Small Cap Reporting Season Highlights

Small Caps | Aug 31 2022

Tim Boreham, with some help from Ausbil, lines up his small-cap favourites from the August reporting season in Australia.

By Tim Boreham 

Not for the first time, a hotly-anticipated profit reporting season hasn’t quite delivered a definitive message about the market’s prospects, although the small to mid cap industrials have fared ok.

Put another way: if soaring interest rates and input costs spell pending doom, CEOs are doing a convincing line in deep denial.

 “So far, small cap earnings results have not been anywhere near as bad as expected,” says Arden Jennings, the portfolio manager for small caps and microcaps at funds manager Ausbil.

He adds: “we remain cautious on companies with significant debt levels which are now facing headwinds from rising interest costs. The market has begun to reflect this in earnings forecasts.”

What caught our eye in the torrent of numbers? Like raindrops on roses and whiskers on kittens – and with apologies to Julie Andrews - here are a few of our favourite things.

Airtasker ((ART))

The odd jobs platform is an overlooked beneficiary of inflation, given a strong uptick of the average price for a task.

The Airtasker Wage Price Index – yes, there is such a thing – showed an average 10.5% rise in the cost of pick-up and delivery tasks in the June quarter, while carpenters nailed down 18% more.

Rising fuel and other input cost mean the toilers are unlikely to be better off, but with Airtasker clipping the ticket on higher volumes, the bottom line benefits are apparent.

Airtasker reported June quarter earnings of $9m, up 31% on gross market value (that is, turnover) of $54m (up $38m).

In pushing up Airtasker shares by 22% on the day, investors were happy to overlook cash outflows of -$3.5m.

Good job!

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