Corporate Results Monitor

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

Currently monitoring March-July 2018.

Outside of official Reporting Seasons of February and August, FNArena's monitoring includes H1 and FY financial reports, plus those quarterly updates that have an impact.

Figures shown as at 20 July 2018

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TOTAL STOCKS:

53

Beats

17

In Line

21

Misses

15

Total Rating Upgrades:

12

Total Rating Downgrades:

8

Simple average net target price change:

7.59%

Beat/Miss Ratio:

1.13

Previous Corporate Results Updates

Company Result Upgrades Downgrades Buy/Hold/Sell Prev Target New Target Brokers Commentary
ALQ - ALS LIMITED IN LINE 0 0 2/2/2 7.86 7.46 6

ALS ltd' result was sufficiently in line on a balance of the commodities division outperforming expectations and life sciences underperforming. Brokers are pleased with the commodities result. While lower margins in life sciences are disappointing, analysts for the most part have not lost the faith in the growth potential. Diversification into this field was applauded by analysts at the bottom of the commodities cycle. Yet valuations remain divergent.

AJM - ALTURA MINING MISS 0 0 0/0/1 0.25 0.25 1

Altura Mining's result revealed a larger loss than Macquarie estimated. The broker considers earnings at this stage are largely irrelevant, given the sole activity is the development of the Altura project (formerly Pilgangoora). The company expects commissioning of the crushing circuit to commence in March. Stage 2 expansion remains on track and is expected to be completed by April. Macquarie does not yet factor in an expansion case for the stock. Underperform retained.

ANZ - ANZ BANKING GROUP IN LINE 0 0 4/4/0 30.09 29.59 8

A messy result from ANZ Bank, given divestments and the bank's simplification program, equally beat and missed forecasts but not substantially. Low bad debts improved the underlying numbers. Brokers agree ANZ is in a superior capital position to peers and in a weak ongoing credit growth environment, capital management will underpin earnings per share. The ongoing Royal Commission is one reason keeping some brokers on Hold ratings.

ALL - ARISTOCRAT LEISURE BEAT 1 0 7/1/0 27.39 34.16 8

Aristocrat Leisure's result took all brokers by surprise. Growth in digital exceeded expectations and thus eliminated any nervousness with regard a business that can provide quality sustainable revenues in contrast to more flippant machine revenues. The company is well set to grow US mobile gaming market share from a low base while the core business ensures solid cash flows regardless. Only Morgan Stanley believes the stock is well-priced, with everyone else championing upside.

API - AUS PHARMACEUTICAL IND MISS 0 0 0/1/1 1.64 1.46 2

Morgan Stanley believes Australian Pharmaceutical's longer term strategy remains intact but the short term green shoots that had been appearing have now given way to intensifying distribution and retail headwinds. Weaker consumer sentiment is having an impact and cash flow is disappointing. Credit Suisse agrees. Underwhelming guidance drives target cuts.

AST - AUSNET SERVICES BEAT 1 0 1/2/1 1.75 1.81 4

AusNet either beat forecasts with its FY18 result or FY19 guidance so we'll call it a net beat, although those forecasts, and subsequently ratings, remain divergent. On cost efficiencies and lower capex, brokers believe the company can continue to grow dividends. Morgans no longer sees a risk to the credit rating and has upgraded to Buy.

ANG - AUSTIN ENG BEAT 0 0 0/1/0 0.27 0.26 1

Austin Engineering's first half earnings slightly exceeded forecasts. Morgans observes tender activity is at record levels and supports the revenue and margin growth that is incorporated into forecasts. The broker remains cautious about the trajectory, nonetheless, given the lumpiness of activity in some geographies and flat pricing. Morgans believes the bulk of the recovery post repairs to the balance sheet has been realised. Medium-term upside is linked to growth in market share and corporate appeal.

BOQ - BANK OF QUEENSLAND MISS 1 0 1/2/3 12.11 10.75 6

Weak revenue growth and subsequent margin pressure meant the bank's earnings result missed all forecasts. Loan growth is subdued and competition is rife for mortgages, to which the bank is heavily weighted, while wholesale funding costs are on the rise. Unless mortgages can be repriced, solid cost controls will not offset further downside risk. Macquarie is assuming mortgage repricing in upgrading to Hold, while brokers also point out a strong capital position can still mean capital management.

