Short Banks and Retailers

Posted on | by Leon Hinde | Leave a Comment on Short Banks and Retailers

We like the short side of the banks and retailers coming into what will likely be a volatile period for equity markets in September & October.

The regional banks, BOQ & BEN look expensive.

Following their profit announcement on the 31st August, HVN should be on your wishlist as a potential short, with a stop losses above recent highs.

 

 

 

Woolworths – FY17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Woolworths – FY17 Earnings

Woolworths announced FY17 underlying NPAT of $1.42 billion, down 3.6% and the company declared a final dividend of 50 cents, which includes the one-off item from the sale of Masters. The higher dividend is not likely to recur in FY18.

The market is now looking for WOW to grow NPAT in the range of 5 – 8% and  payout approximately $0.90 in full year distributions, placing the stock on 22x forward earnings and 3.1% dividend yield.

We feel WOW is now fully valued and holding the stock can only be justified when an at-the-money covered call is overlaid to boost the annualised cash flow to 10 – 12%.

 

Coca Cola 1H17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Coca Cola 1H17 Earnings

Coca Cola announced 1H17  underlying NPAT fell 4.3%, to $190 million. The company declared an interim dividend of 21 cents,  which is 75%
franked.

Forward guidance suggest relatively flat EPS  will continue with full year NPAT expected to be $420 million.

Indonesia and PNG are delivering improved earnings metrics and we have the company on a forward dividend yield of 5.4%, assuming 44 cents in annualised DPS.

 

SYD Nears Resistance At $7.30

Posted on | by Todd | Leave a Comment on SYD Nears Resistance At $7.30

Shares of Sydney Airports (SYD) are still well bid over $7.00 after the company announced 1H17 results, which included EBITDA of $577 million , cash flow of $383 million and an upgraded dividend guidance from 33.5 cents to 34.5 cents for calendar  year 2017.

This strength  in cash flow and increased dividend puts SYD on a dividend yield of 4.9%.

We expect strong price resistance in the $7.30 area and consider the stock expensive in the $7.30/50 area.

Considering the extended market conditions, in general, we prefer a at-the-money  buy/write strategy for SYD to enhance portfolio returns on a stock with modest upside potential.

 Sydney Airports

 

 

Amcor – FY17 Earnings Update

Posted on | by Leon Hinde | Leave a Comment on Amcor – FY17 Earnings Update

AMC has delivered  FY17 operating earnings of $1.09 billion, up 3% on FY16. The Board declared a final dividend of $0.235.

Underlying net profit for the 12 months to June, came in at $700 million or 4.5% higher on the same time last year.

At 19x forward earnings, AMC is expensive.

However, earnings are defensive and the company should still achieve average EPS growth of 8% into FY18, (net profit in the range of $750 – $770 million), placing the stock of a forward yield of 3.7%.

We expect AMC to trade within a range of $15.00 to $16.50.

Amcor

 

 

OSH Finds Support After 1H Earnings

Posted on | by Todd | Leave a Comment on OSH Finds Support After 1H Earnings

Shares of Oil Search got as lift yesterday as the company announced 1H17 results, which included an underlying NPAT of USD129 million and a higher-than-expected dividend of USD 4 cents per share.

Total profit increased to AUD7.30 per share. OSH management also tightened guidance towards the higher end of production, and the lower end of costs and capital expenditure for the calendar year 2017.

The company expects the PNG LPG yearly production rates over 8.6 metric tons per annum, which is the top end of the last year’s guidance.

OSH shares have lost over 15% since trading at $7.50 in mid-April.

We see scope for a medium-term lift from the $6.30 support area, but would consider the company a buy/write opportunity at current levels.

 Oil Search