Trading ex-dividend: Automotive Holdings Group Ltd.’s stock plunged 1% on September 21, 2017 as the group traded ex-dividend. Last month, the group announced its annual results for the twelve months ending 30 June 2017 with revenue growth of 8% to $6,080 million. On the other hand, net profit after tax (NPAT) dropped 38% to $55 million at the back of one‐off costs associated with the Refrigerated Logistics transformation program, restructuring of the company’s operations, and cost down initiatives as highlighted in the May trading update. The group has still been consistent with its dividend policy of paying 65% to 75% of operating profit. Despite the shortcomings in automotive segment, the group expects a modest improvement in operating performance in 2018 and is putting efforts on cost reduction. The group expects to benefit from continued strong performance of dealerships in New Zealand, roll-out of easyauto123 fixed price used car warehouse model and ongoing improvement in Refrigerated Logistics.
Improving pipeline: Spotless Group Holdings Ltd (ASX:SPO) stock crashed over 50% in the month of December 2015 after the group issued an update of lower than estimated growth from its new business wins for 2016. Accordingly, SPO reported an NPAT decrease by 20% yoy in the first half of 2016 even though the underlying revenue and EBITDA rose by 23% and 19%, respectively.To read the complete report click here . To get your free report Click Here
Outstanding dividend yield: Australia and New Zealand Banking Group Ltd (ASX: ANZ) delivered a Cash profit increase of 5% year on year (yoy) to $1.85 billion in the first quarter of 2016 as compared to the average of the third and fourth quarters of the fiscal year of 2015. The group’s core Australian and New Zealand business generated a decent performance driven by the lower interest and exchange rates coupled with improving Retail and Small Business segments. Retail business growth was boosted by the group’s market share gains at home lending in major markets. The group’s Asian business was slow while its China’s business was affected by manufacturing and trade-exposed sectors. But Institutional Markets income surged 6% yoy to $553 million while Institutional NIM was also enhanced during the period as the group’s efforts on asset mix and deposit pricing paid off. Some positive news comes from the new CEO who has updated about management restructure in order to improve productivity of the bank. To read the complete report click here . To get your free report Click Here
Boosting Capital position: Westpac Banking Corp (ASX: WBC) improved its stable funding ratio to 84.0% as of December 2015 driven by rise in customer deposits and capital. The bank even raised over $14 billion of term wholesale funding during this year and intends to enhance its liquidity coverage ratio (LCR) to 129% with $30 billion in excess liquidity by this year end. However, WBC’s total stressed assets in dollar terms have increased while the rising stress in consumer lending led to a 2 basis points rise in group mortgage.
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Improved bottom line performance: Commonwealth Bank of Australia (ASX: CBA) reported a cash NPAT growth by 4% yoy to $4,804 million for the half year ended on December 2015 while its statutory NPAT rose by 2% yoy to $4,618 million. CBA enhanced its Customer deposits by 9% to $500 billion, which is 64% of the funding. Operating income improved by 6% yoy to $12,362 million during the period while the bank is also boosting its capital position with Basel III Common Equity Tier 1 (CET1) (APRA) at 10.2% and CET1 (Internationally Comparable) APRA at 14.3%. But the bank’s risk weighted assets rose 11% yoy to $393 billion during the first half of 2016. To read the complete report click here . To get your free report Click Here
Growing customer base as well as strengthening balance sheet: For financial year 2015, Australia and New Zealand Banking Group Ltd (ASX: ANZ) reported CET1 ratio of 9.6% as compared to 8.8% in 2014 indicating strong capital. Meanwhile, balance sheet is growing with total assets at $889.9 billion in 2015 compared to $772.1 billion in 2014. Cash profit stood at record $7.2 billion compared to $7.1 billion in 2014. In 2015, net loans and advances increased 9% to $570.2 billion while customer deposits was up 10% to $444.6 billion from 2014 levels. In 2015, the bank recorded a 20% profit uplift in Greater China, its third largest market. Meanwhile, the number of bank’s retail customers in Australia recorded more than 150,000 in 2015. To read the complete report click here
Ongoing copper production focus by controlling unit costs: BHP Billiton Ltd (ASX: BHP) stock has been under pressure as ongoing commodity prices continued to impact its earnings performance. Moreover, the shares plunged over 30.08% (as of December 14, 2015) in the last three months impacted by the Samarco incident, wherein Fundao dam and the downstream Santarem dam have been affected leading to major damage. On the other hand, BHP undertook extensive rescue operations and immediately made arrangements to clean up the site. The group has been cutting costs to offset the top line pressure and accordingly estimates to decrease the copper unit costs to US$1.08 per pound by fiscal year of 2017, which would enhance its cash margins. BHP would continue to increase its copper production to over 1.7 Mt by FY17. BHP is also targeting to cut its Olympic Dam unit costs by 48% by FY17 end to US$1.00 per pound, enabling the asset to be in the lower end of the cost curve. Overall, the company expects to deliver material cost reductions at both the Pampa Norte mines, Spence and Cerro Colorado. To read the complete report click here
Expected Improvement in ROCI: Brambles Ltd (ASX: BXB) with its recent announcements expressed a probable expansion of capital base by US $1.5 billion to FY19. This may however be pulled down by any softness in revenue growth and Return on capital invested (ROIC). Nonetheless, the company stated about US$475 million of net growth capex guidance for FY16 and the group expects to have incremental improvement in ROCI to 20% by FY 2019. This 20% objective demonstrates disciplined capital allocation while avoiding any temptation to prioritise short-term financial outcomes. The company sees considerable unserved opportunities for pallets in all markets and reflects the estimate of addressable FMCG standard size opportunities in currently served countries only. These include markets in North America, Latin America, Europe and Africa, India and Middle East. As per the company, there are multiple factors which will drive improvements in ROCI including the opportunity to support high single digit sales growth, as well as the One Better program, amortisation of intangibles already identified, and improvements in asset utilisation.To read the complete report click here
The company has announced that as expected, Moody’s Investor Services revised its long-term senior unsecured debt rating from A3 (Negative Outlook) to Baa1 (Stable Outlook). CFO David Marr said that the company remains committed to strong investment grade ratings and has been reviewing its balance sheet and capital structure including support for the most appropriate credit ratings which will take the business forward. He does not believe that the rating change will have a material impact and the company will continue to provide for adequate pricing and adequate capacity for future requirements.
Like the other major Australian banking stocks, shares of this bank have lost considerable ground since the high point in April 2015 and even income investors who want to take advantage of the attractive dividend yields are likely to be disappointed with the price performance. This raises the question of whether the shares are worth buying at the current low prices. This is one of the most profitable of the big four banks because it had a net interest margin of 2.05% in the latest half year. However, it is pertinent to note that this margin has been sliding over the past few years as the group’s return on equity. Moreover, the higher capital requirements being imposed on all Australian banks by the regulators means that it is becoming increasingly difficult to maintain margins and the return on equity. However, a plus point in favour of the stock is the attractive fully franked dividend yield of almost 6% and it is unlikely that this will not be maintained.