BKW - BRICKWORKS BEAT 0 0 0/3/0 14.76 15.80 3

The result beat expectations and brokers agree earnings should continue to be supported by east coast building activity, while valuation is underpinned by the company's property business. The WH Soul Pattinson cross-holding also provides support. However, rising energy costs will weigh and any catalysts for re-rating appear absent for now, hence FY18 may prove to be a peak.

CIM - CIMIC GROUP IN LINE 0 0 1/2/0 44.68 47.66 3

The company's quarterly result met with expectations and guidance has been reaffirmed. The 2018 development pipeline remains robust and 2019 expectations have been upgraded due to the number of public private partnership, or PPP, opportunities in the offing, supported by a strong balance sheet. Valuation is a point of contention, hence two Holds.

CL1 - CLASS IN LINE 0 0 2/1/0 3.20 3.20 3

Account growth in the March quarter was in line with expectations. Regulatory and competition pressures have slowed the rate of growth in the near term but strong free cash flow and sustainable double-digit earnings growth are still expected.

CKF - COLLINS FOODS MISS 1 0 3/0/0 5.98 6.19 3

Collins Foods missed expectations due to weak KFC margins in WA, the cost of establishing a presence in Europe, and increased marketing spend. Yet brokers remain positive, expecting KFC margins to improve and European expansion to pay dividends in the longer run. One upgrade to make three Buys.

CBA - COMMBANK MISS 0 0 1/5/2 77.13 75.38 8

CBA posted a clear miss of forecasts on cash earnings, as credit growth slowed while funding costs rose, forcing down the net interest margin. A sizeable level of provisions has been taken to cover expected fines/compensation stemming fro the Royal Commission and ASIC review. Uncertainty on this front, in terms of magnitude, makes ongoing forecasts difficult but brokers agree the damage to the CBA franchise suggests a traditional premium to peers is no longer justifiable.

CSR - CSR IN LINE 0 1 1/3/2 4.47 5.16 6

CSR's result was roughly in line with forecasts and its best in eleven years. While no FY19 guidance was provided management is upbeat about strength in the building products market. Here, brokers diverge in their views, with many suggesting the result will represent peak earnings ahead of an inevitable housing cycle decline. Others point to a long tail in the cycle. All agree rising energy prices will present a drag on aluminium earnings.

DLX - DULUXGROUP MISS 0 0 0/3/4 7.00 7.23 7

Omitting a tax effect and one-offs, DuluxGroup's result fell slightly short of forecasts. The A&NZ business nevertheless performed solidly in the face of rising raw material costs, with margins remaining flat. That said, brokers see ongoing input cost increases and a slowing in the housing market providing a headwind for earnings, suggesting offshore investments need to perform to enable growth. All agree the stock is well to overpriced under the circumstances.

ECX - ECLIPX GROUP IN LINE 0 0 5/0/0 4.65 4.32 5

We'll call the EclipX result in line despite a negative share price reaction because brokers agree that was unwarranted. While margins came under pressure as growth slowed in the core business, the company boasts multiple growth options within a complexity investors may find difficult to assess. Trading at a significant discount to peers, the stock retains all three Buy ratings.

ELD - ELDERS BEAT 0 0 0/1/0 6.00 7.70 1

In beating Morgans' forecast, Elders proved to the broker it can still grow earnings in the face of falling cattle prices. While guidance is for 5-10% growth to FY20, the share price has had a solid run and Morgans retains Hold, noting upside risk were the company's substantial Chinese shareholder to make a full offer.

FPH - FISHER & PAYKEL HEALTHCARE IN LINE 0 0 0/1/2 0.00 0.00 3

Fisher & Paykel Healthcare's result was largely in line with forecasts. Brokers are upbeat about the company's prospects and execution in an attractive market, but agree the market is under-pricing risks regarding competition, the product cycle and ups and downs of the annual flu season. The stock is trading at a premium to peers hence negative ratings.

