0442 GMT - The selloff that greeted WiseTech Global's FY 2024 earnings guidance has left the stock trading broadly in line with historical earnings multiples, Goldman Sachs analysts say. They tell clients in a note that Wednesday's 20% share-price decline left the company valued at 46 times 12-month forward earnings, compared with a five-year average of 45 times. The GS analysts reckon the stock could receive some support after its hefty selldown, but they point out that it remains strongly higher in 2023 and that WiseTech's Ebitda is set to grow just 1% in 1H. They stay neutral on the stock and cut the target price by 9% to A$75.00. Shares are up 8.3% at A$75.40. (stuart.condie@wsj.com)
0414 GMT - Consensus expectations for costume jewelry retailer Lovisa's store rollout likely need to come down in the wake of the company's FY 2023 result, Citi says. Lovisa's run rate of store openings implies a network of 872 shops at the end of December, whereas the market is anticipating 897 shops, analyst Sam Teeger says in a note. "This could be somewhat offset by a better than expected FY 2024 gross margin outlook, where the company hopes to maintain on FY23 levels (79.9%), which is above FY 2024 Visible Alpha Consensus gross margin of 78.5%," Citi says. On a call with Lovisa's management today, Citi says the company indicated that the pace of store openings would be driven by the quality of deals from landlords. (david.winning@wsj.com; @dwinningWSJ)
0358 GMT - Qantas's balance sheet looks strong, which is just as well given the level of capital expenditure it has in the pipeline for items including fleet renewal, RBC Capital Markets analyst Owen Birrell says. The carrier's fiscal 2024 net capex guidance of A$3.0 billion-A$3.2 billion is squarely in line with Birrell's forecast of A$3.1 billion. Birrell tells clients that this includes new craft and investment in lounges. In terms of fiscal 2023 performance, domestic earnings fell short of Birrell's expectations, while international earnings beat them. Overall, group performance was in line at the profit level, he says. RBC has a sector-perform rating and A$7.50 target price on the stock, which is up 0.9% at A$6.225. (stuart.condie@wsj.com)
0352 GMT - Qantas's annual results were largely in line with market expectations, Citi analyst Samuel Seow says. He tells clients in a note that the carrier's A$2.465 billion underlying pretax profit compared with an average analyst forecast of A$2.452 billion. Its A$500 million share buyback, capital expenditure and rising level of net debt were also widely anticipated, suggesting limited implications for the airline's share price. The stock is up 1.1% at A$6.24. Citi has a neutral rating and target price of A$6.90 on the stock. (stuart.condie@wsj.com)
0056 GMT - The market is probably disappointed by South32's lower-than-anticipated cash generation in fiscal 2023, Citi analysts say in a note. Free cash flow in fiscal 2023 was just $57 million versus $2.24 billion in fiscal 2022, they highlight. "Group free cash flow reflected higher expenditure on productivity, improvement and growth projects and one-off tax payments in relation to Sierra Gorda acquisition and non-core royalty sale," the analysts say. Citi has a neutral rating and A$4.05 target on South32, which is down by 2.4% at A$3.66. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0026 GMT - Insignia's FY 2023 results show evidence of ongoing margin pressure, which may mean strong cost execution is required ahead, UBS analysts Scott Russell and Shreyas Patel say in a note. UBS notes Insignia's guidance for a further decline in FY 2024 group Ebitda margin by up to 0.5bps, as revenue margin compression exceeds cost reductions. UBS adds that it thinks the market will debate mid-term margin outlook and execution risk associated with Insignia's plans to simplify its business. The investment bank has a neutral call on the stock. (alice.uribe@wsj.com)
0016 GMT - While Medibank's FY net profit after tax and operating profit were both ahead of consensus, there is still some hangover from the cyberattack that it experienced, UBS analysts Scott Russell and Shreyas Patel say in a note. The core drivers of the beat appear to be the company's resident private health insurance and health units. At the same time, Medibank's FY 2024 claims inflation guidance of 2.6% growth, which compares with UBS's estimate of 2.5%, should reassure investors that claims remain low. But with cyber costs in FY 2024 expected at A$30 million-A$35 million, versus UBS's expectations of A$15 million, there may still be some residual fallout from the cyberattack, UBS adds. (alice.uribe@wsj.com)
