Corporate Results Monitor

FNArena's All-Year Round Australian Corporate Results Monitor.

Currently monitoring post-August 2018.

Figures shown as at 22 November 2018

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TOTAL STOCKS:

32

Beats

10

In Line

17

Misses

5

Total Rating Upgrades:

10

Total Rating Downgrades:

8

Simple average net target price change:

1.54%

Beat/Miss Ratio:

2.00

Previous Corporate Results Updates

Company Result Upgrades Downgrades Buy/Hold/Sell Prev Target New Target Brokers Commentary
ALQ - ALS LIMITED BEAT 0 0 1/4/1 8.15 8.07 6

ALS ltd's life sciences division has been disappointing for a while, and the division disappointed most brokers again in the first half. This was more than offset by a solid beat from the commodities division, particularly in geochemistry. Further upside is envisioned for this division but life sciences splits broker views. Ongoing disappointment keeps Deutsche Bank on Sell while Macquarie (Buy) believes the division is back on a growth trajectory.

ANZ - ANZ BANKING GROUP BEAT 0 0 5/3/0 29.60 29.06 8

ANZ Bank's result beat most forecasts on better than expected costs and lower bad debt charges. Capital growth was also a highlight, underscoring sustainability of dividends. Brokers are prepared to say the worst is now over and as the banks move into 2019, ANZ is comparatively well placed in having less exposure to retail banking and thus housing. Hold raters remain cautious on the outlook as a whole.

API - AUS PHARMACEUTICAL IND IN LINE 0 0 0/0/2 1.53 1.57 2

Australian Pharmaceutical's FY18 result met the expectations of both (remaining) covering brokers. Both retain Sell ratings based on outlook. PBS revenues are likely to remain under pressure alongside greater competition and increased discounting in the wholesale market. Management itself did not provide an outlook given the government's pending review of community service obligation funding. There is a lack of confidence in the retail market heading towards Christmas trading.

AST - AUSNET SERVICES BEAT 0 0 0/0/0 0.00 0.00 0

AusNet Services' earnings decline was not as much as brokers had expected, supported by non-recurring revenues and cost efficiencies. Recurring revenues are known through to FY21 which, along with a solid yield, underscores the defensiveness of the stock. Renewables offer upside opportunity but government policy offers risk, although that appears to be priced in. An upgrade and downgrade, both to Hold, reflect a general view the stock is properly valued.

BOQ - BANK OF QUEENSLAND BEAT 1 0 2/2/3 10.68 10.53 7

Bank of Qld's result came in ahead of forecasts but there were one-offs in the profit line. Net interest margin was nevertheless positive but the bank's capital position remains the main focus of attention. A lack of special dividend, as expected by some, reflects a fall in tier one capital. Here brokers are divided: Morgan Stanley (Sell) expects no dividend growth, Macquarie (Sell) sees a risk of a dividend cut, while Citi (Buy) suggests the capital position is "strong". Ords upgrades to Hold on valuation.

BKW - BRICKWORKS BEAT 0 0 1/3/0 15.80 16.56 4

Brickworks' result beat broker expectations. Earnings upgrades follow but brokers agree a cooling housing market will provide a headwind for building products and rising energy costs are also an issue, suggesting slower earnings growth ahead. The cross-holding in WH Soul Pattinson provides a diversification offset but the stock is well valued.

CIM - CIMIC GROUP IN LINE 0 1 2/2/0 47.74 49.44 4

Cimic grew profit by 13% in the nine months to September, as forecast. The company is benefitting from strength in both the infrastructure and mining contract markets. Work in hand is stable ahead of further bidding opportunities expected this year. Credit Suisse sees work in hand as having plateaued and believes the outlook for transport infra to be flat at best, hence a downgrade to Hold. Ords sees upside potential if the current growth rate is maintained, while Macquarie believes the recent sell-off has left the stock undervalued.

CSR - CSR MISS 1 0 2/4/0 5.20 3.74 6

CSR's result either met or missed forecasts for a net miss. Long suffering Viridian, problem child ever since it has been acquitted, managed to outperform this time around, but the troubled division is to be sold. Rising costs took their toll on aluminium. Those costs, alongside a declining housing market, mean all bar Macquarie (Buy) see FY19 as another struggle for the company. On the basis of the share price decline, Hold ratings are maintained.