GXY - GALAXY RESOURCES MISS 0 0 2/2/0 3.65 3.71 4

While the result was a general miss, revenue timing issues may be a factor and brokers are none too concerned at this stage of the company's progress. The Mt Cattlin reserve upgrade was a key point although this, too, slightly disappointed. Brokers agree the share price will move from here on periodic news with regard a funding partner for Sal de Vida and a feasibility study on James Bay, notwithstanding the lithium price. Both projects have a long lead time.

GNC - GRAINCORP IN LINE 1 0 1/3/0 8.62 8.35 4

A weak result for Graincorp had been well anticipated given a poor harvest in dry summer conditions. Winter is not yet shaping up to be much better. UBS would like to see an improved performance in oils and better malt sales but brokers acknowledge efforts to increase efficiencies and diversify the earnings base which will not have an impact until FY19. Credit Suisse believes these strategic measures will outweigh seasonal flows and upgrades to Buy.

HIG - HIGHLANDS PACIFIC IN LINE 0 0 1/0/0 0.22 0.21 1

Highlands Pacific's financials featured a reversal of a prior impairment on the value of the Ramu nickel/cobalt project to reflect operating performance, cash generation and nickel and cobalt prices. It's good news for Ramu but Morgans is concerned with regard the miner's other projects. Given the dispute over the Frieda River copper/gold project the broker downgrades the valuation of Highlands' 20% stake. Add nevertheless retained.

HUB - HUB24 BEAT 1 0 2/0/0 12.00 12.33 2

Both brokers were surprised by the extent of net inflows in the March quarter, which is typically the quieter quarter. This bodes well for June, seasonally the busiest quarter, and earnings forecasts have been lifted. The number of advisors continues to grow and two major new distribution deals were signed during the period. With structural tailwinds strengthening, Ord Minnett upgrades to Buy.

IPL - INCITEC PIVOT MISS 0 1 3/3/1 4.01 3.87 7

Incitec Pivot's result missed forecasts, largely due to weaker fertiliser prices and operational issues. Seasonality impacted on fertilisers but the outlook for explosives is dour in the face of input cost rises and competition. There is some uncertainty in the outlook on capex and ongoing maintenance costs, along with Gibson Island gas contracts. Amidst this uncertainty, broker views are divergent.

JHX - JAMES HARDIE BEAT 0 0 4/1/1 24.39 24.79 6

James Hardie's quarterly result was as or better than expected by brokers. The removal of some products meant the US was slightly weak but management has stuck to FY growth guidance. The European rollout, Fermacell acquisition and new fibre cement products are all expected to drive growth, albeit the latter are in their infancy. Ord Minnett (Sell) believes too much growth is priced in while others are prepared to give management the benefit of the doubt.

KMD - KATHMANDU BEAT 0 0 2/2/0 2.37 2.47 4

While Kathmandu's result largely matched pre-released numbers, brokers highlight a positive start to the second half suggesting strong sales momentum. Analysts have raised forecasts accordingly, so we'll call it a beat. The announced acquisition of Oboz Footwear has also been well-received.

MQG - MACQUARIE GROUP BEAT 1 0 3/4/0 101.19 109.85 7

Macquarie's result beat forecasts on very strong performance fees and strength in capital markets. While lower in quality than annuity-style earnings, growth in which is expected to slow, brokers highlight the diversification of the group's businesses. Performance fees will drop in FY19 by comparison but Macquarie does at least offer one bright light in the troubled financials sector. It then comes down to a matter of valuation, which splits broker ratings.

MTS - METCASH IN LINE 0 1 3/1/3 3.04 2.98 7

The question arising from Metcash's result, which was largely in line with forecasts, is as to whether the bad news is priced in. On this point brokers are polarised, with three Buys pointing to greater synergies in hardware, a possible bottoming out in food & grocery and the buyback, while three Sells fear more supply contracts will be lost. Sell-raters also pose the question as to why Drakes would spend $80m on a distribution centre with (as yet) insufficient customers to justify the cost.

MDL - MINERAL DEPOSITS MISS 1 0 1/0/0 1.18 1.51 1

The good news for Mineral Deposits is the Grande Cote mineral sands operation in Senegal, 90% owned by TiZir, which is 50% owned by Mineral Deposits, ramped up production at a time titanium and zircon prices were firming. The bad news is operational problems at the company's smelter in Norway halted production. The cost turned out to be greater than Morgans had forecast and hence Mineral Deposits' earnings result was a disappointment. However the smelter has now ramped up to a greater efficiency level than first modelled. Revised production and cost projections lead the broker to increase its target and upgrade to Add.

