Corporate Results Monitor

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

Currently monitoring Post August 2019.

Figures shown as at 20 November 2019

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Beat/Miss Ratio:


Previous Corporate Results Updates

Company Result Upgrades Downgrades Buy/Hold/Sell Prev Target New Target Brokers Commentary
AMC - AMCOR IN LINE 1 0 5/2/0 15.93 16.00 7

Amcor reported an in-line quarterly and has maintained FY20 guidance. The market has de-rated the stock on concerns over the sustainability of plastic packaging from an environmental perspective, but this is not reflected in plastics volume growth. The company is also a leader in the development of alternative packaging solutions, thus making the sustainability issue both a risk and an opportunity. Five Buy ratings on a valuation that has dropped to historically low levels.

ANZ - ANZ BANKING GROUP MISS 0 0 0/6/1 27.64 26.31 7

ANZ Bank's earnings result missed expectations due to a lower than expected net interest margin. The outlook remains downbeat, with uncertainty remaining with regard additional NZ capital requirements and ultimate remediation provisions amidst subdued credit growth and rising costs. The dividend was maintained but the clanger in the result was a cut in the franking level to 70%. Brokers do not feel the recent turnaround in the housing market will necessarily feed into earnings growth and, given the issues, the dividend itself remains under threat going forward.

API - AUS PHARMACEUTICAL IND MISS 0 1 0/1/1 1.53 1.45 2

Australian Pharmaceutical's result involved multiple accounting adjustments that blurred the picture and undermined result quality. Reported earnings were below guidance and included a lower tax rate, a dividend from Sigma Healthcare and a fair value benefit from Clearskin Care. With Citi downgrading to Hold and Credit Suisse maintaining Sell, we'll call it a miss. Credit Suisse considers the short-term outlook challenging, as PBS revenues are expected to remain under pressure and there is greater competition in the wholesale distribution market.

AST - AUSNET SERVICES MISS 0 1 0/4/1 1.82 1.80 5

AusNet Services' result missed most forecasts, most notably that of Morgans, who after a damning assessment has downgraded to Sell (Reduce). Other brokers acknowledge ongoing regulation risk for that part of the asset base, and the impact of low interest rates, but are more circumspect about the prospects for the unregulated asset base. Confirmation of the distribution policy increases confidence, and Macquarie, for one, believes growth can still be delivered. But not enough for anyone to risk a Buy rating.

BOQ - BANK OF QUEENSLAND MISS 0 1 0/1/6 8.80 8.30 7

Bank of Queensland's result missed all forecasts on the bottom line, while a boost in revenues was provided by low-quality trading income. Rising bad debts are a concern, with the drought an influence. The dividend cut came as no surprise but brokers expect further cuts. The result has shown up the challenges for smaller banks amid a mounting regulatory cost burden and a lack of scale to spread the pain. Brokers expect a full-scale restructure under the new CEO, earnings re-basing and more pressure on capital. One downgrade to Sell makes six from seven.

BKW - BRICKWORKS BEAT 0 0 0/3/0 16.94 17.57 3

Brickworks' result beat guidance, highlighting the inherent resilience of the company's diverse operations. Record earnings from property offset weakness in building materials and investments. Recent US brick acquisitions, Glen-Gery and Sioux City, are delivering incremental profit growth and further bolt-on acquisitions should be expected. Macquarie remains cautious, as a receding contribution from property and investments and uncertainties in building products means profits are under pressure and forward multiples remain comparatively unattractive. Three Hold ratings suggests consensus agreement.

CTP - CENTRAL PETROLEUM IN LINE 0 0 1/0/0 0.24 0.25 1

Central Petroleum's FY19 results were in line with estimates. Morgans notes a marked uptick in earnings strength, with margins rising to 50% from 32%. Progress towards development of Project Range remains in focus, with a pilot program planned for the next six months. The broker suggests this is the most obvious source of valuation upside risk. Morgans is also keen on the early results at Dukas-1.

CIA - CHAMPION IRON IN LINE 0 0 1/0/0 4.20 3.00 1

Macquarie notes strong operating results in the September quarter for Champion Iron, although first half financials were affected by provisional pricing adjustments, netting the result out to in-line. The company has completed the acquisition of the remaining interest in Bloom Lake and will double production with the development of phase 2. Upgrade momentum is significant, in the broker's view.