DLX - DULUXGROUP IN LINE 0 0 0/4/3 7.24 7.14 7

While coatings revenues slowed in the period, DuluxGroup was able to maintain margins in the face of rising input costs and meet broker expectations. No broker sees the stock as undervalued, hence no Buys. Hold ratings reflect a track record of solid performance in all market conditions, underpinned by maintenance and home improvement domestically, with offshore businesses offering upside. Sell raters fear the impact of the declining housing construction market.

ELD - ELDERS BEAT 0 1 0/0/1 7.05 7.80 1

Elders' result beat expectations, proving to Morgans the company can still grow earnings in the face of drought and falling cattle prices. Management remains confident of delivering 5-10% earnings growth through to FY20, organically, through acquisitions and cost controls. Morgans raises its target but downgrades to Reduce on a full valuation.

FSF - FONTERRA MISS 1 0 0/2/1 0.00 0.00 3

Despite twice downgrading guidance in the lead-up, Fonterra still managed to miss the bottom end of recent guidance and thus disappointed brokers. Factors out of the company's control, particularly input prices, remain an issue and while brokers see earnings growth ahead from a sensible strategy, forecast cuts mean this will be from a low base. Re-rating would require a better earnings track record. One upgrade to Hold.

GOR - GOLD ROAD RESOURCES IN LINE 0 0 1/0/0 0.95 0.95 1

Gold Road is not yet at the production phase so its result is not a major focus. Macquarie expects Gruyere development capex to reach a peak in the second half 2018, with construction on track for first gold production mid-2019.

GNC - GRAINCORP IN LINE 0 0 2/3/0 8.47 8.38 5

Graincorp's result was as expected, weak due to the drought. FY19 is expected to be worse still for grains on current assumptions, while the malt business (craft beer) and potential asset sales offer some upside, along with structural improvements. Brokers cut forecasts on the weaker FY19 outlook but see value in the longer term, hence no Sell ratings at this level. One day it will rain, but it will still be a couple of years thereafter before earnings are back to more normal levels.

IPL - INCITEC PIVOT IN LINE 0 0 4/3/0 3.88 4.25 7

Fertiliser prices increased over FY18, leading brokers to assume Incitec Pivot would enjoy the boost to earnings. However, the drought, unplanned outages and manufacturing issues got in the way, thus leverage to rising prices was lost. Brokers were either disappointed or sympathetic, and forecasts were equally missed, met and beaten. FY19 is expected to be brighter as leverage to fertiliser prices improves, US explosives provide earnings growth and the A$ provides a tailwind, but three brokers see a full valuation.

JHX - JAMES HARDIE MISS 0 0 7/0/0 24.46 21.37 7

James Hardie's quarterly disappointed, as volumes declined more than expected in a weakening US housing market and input costs remain elevated when some easing was assumed. Brokers argue as to whether cost pressures are cyclical or will continue to weigh but a full set of Buy ratings reflects a combination of faith in the company in the longer term and the share price fall on the day.

KMD - KATHMANDU IN LINE 0 0 2/2/0 2.92 3.07 4

Kathmandu reported in line with guidance. Brokers saw a solid result, supported by strong same-store sales growth domestically and better margins as discounting eased, along with the Oboz acquisition. No FY19 guidance was offered but momentum is expected to continue into the first half, while thereafter online sales and the performance of Oboz and international will be important.

LYC - LYNAS CORP MISS 0 0 1/0/0 3.20 3.20 1

Lynas Corp's FY18 results were below UBS's forecasts. The only negative news centred on the recurrence of water reliability issues. There are a number of initiatives to improve this so the broker believes there is nothing that fundamentally alters the value of the company's assets. The assets are strategic and the key product is experiencing robust demand amid the growth in electric vehicles. Buy maintained.

MQG - MACQUARIE GROUP BEAT 1 0 4/3/0 118.54 128.11 7

We'll call Macquarie's result a beat but based on FY19 guidance, not on the FY18 result. Both exceeded forecasts but FY18 was boosted by a cut in tax rate. FY19 guidance nevertheless had brokers upgrading forecasts, noting rarely does Macquarie ever upgrade guidance at this stage of the year ("flat" is the typical offering) so confidence must be high, and guidance will still likely proving conservative, as is always the case. Growth investment has meant a drop in excess capital so no buyback, but one upgrade to Buy.