MYR - MYER IN LINE 0 0 0/1/5 0.47 0.38 7

There were no major surprises in the result given Myer's prior profit warning, with dividend suspension expected in light of debt covenant breaches looming. Myer will switch back to a lower end offering given the higher end offering hasn't worked, which it switched to because the lower end offering previously didn't work. Brokers have little faith, reflected in five Sell ratings, and note investment capacity to turn things around is limited given the debt situation. The possibility of corporate activity is considered unsupportive given a discount, not a premium price, would be offered.

NAB - NATIONAL AUSTRALIA BANK IN LINE 0 0 6/0/2 31.62 30.98 8

NAB's result was roughly in line with forecasts and there's no change to a polarised five Buy to two Sell ratings, with no Holds in between. There is little disagreement the revenue and earnings outlook is subdued, and the bank's restructuring program underway will further weigh in the near term. Buy-raters are nevertheless confident it will pay off down the track through reduced costs. They also point to NAB's business banking skew, which means less exposure to retail fallout from tighter lending restrictions. Sell raters believe restructuring benefits are being overstated.

NWL - NETWEALTH GROUP IN LINE 1 0 1/1/1 6.18 6.17 3

We call Netwealth's quarterly update in line with expectations as while funds under management dipped, leading to a negative share price response, market share increased and brokers highlight ongoing strong net inflows. The company is enjoying structural tailwinds from advisors shifting to independent platforms, but then it comes down to valuation. Credit Suisse (Hold) says fairly priced, UBS (Sell) warns of margin risk, while Ord Minnett upgrades to Buy on the share price response.

NHC - NEW HOPE CORP IN LINE 0 0 1/2/0 2.49 2.43 3

New Hope's cash flow and dividend positively surprised Morgans, although Macquarie suggests cash is being held back to acquire Wesfarmers 40% stake in Bengalla. Credit Suisse also highlights cash flow but cites a miss on lower realised pricing at Bengalla. We'll net out to in-line. The ongoing catalyst is approval for Acland stage 3 as work on stage 2 progresses. Strong cash flow provides for growth options, including the potential acquisition.

NWS - NEWS CORP IN LINE 0 0 1/2/0 21.56 23.27 3

News Corp's result was mostly in line with forecasts but this required an earnings beat from REA Group to offset higher costs across News' cable programming and news & information services. The merging of Foxtel and Fox Sports should provide a boost net of expensive cricket rights, but it will remain incumbent upon REA's growth to offset declines in traditional services, brokers suggest.

NUF - NUFARM BEAT 1 0 6/0/1 9.40 9.78 7

Nufarm's result was weaker than forecasts, mostly due to LatAm weakness, but better than expected FY guidance suggests this year's seasonal half-to-half earnings skew will be more pronounced than average. We'll call it a beat on guidance. Brokers are positive on recent acquisitions ultimately boosting earnings, along with new Omega-3 products, which is reflected in six from seven Buy ratings. Deutsche Bank remains the non-believer.

ORI - ORICA MISS 0 0 1/5/1 18.39 18.29 7

Commodity prices and the market environment for Orica are improving, hence brokers were disappointed in a weak result beset by operational issues. The timing of the Burrup plant to reach full utilisation has been pushed out. The company is guiding to a much better earnings result in the second half but brokers all agree this relies entirely on improved execution, as Orica's peers enjoy the improved conditions.

OFX - OZFOREX GROUP IN LINE 0 1 0/2/0 1.47 1.62 2

While Ozforex posted in line with forecasts, brokers are concerned over an outlook highlighting a greater level of competition and lower levels of currency volatility. New client growth is needed to support profitability and is currently disappointing, while margins are lower on existing customers. Macquarie downgrades to Hold.

PNL - PARINGA RESOURCES MISS 0 0 1/0/0 0.70 0.70 1

Paringa Resources' first half loss was greater than Macquarie expected, primarily because of costs associated with the US listing. Flooding has delayed construction in the Ohio River Valley by around one month. First production from Poplar Grove is still expected in the second half of 2018. Macquarie believes the company could stand to benefit should upcoming changes to US steel and aluminium tariffs result in increased energy demand. Buy retained.