CIM - CIMIC GROUP IN LINE 1 0 0/3/0 38.88 39.00 3

Cimic Group's quarterly result was largely as expected and FY guidance was reaffirmed. The problem remains one of weak cash conversion, which appears to be a result of a higher proportion of alliance-style contracts as well as delays for large projects. Macquarie suggests that while things haven't gotten any worse, they have not gotten any better either. Improved cash conversion and positive construction growth are required to drive any re-rating. Three Holds sums things up.

CLV - CLOVER CORP BEAT 0 1 1/1/0 2.08 3.03 2

We'll take Clover's result as a beat given the substantial rise in target price resulting from a 22% revenue increase provided by growth across all areas. Ord Minnett notes the company is yet to benefit from several catalysts, including EU regulation and being only one of three infant formula brands receiving Chinese registration in the last 12 months. There is also upside risk to forecasts should China mandate DHA (omega-3) increases. Ord Minnett retains Buy but UBS downgrades to Hold following a near 100% rally since February.

CSR - CSR IN LINE 1 0 1/1/4 3.55 3.78 6

CSR's result evenly beat, met and missed forecasts which likely comes down to how one assesses profit from a property sale, which offset ongoing weakness in building materials and aluminium. Such a gain is not expected in the second half, while conditions for materials/aluminium are only expected to deteriorate further as demand lags any recovery in housing. This leads a majority of brokers to retain Sell ratings, although Macquarie (Buy) stands out on seeing the company as positioned to cut costs.

ELD - ELDERS BEAT 0 0 1/0/0 7.30 7.10 1

Morgans found Elders' FY19 result commendable, given the challenging operating environment. No formal FY20 guidance was provided but the company expects a below-average summer cropping season. As a result, Morgans reduces FY20 forecasts, but relative to peers, the broker considers Elders best placed to withstand the current environment. The business is also highly leveraged to a rising cattle price, which will occur once it rains and farmers need to re-stock.

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

Fonterra's result fell short of expectations and brokers see little light at the end of the near term tunnel. There simply is too much happening right now, suggests UBS, with the company battling margin pressure from higher milk prices, as well as downsizing the organisation while at the same time coping with environmental initiatives. Larger investments might need to be made. The company has a long road ahead, warns Credit Suisse, given the value destruction that occurred through a series of poor investments. Macquarie (Sell) wants to see the new strategy making an impact.

IPL - INCITEC PIVOT BEAT 0 3 2/4/1 3.42 3.54 7

Incitec Pivot posted a shocker, but this was expected and in most cases the numbers weren't as bad as feared. Local drought and flooding rains, and a US pipeline outage, conspired to provide for a weak FY19, so for brokers it's all about FY20. Clearly this should be a better year, yet fertiliser prices remain sluggish, and realistically forecasts reflect whether brokers are assuming an end to the drought or not. On such uncertainty, three brokers downgrade on the back of the share price response, citing stretched valuation in the face of the risks.

JHX - JAMES HARDIE BEAT 0 0 6/0/0 26.34 29.89 6

James Hardie went into its result carrying six from six Buy ratings and nothing has changed, following a result that beat all forecasts on better than expected US margins. Guidance has been upgraded for both earnings and margins in FY20, leading to forecast increases. The company plans to invest in growth which will eventually weigh on earnings, but in the meantime brokers foresee a PE re-rating for the stock on the resumption of growth in US housing and consistency in primary demand growth.

KLL - KALIUM LAKES IN LINE 0 0 1/0/0 0.90 0.90 1

Kalium Lakes has reported a loss of -$11.8m in FY19. Beyondie is now fully funded and Macquarie expects accelerated development in the first quarter and first production in the second quarter of FY21. The company is expected to make a final investment decision shortly, which should mean the substantial early works move into full development.

KMD - KATHMANDU BEAT 0 1 0/2/0 2.48 2.92 2

Kathmandu's profit was at the top end of guidance and above forecasts. Credit Suisse found the results solid, reflecting the full year impact of the Oboz acquisition as well as operating efficiencies. The company expects Oboz to continue delivering double-digit growth and this should largely offset the FX impact on gross margins in the core retail business. Macquarie observes, despite a good start to FY20, margins are above the long-term target of 61-63% and are likely to moderate over the next few years. Credit Suisse sees nothing new to drive a higher valuation and downgrades to Hold.

