nowhere is this more visible than in Citi's assessment post August. Strategists Tony Brennan and James Wang have held on to their targets for the ASX200 to reach 6500 by year-end and 6650 by mid-2019 (note the small gain post December) and on their assessment the local reporting season provided enough evidence these targets look reasonable and will be met.

As a matter of fact, the Citi strategists report overall their confidence in the share market's outlook has grown, irrespective of macro-economic, and other, risks.

Further observations can be derived from the table below, which shows how profit growth expectations have shifted throughout August. There are mostly positives in there, one would have to conclude.


Industrials analysts at Morgan Stanley have used post-August updates to reiterate their view that operational dynamics are improving for Amcor ((AMC)), as well as their support for the proposed acquisition of Bemis in the US. The latter deal, while not meeting Amcor's future return hurdles, is seen as strategically sound, while also both EPS accretive and value-accretive.

Morgan Stanley remains cautious/sceptical about the immediate outlook for Brambles ((BXB)), while reiterating Overweight ratings for Boral ((BLD)) and BlueScope Steel ((BSL)).

Adelaide Brighton ((ABC)) remains on Underweight. The analysts feel the stock was priced for higher growth that was always tough for the company to meet. Even though the share price has weakened post the result, the analysts are still not jumping on board.

August showed the housing construction market remains pretty resilient, point out the analysts, though their preference is with companies that have more leverage towards new infrastructure. Apart from Boral, the preference lies with Lend Lease ((LLC)) which, the analysts note, has won new engineering contracts for Westconnex and the above-station development at Martin Place in Sydney and seems poised to increase market share.


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