0012 GMT - Medibank's FY 2023 result looks to be good, and a little ahead of consensus forecasts, say Citi analysts, noting that the beat is partly driven by investment earnings. The investment bank says the outlook for claims inflation is a question mark, noting that it appears benign with Medibank forecasting underlying claims per policy unit growth of 2.6% for FY 2024 versus 2.4% for FY 2023. "However, this is a little ahead of our current estimates with Medibank citing higher public and private hospital claims inflation," Citi says. It reckons that the consensus beat will likely to mean the share price stays flat to slightly up today. The stock is 3.5% higher at A$3.54. (alice.uribe@wsj.com)
2355 GMT - Judo's FY 2023 capital position is weaker than E&P was expecting, says its analyst Azib Khan in a note. At the same time, Khan says FY 2023 revenue and pre-provision profit are broadly in line with E&P and Visible Alpha's estimates. However net profit after tax is around 5.5% below E&P's estimates due to a slightly higher bad debt charge. For FY 2024, E&P expects consensus pre-tax profit to be reduced by more than 10% due to lower forecasts for net interest margin and higher costs. (alice.uribe@wsj.com)
2328 GMT - PSC Insurance has the balance sheet to continue to pursue accretive acquisitions, say Macquarie analysts in a note. In a review of the company's FY 2023 earnings, the investment bank notes that acquisition growth continues to be a feature of PSC results, noting that the company completed 13 acquisitions in that fiscal year, with the most material being Ensurance UK, Turner Rawlinson and Charter-Union. At the same time, Macquarie notes that PSC is seeding start-up opportunities and reckons it's in a strong position to deploy capital, for continued growth. Macquarie retains its outperform rating, with operating conditions remain attractive. (alice.uribe@wsj.com)
2323 GMT - The trajectory for Platinum's flows remains weak, say Goldman Sachs analysts Julian Braganza and Brian Kim in a note. They call out consistent monthly net outflows alongside a major redemption of A$650 million expected in August. At the same time, GS says group cost-to-income ratio continues to increase, reflecting lower average funds-under-management levels. "We think it is possible expenses may improve into FY 2024/FY 2025, but no firm guidance provided," says GS which thinks the company's valuation still looks relatively expensive. GS has a sell call on the stock. (alice.uribe@wsj.com)
2251 GMT - Platinum's reported NPAT of A$80.9 million is 2% above consensus, but Barrenjoey analysts say when stripping out mark-to-market movements, the result is a slight miss to its forecast. In a note, they add that overall there were no major surprises, but that the steep drop in 2H FY 2023 gross inflows is a major concern for the Australian fund manager's net flows outlook. "The key issue for Platinum is its rapid funds under management decay, which in turn drives net profit after tax, earnings per share and dividend per share on a severe downward trajectory," says Barrenjoey and reckons the company's current valuation on a one-year forward consensus earnings looks hard to justify. It keeps its underweight rating. (alice.uribe@wsj.com)
0641 GMT - Megaport gets a new bull at Macquarie after the Australian tech services provider's earnings guidance came in stronger than expected. Macquarie's analysts raise their recommendation to outperform from neutral, telling clients in a note that the company's expectation of A$51 million-A$57 million in fiscal 2024 Ebitda was about 14% higher at the midpoint than they had been forecasting. They also see Megaport's A$190 million-A$195 million revenue guidance as conservative and think that A$200 million is achievable. Macquarie lifts target price 50% to A$18.00. Shares closed 1.2% lower at A$12.00. (stuart.condie@wsj.com)
0513 GMT - The implications on LNG prices of labor strikes stopping production at three Australian plants could be short-lived should it occur only through September, says Massimo Di Odoardo, Wood Mackenzie's head of global gas analysis. "Europe is awash with gas because of subdued gas demand and high LNG imports, with storage levels already at 90%," he says. "If anything, there was a risk of a price collapse in September [or] October, before prices would increase again through the winter along with the start of the heating season." The risk of a prolonged strike, like what occurred at Shell's Prelude LNG plant last year, seems unlikely, he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
(END) Dow Jones Newswires