MYR - MYER IN LINE 2 0 0/3/3 0.37 0.39 6

Myer's result was largely in line with weak expectations, although gross margins did slightly surprise to the upside thanks to less discounting. The new CEO's turnaround plan for a company that's been trying to turn around for five years -- that of focusing on revenue growth -- has been met with a mix of tentative approval and scepticism. Is this plan actually different to any other prior? Refinancing at least limits downside and there is possible corporate activity support. Two upgrades to Hold but no Buys.

NAB - NATIONAL AUSTRALIA BANK IN LINE 0 0 5/1/2 30.19 28.98 8

In the overall picture, NAB's result was largely as expected. Management suggested a subdued outlook but brokers acknowledge a greater exposure to business banking than retail compared to peers. The bank is alone in not repricing mortgages which will either crimp revenues or provide an opportunity to reprice at a later stage. Capital remains to the light side albeit credit quality is sound. Restructuring is going to plan, but execution risks still remain.

NWS - NEWS CORP BEAT 0 0 1/3/1 22.88 22.15 5

News Corp's result was ahead of expectation. While the numbers were supported by the REA Group stake, as always, News & Information also posted a strong result for a change. Foxtel is nonetheless an ongoing drag due to both reinvestment and structural challenges in media. Macquarie's Buy mostly reflects the REA stake and Morgan Stanley (Sell) believes consensus forecasts are too ambitious. Citi (Hold) is bold enough to point out that a direct investment in REA might be a better option.

NUF - NUFARM IN LINE 1 1 4/2/0 8.96 7.69 6

Nufarm had been keeping the market up to date with the impact of the drought so no real surprises in the result release. Outside of drought-affected earnings, other aspects of the business are doing relatively well and approvals for omega 3 canola are proceeding. The capital raising was a slight surprise and is highly dilutive but brokers see the sense in shoring up the balance sheet given it is unknown how long the drought will last. Brokers all see the stock as undervalued at this level except Deutsche Bank, who cites further unknowns with regard Brexit, US tariffs, rising raw material costs and volatility in Brazil.

ORI - ORICA IN LINE 1 1 1/5/1 18.15 17.56 7

Orica's result either met or beat forecasts at the headline, but take out asset sales and it missed, so we'll net out to an in-line. A spread of ratings underscores varied views, as does one upgrade to and one downgrade from Buy, leaving the numbers unchanged. A positive market response reflects weak expectations. Management sees FY19 as underpinned by increased demand and manufacturing improvements, but brokers note capex and cost pressures are weighing on margins. Burrup problems mean probably another year before full utilisation.

OFX - OZFOREX GROUP BEAT 0 0 0/2/0 1.92 1.81 2

A growing corporate customer base helped OzForex to a beat of expectations, although earnings were hindered by investment in personnel and offshore expansion. It's too early to know whether this will pay off but guidance implies 17.5-20% second half earnings growth above first half. Ongoing strong growth in turnover is expected but both brokers retain Hold.

PDL - PENDAL GROUP IN LINE 0 0 2/3/1 10.88 9.38 6

A reduction in fixed cost growth guidance was a highlight of an otherwise in-line result for Pendal. A split of ratings reflects a balance between expectations of less supportive equity markets in FY19, meaning lower funds flows and performance fees, lower fixed costs, and growth options, particularly in the US. A better performance from JOHCM would balance out the negatives.

PMV - PREMIER INVESTMENTS IN LINE 0 2 1/4/1 15.96 18.89 6

Premier Investments' result was considered solid, with Smiggle once again starring and apparel brands posting positive second half growth. Cost control was impressive but the ongoing Smiggle strategy overshadowed, as the business focus moves more towards online, concessions and wholesale. The high growth, high margin Smiggle and Peter Alexander brands now account for 43% of sales but brokers see the stock as having reached overvaluation, hence two downgrades.

REA - REA GROUP BEAT 1 1 3/3/0 87.90 86.09 6

REA Group's result caught everyone by surprise in the face of a deteriorating housing market, thanks to strong developer/commercial growth, new residential products and lower cost growth. As to whether the peak has now been seen as house prices fall further, and upcoming state and federal elections stymie listings, is the question that split ratings between those who are cautious and those who have faith in REA's track record. One upgrade and one downgrade reflect varying views.