MQG - MACQUARIE GROUP IN LINE 0 1 3/3/0 131.97 134.65 6

Macquarie Group's first half result was seen as solid and consistent with FY guidance. Brokers see potential to meet or beat guidance given increased asset management fees and ongoing expansion in the commodities business, although the group is cycling a very strong period last year. Three Buy ratings suggest the stock is not yet expensive despite its run-up, although Credit Suisse pulls back to Hold, unconvinced in second half upside.

MYR - MYER BEAT 0 0 2/2/1 0.55 0.66 5

Myer's earnings result beat expectations on improvement in gross margins, but this was all down to cost reductions offsetting an ongoing decline in sales. Further margin expansion is on offer through store rationalisation and product mix changes. While Myer's online business is growing solidly, it is dilutive to margins. A split of ratings largely reflects a belief further improvement can be made against a wider negative view about the consumer in FY20.

NAB - NATIONAL AUSTRALIA BANK MISS 0 0 2/3/2 27.00 27.33 7

National Bank posted a slight miss of forecasts but brokers were circumspect, responding on a could-have-been-worse basis and least-worse among the Big Three, with a relatively better net interest margin performance. The dividend cut was as expected but while a lack of capital raising pleased the market, it does mean uncertainty remains with regard remediation cost coverage. Otherwise the bank faces the same outlook of little to no loan growth and it is this sector-wide view that largely informs Sell ratings, while sector-relative views support Buy ratings in an even split of recommendations.

NHC - NEW HOPE CORP MISS 0 0 2/2/0 2.81 2.74 4

New Hope posted record earnings in FY19 but still fell short of expectations due to lower realised coal prices from Bengalla production. The company is forced to ramp down operations at the Acland development after failing to receive approvals for stage 3, but will keep on trying. Coal prices have possibly bottomed out but while Acland remains uncertain there are few catalysts in sight. Brokers retain positive ratings on valuation.

NWS - NEWS CORP MISS 0 0 3/0/0 23.68 23.71 3

News Corp's quarterly result missed forecasts, reflecting both a weaker result for REA Group and a subdued News & Information Services result. Within the latter, News Corp Australia disappointed but Dow Jones and the WSJ fared well, which are the main drivers in the division. Currency moves also impacted but Buys retained on valuation.

NUF - NUFARM IN LINE 1 0 3/2/0 6.08 6.58 6

There was little risk of Nufarm's result being anything other than in line as the company kept the market well informed throughout the period with drought-driven profit warnings. But the result pales in the shadow of the company's sale of its LatAm business at a surprisingly good price, relieving Nufarm of its debt burden at this tough time. It also increases leverage to any recovery in domestic seasonal conditions, if one can be so hopeful. Brokers also agree the drought has led to little value being placed on the company's omega-3 business, which it can now accelerate. Macquarie upgrades to Buy.

OFX - OFX GROUP IN LINE 0 0 0/1/0 1.47 1.39 1

Ozforex's first half net operating income was lower but in line with Macquarie's estimates. The company has committed to deliver annual positive operating earnings leverage and maintain a stable net operating income margin. Macquarie awaits a demonstration of this commitment before forming a stronger conviction on the stock.

ORI - ORICA BEAT 0 0 0/6/1 20.57 21.91 7

Orica's result either met or beat forecasts. Management expects growth in the second half and brokers believe this is achievable in a difficult market, with technology offering upside and ammonium nitrate oversupply easing. Growth depends on the Burrup recommissioning timetable which is not without risk, although the company is a late stage beneficiary of the recovery in mining activity. Brokers are upbeat but ratings reflect full value.

PDL - PENDAL GROUP IN LINE 1 2 2/2/1 7.94 8.39 5

Pendal Group's largely in-line result was met with mixed responses from brokers. The stock had been heavily de-rated on fund outflows though the year, but brokers agree signs of improvement have appeared recently and Brexit risks are fully priced in. Hence one upgrade to Buy. But with performance fees expected to remain low and costs expected to rise, the recent rally leads one broker to downgrade to Hold and one to Sell on valuation.

PMV - PREMIER INVESTMENTS BEAT 1 1 3/0/1 18.02 19.56 5

Premier Investments' result exceeded expectation but drew divergent responses. With wholesale channels now the key earnings driver for Smiggle, and core retail sales slowing, Citi (downgrade to Sell) believes past the next six months, momentum is unlikely to stay strong. Macquarie (upgrade to Buy) believes further clarity on the wholesale channel trajectory is likely to be a positive catalyst and wholesale remains the source of upside risk. Credit Suisse (Buy) suggests debates on the company's UK exposure are becoming peripheral to the overall investment case. The business appears to have been able to mitigate market weakness through rental reductions.