PDL - PENDAL GROUP BEAT 0 0 3/3/0 12.03 10.92 6

Pendal Group's result came in ahead of expectations, assisted by an asset sale and lower employee costs. Trends are improving in Australia and the stock trades at a notable discount to peers, but risks around funds flows are elevated and fixed costs are set to rise, keeping two brokers on Hold. Funds under management are nevertheless beating three and five year benchmarks.

PPT - PERPETUAL MISS 1 0 0/5/1 52.20 44.70 6

Perpetual suffered significant net outflows in the March quarter amidst a weak funds performance. Current market volatility suggests further downside risk. The fund manager has improved diversity and global equities offer strong growth potential, although inflows to date are slow. The weak share price has kept all bar one broker on Hold, following a valuation-related upgrade from Ord Minnett.

PPS - PRAEMIUM IN LINE 0 0 0/1/0 0.69 0.69 1

Strong net inflows in the quarter led Praemium to post a 37% increase in funds under management in the year to March. The specialist platform manager is on track to meet full year revenue and earnings guidance. Morgans retains Hold.

PMV - PREMIER INVESTMENTS IN LINE 0 1 3/3/0 15.20 15.96 6

The reduction in Premier Investments' gross margin, reflecting intense competition in apparel, was greater than brokers feared. However, online sales growth surprised to the upside and Smiggle posted another solid performance, so we'll net out to in-line. Brokers expect the margin decline to ease in the second half and for high-margin Smiggle and Peter Alexander to continue performing well. One downgrade to Hold reflects recent share price gains.

REA - REA GROUP BEAT 0 0 1/2/1 75.39 81.50 4

REA Group's March quarter result beat all forecasts on greater than expected revenue, overcoming the timing of Easter, and lower than expected costs. Earnings growth was also strong despite marketing spend on REA's new HomeTrack mortgage product, of which the company had warned. Brokers believe HomeTrack will prove a good fit and have upgraded earnings forecasts in line with guidance.

RMD - RESMED BEAT 0 0 3/4/1 12.01 13.30 8

ResMed's result beat forecasts on strong non-US sales. Revenue in the Americas slipped but operating margins were solid. Revenues should prick up as new products are launched this year but competitors also plan new launches, suggesting gross margins will remain flat. While cycling strong numbers last year, the company should be able to sustain growth levels. But valuation is an issue for most.

RHL - RURALCO BEAT 0 0 1/0/0 3.55 3.60 1

Ruralco's result beat Morgans' forecasts thanks to a full six-month contribution from prior acquisitions. Further strong growth is expected in the second half despite weaker cattle prices and a dry start to the winter cropping season.

SIG - SIGMA HEALTHCARE IN LINE 0 0 0/1/3 0.75 0.77 4

The result was in line but three from four unchanged Sell ratings reflect little faith in the stock going forward. Operating expenditure is running ahead of sales growth and FY19 guidance, ex acquisition contributions, suggests the business is going backwards. Pharma manufacturers are beginning to bypass wholesalers and uncertainty is provided by the pending expiry of the Chemist Warehouse contract.

SEH - SINO GAS & ENERGY MISS 0 0 2/0/0 0.26 0.24 2

Sino Gas & Energy posted a greater than expected loss due to higher operational costs in China, but as development progresses the result is not of any concern. More importantly, China's CNOOC is currently withholding cash payments but this appears to be a procedural matter as a long term deal is negotiated, and neither broker is worried. The upside case remains intact, even if there is a delay.

SM1 - SYNLAIT MILK BEAT 0 1 0/0/3 0.00 0.00 3

The result was stronger than expected and has led to a sizeable lift in consensus target (not tabled given NZD) but brokers suggest the company is currently in a "sweet spot", to use Deutsche Bank's words. Credit Suisse agrees, believing the market is not considering the risk of margin contraction through competition. There is no disagreement the stock price has run well ahead of valuation, hence all Sell ratings following Macquarie's downgrade.