RMD - RESMED BEAT 1 0 4/3/1 14.28 15.08 8

ResMed's quarterly beat all forecasts on revenue, with earnings boosted by impressive cost management. Brokers note the company's growing dominance in the US amidst ongoing growth in awareness of sleep apnea and rolling mask replacement. Brightree has provided an additional boost and ResMed should be positioned to further increase market share. Credit Suisse upgrades to Buy while Macquarie (Sell) wants to confirm sustainability of growth trends.

SIG - SIGMA HEALTHCARE MISS 0 1 0/1/3 0.48 0.47 4

Sigma Healthcare reported weaker than expected. Brokers chorus a view that industry conditions are "challenging". FY19 guidance has been retained which suggests a second half skew driven by cost reductions, but brokers believe revenues will remain under pressure. Restructuring is being considered but this will also cost money. One downgrade to Sell despite a sharp share price fall on the day.

SM1 - SYNLAIT MILK IN LINE 0 0 0/0/3 0.00 0.00 3

An 89% jump in profit for Synlait Milk was impressive but not surprising. A slower pace is expected in FY19. Brokers believe the company's diversification push is sensible and volume growth is expected to continue for a2 milk, but momentum is expected to slow and itís a simple case of a valuation being unjustifiable.

TNE - TECHNOLOGY ONE BEAT 0 0 1/3/0 4.96 5.59 4

TechnologyOne's result beat most forecasts. Management seems increasingly confident in momentum in the cloud, with brokers noting government and education demand supporting verticals and the highest margins in a decade underscoring the benefits of scale. Further upside is expected but valuation is an issue, with UBS noting the stock has not de-rated along with global peers. Ords (Buy) retains the faith but current market sentiment throws up the risk of volatility.

TPM - TPG TELECOM IN LINE 0 0 2/0/3 6.75 7.81 5

TPG Telecom pre-released its numbers just recently at the Vodaphone merger announcement, so no surprises. Brokers are nevertheless split down the middle, as ratings imply. On the one hand TPG will continue to be impacted until the NBN rollout is complete and the loss of legacy iiNet fixed lines rolls out of the numbers over the next three years. On the other, the merger offers significant synergies over time. The approval process will take some time yet, so it is suggested by the naysayers a better entry point might present.

URW - UNIBAIL-RODAMCO-WESTFIELD IN LINE 0 0 1/2/0 17.85 16.29 3

Brokers do not indicate whether UR Wesfield's result beat or missed expectations but reaffirmed guidance is seen as a positive, with asset disposals running ahead of schedule. Operational performance is seen as sound but the outlook is clouded by rising bond rates and a weakening retail environment that suggests lower rents ahead, offset by a solid yield.

WBC - WESTPAC BANKING IN LINE 0 0 3/4/1 30.60 29.86 8

Given Westpac had flagged RC-related provisions, the bank's earnings result was largely in line with expectations. Productivity savings were a key feature along with low bad debts, offsetting a lower net interest margin due to RC-costs, higher funding costs and competition. Ongoing productivity savings may be all that can drive earnings ahead as credit demand slows. Variance in ratings reflects views on whether or not more anticipated pain to come in housing and in further RC-fallout is priced in.

XRO - XERO BEAT 0 0 2/3/0 41.09 46.92 5

Xero's result beat estimates on strong subscriber and revenue growth. Australia and UK stood out, while US growth is yet to catch up to a similar rate but progress is being made. Acquisition opportunities and plans for new products underpin a faster than expected ramp-up of operating leverage. Hold raters see valuation as fair.

Yet to Report

Indicates that the company is also found on your portfolio

Monday
19 November
Tuesday
20 November

earnings result


earnings result


earnings result


investor update


Wednesday
21 November
Thursday
22 November
Friday
23 November
Monday
26 November
Tuesday
27 November
Wednesday
28 November

earnings result


earnings result


AGM


Thursday
29 November

earnings result


Friday
30 November
Monday
3 December
Tuesday
4 December
Wednesday
5 December
Thursday
6 December
Friday
7 December
Monday
10 December
Tuesday
11 December
Wednesday
12 December
Thursday
13 December
Friday
14 December

Listed Companies on the Calendar

Date Code
29/11/2018ALLearnings result
20/11/2018ALQearnings result
28/11/2018CKFearnings result
Date Code
20/11/2018CYBearnings result
28/11/2018IFLearnings result
28/11/2018MLXAGM
Date Code
20/11/2018OFXearnings result
20/11/2018TNEinvestor update