PPH - PUSHPAY HOLDINGS IN LINE 0 0 1/0/1 2.80 2.77 2

Following a "solid" result from Pushpay Holdings, UBS believes that while it will take time for the front book growth to materialise, lead-based marketing and new products are expected to stimulate customer acquisition in FY21. Ord Minnet believes the company is facing an increasingly mature and competitive market. The latter broker is cautious about the long-term potential for cash generation. Hence a Buy and a Sell.

REA - REA GROUP MISS 0 1 0/2/3 97.76 96.08 5

Brokers were expecting a weak quarterly result from REA Group amidst falling real estate ad volumes, but not quite this bad -- the worst result since the GFC. Management is expecting improvement in the second half as the housing market bottoms out and brokers do not disagree, but suggest the market is already pricing in a return to the glory days based on current valuation. There is also a question of whether higher "depth" penetration is now near a top. The longer term view remains positive but for now, caution reigns.

RMD - RESMED BEAT 0 0 4/2/1 18.81 20.54 7

ResMed's quarterly result sent brokers into an earning forecast and target upgrade scramble. Suggestions are made the company has re-established itself as leader in masks, while enjoying the benefits of a broad portfolio of devices. US re-supply is showing no sign of slowing down. Macquarie (Sell) remains the naysayer, forecasting strong growth but warns of downside risk from competitive bidding on reimbursements and competing new technologies. Citi and Ord Minnett, both Hold, agree upcoming competitive bidding offers a risk.

SIG - SIGMA HEALTHCARE IN LINE 0 0 0/1/3 0.48 0.50 4

A messy result from Sigma Healthcare, impacted by the loss of the Chemist Warehouse contract and restructuring costs related to Project Pivot, equally beat, met and missed forecasts. More important to brokers is what happens from here. Improved efficiencies are going some way to mitigating the contract loss but restructuring comes with execution risk. The company continues to invest in automated distribution centres that may lead to excess capacity. Brokers believe guidance may be a tad optimistic.

SM1 - SYNLAIT MILK MISS 0 0 0/2/2 9.60 8.79 4

Synlait Milk's FY19 result missed expectations and FY20 guidance disappointed. The result reflected start-up issues at new facilities, margin pressure from the renegotiated a2 Milk contract and increased overheads. The company's need to invest ahead of the curve will mean materially higher overheads, Morgans notes. Guidance addresses concerns regarding lower initial returns on the Pokeno factory and "Everyday Dairy" plant. There is scope for the relationship between Synlait Milk and a2 Milk to be restored as earnings growth picks up and operating risks moderate. Valuation is considered full.

TPM - TPG TELECOM BEAT 1 0 1/3/1 6.23 6.42 6

TPG Telecom's earnings came in ahead of guidance and either met or beat forecasts. Management continues to aggressively fight NBN margin erosion with cost reductions. The stock is nevertheless currently a binary risk, dependent entirely on whether the Federal Court approves the merger with Vodafone or not. Up/downside risk on that decision is significant.

WBC - WESTPAC BANKING MISS 0 0 2/3/1 29.06 27.27 6

Weaker volumes growth, lower wealth income and modestly higher costs led Westpac to miss most forecasts. The outlook remains dour, impacted by lower interest rates and a flat yield curve which are not generating loan growth. The bank's dividend cut came as no surprise but the capital raising did, although brokers agree Westpac now has enough to cover future remediation and capital requirements. The removal of uncertainty, paired with de-rating, may provided for upside from here. But nothing to be excited about, according to analysts.

XRO - XERO IN LINE 0 0 2/1/3 58.25 66.32 6

Xero's result was largely in line but brokers highlight strong subscriber growth in Australia. The question splitting brokers is whether, as Xero continues to invest in growth, the pace of subscriber growth can be maintained across more mature geographies, amidst competition from Intuit, and cycling strong comparables. While brokers agree the company is executing well, valuation is an issue.

Total: 35

Yet to Report

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20 November

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21 November
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earnings result

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28 November
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earnings result

2 December
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6 December
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Listed Companies on the Calendar

Date Code
20/11/2019ALLearnings result
19/11/2019ALQearnings result
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27/11/2019CKFearnings result
27/11/2019FPHearnings result
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05/12/2019MTSearnings result
29/11/2019SHVearnings result
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19/11/2019TNEearnings result