TNE - TECHNOLOGY ONE MISS 0 1 0/3/0 5.36 4.80 3

It was mostly timing issues that led the company to a miss, but weak consulting revenues offset strength in cloud. The UK business is also tardy in reaching profitability. Guidance has been downgraded (implicitly) and brokers note a heavy reliance on the traditional second half skew to achieve a flat FY. TechnologyOne is a quality business, but the stock is well priced, brokers suggest.

TPM - TPG TELECOM IN LINE 0 0 1/3/4 5.74 5.68 8

TPG Telecom's result modestly beat some broker forecasts but this was widely offset by disappointment in the group's first fall in broadband subscriber numbers and loss of market share. Brokers have lifted near term forecasts due to slower than expected NBN roll-out but this is only a timing issue. Latter year forecasts have been cut. A challenging market and stiff competition leads to a negative weighting on broker ratings.

VRL - VILLAGE ROADSHOW MISS 0 0 0/2/0 3.54 2.41 2

The company's quarterly update featured a material downgrade to FY profit guidance, largely due to the recovery in theme park attendance stalling. Cinema exhibition is also facing structural headwinds from video streaming and a fourth quarter rebound is needed. Debt is becoming an issue with Macquarie suggesting risk remains to the downside.

WAF - WEST AFRICAN RESOURCES IN LINE 0 0 1/0/0 0.50 0.50 1

West African Resources' result was in line with expectations. Macquarie expects a strong resource upgrade this year and success at Sanbrado increases the prospect for consolidation by other West African producers. An updated feasibility study is expected mid year which should include a high-grade underground base case at the M1S deposit. Buy retained.

WBC - WESTPAC BANKING BEAT 0 0 4/3/1 33.01 31.95 8

Westpac posted a slight beat of consensus, driven by mortgage repricing, cost controls and productivity increases along with greater market trading income and low bad debts. Looking forward, a dark cloud in the form of the Royal Commission hangs over the bank in terms of potential regulatory response. Westpac is still trying to reduce its interest-only loan levels to meet APRA requirements. At the same time, offshore funding costs are rising, all of which points to a subdued earnings outlook.

XRO - XERO BEAT 1 1 0/3/1 0.00 38.15 4

Xero's result beat most forecasts although Citi was hoping for a bit more. It was a landmark year for the company, with earnings and cash flow turning positive for the first time. A&NZ subscriber growth was reasonable while the UK is powering ahead. US growth is slow but the company is pursuing partnerships. Macquarie likes the emerging operating leverage and upgrades to Hold but while others are equally upbeat, they see too high a valuation. Citi downgrades to Hold.

Yet to Report

Indicates that the company is also found on your portfolio

Monday
16 July
Tuesday
17 July
Wednesday
18 July

earnings result


Thursday
19 July
Friday
20 July
Monday
23 July
Tuesday
24 July
Wednesday
25 July
Thursday
26 July
Friday
27 July

earnings result


Monday
30 July
Tuesday
31 July

earnings result


earnings result


Wednesday
1 August

earnings result


earnings result


earnings result


Thursday
2 August
Friday
3 August

earnings result


Monday
6 August
Tuesday
7 August

earnings result


earnings result


Wednesday
8 August

earnings result


earnings result


earnings result


earnings result


earnings result


Thursday
9 August

earnings result


earnings result


earnings result


earnings result


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earnings result


Friday
10 August

earnings result


EGM


Listed Companies on the Calendar

Date Code
09/08/2018AGLearnings result
08/08/2018AMPearnings result
01/08/2018BWPearnings result
08/08/2018CBAearnings result
31/07/2018CCPearnings result
18/07/2018CIMearnings result
09/08/2018CWNearnings result
31/07/2018FLNearnings result
Date Code
27/07/2018GUDearnings result
08/08/2018IFLearnings result
01/08/2018JHGearnings result
10/08/2018JHXearnings result
09/08/2018MFGearnings result
09/08/2018MGRearnings result
07/08/2018NVTearnings result
09/08/2018ORAearnings result
Date Code
10/08/2018RFFEGM
01/08/2018RIOearnings result
03/08/2018RMDearnings result
07/08/2018SCPearnings result
09/08/2018SUNearnings result
08/08/2018TAHearnings result
08/08/2018TCLearnings result