SHL.ASX FY16 earnings per share growth of 21% was better than market expectations. FY17 the stock trades 22x on an expected yield of 3.4%
We own this name in the model from lower levels and see the stock price well supported and suitable for a buy write strategy.
CWN FY16 NPAT $406m is down 23% on the same time last year. Normalised EBITDA was up 4% and EBIT up 2% on last year.
FY17 outlook on our numbers suggests that Crown could grow EBITDA earnings per share around 5% to $900m and payout $0.60 per share in dividends. This places the stock on a forward yield of 4.2%.
We retain our long exposure and feel there’s added value yet to come from the proposed break up of CWN.
CSL.ASX reported FY16 revenue of $6.1b on EBITDA of $1.65b. The $500m share buyback is less than conducted in the previous 2 years but will still provide marginal buy side support to underpin the stock. In FY17 we see revenue growing to $6.5b and EBIT in the range of $1.8b suggesting the underlying business can continue to grow at around 12%. This places CSL.ASX on a 12 month forward PE of 27x with a yield of 1.4% assuming dividends per share of $1.30.
An okay result and a stable outlook underpins CSL as a buy write . We own it at lower levels in the model and generated significant call premium earlier in the year when selling December call options.
DMP.ASX now trades on a forward yield 1.5% assuming EPS of $1.40 into FY17. This places the stock on 50x multiple and the market assumes the business can continue to grow EPS by 30%+ per annum.
Current market cap $6.5b
BHP.ASX announced FY16 EBITDA $12b and underlying EBIT $3.5b. There was over $7b in impairments and management’s cost out performance in Copper, Coal and Petroleum will help to improve BHP’s earnings and cash flow into FY17 and FY18.
On forward basis we have BHP in FY17 paying out $0.35 DPS, placing the stock on a 2.2% yield.
No signal present: We currently hold BHP in the model and have sold Nov $22.50 calls to enhance the return.
GPT.ASX reported first half earnings of $270m or $0.15 per share. This reflects 6% growth on the same time last year. Retail and office rent growth was okay, yet the logistics rental growth was flat.
FY17 EPS growth should remain in the 5 – 6% range, placing the stock on a forward yield of 4.4% based on $0.24 dividends per share (DPS).
We like this name as a buy write.
AZJ reported FY16 EBIT of $870 (down 10%). AZJ has a challenging outlook on the revenue front (9% decline to $3.45b) and their 100% payout ratio means that dividends are likely to be cut in the near future. The company remains focused on cost cutting and $130m in savings were achieved in the past 12 months, helping to reduce the impact of softer haulage volumes.
FY16 NPAT of $510m (down 16%) was impacted by higher interest expenses. Dividends per share (DPS) of $0.24.
FY17 EBIT guidance of $900m.
We’ve been on the short side of this trade and we now look to lock in profits.
The US Dollar ended last week mixed as Friday’s Retails Sales and Inflation data disappointed to the downside. This saw the Greenback offered across the G-7 pairs at the NY open. However, the unexpected drop of .1% in consumer spending along with the -.4% reading in the Producer Price Index were shaken off by the NY close setting up some interesting chart patterns as we start the new week.
The AUD/USD, in particular, looks vulnerable to further downside range extension. After posting a .7755 high on Thursday, the AUD/USD finished the week with two consecutive losses for the fist time in almost two months and the first close below the five-day moving average since July 25th. Technically, the pair has been in a strong uptrend over the last three weeks but the RSI, along with the MACDs, are looking stretched.
With Tuesday’s RBA minutes likely to include a warning about the risks of currency appreciation derailing the sluggish post-mining economic recovery, a break of the key support level at .7630 is a reasonable bet. Further, the preliminary forecasts for Thursday’s Australian Employment report are looking for a softer reading in the key metrics in what has become a volatile data series.
TWE.ASX is a buy at $9.30 and we’re building an exposure coming into the upcoming earnings result on Thursday. Looking for numbers that equal or exceed NPAT $230m and anticipating a dividend of $0.13
NAB.ASX reported 3Q16 cash profit of $1.6bn for the quarter, slightly below consensus forecasts with revenue down but offset by better than expected cost management.
FY17 dividends are expected to be around $1.70 placing the stock on a forward yield of 6.1%.
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