NZ
Fletcher Building shares were down on their result despite revenue holding steady. Net profit fell -45.6% due to significant costs related in NZICC (which was flagged earlier). This forced the building company to cut its dividend, which wasn’t well received and investors were hoping for strong guidance like its peer James Hardie – we remain Neutral rated as we are convinced revenue will be able to hold up over the medium-term, value at $4.50 perhaps.
A poor result at My Food Bag – profit falling to $7.9mn from $20mn the previous year ,and delivery volume down ~12%. This stock has been an incredible destroyer of value for a while now and we don’t see any catalyst for recovery – the market for meal kits in NZ is competitive and saturated, and there is little upside to their TAM (total addressable market). No value to be had here. Good result from Skellerup – profit up +7% for the year to $50.9mn and 22c per share divvy. We like the company — a “boring” industrial done well.
Australia
CSL’s result was inline with expectations for the 12months ended 30 June, CSL’s revenue increased 31% in constant currency to US$13.31 billion. This was driven by growth across the business, as well as an 11-month contribution from the new CSL Vifor business. Remain BUY rated.
Telstra shares were weaker after the telco giant, shelved plans to sell its InfraCo Business which investors had hoped for. Operationally it performed well revenues rising +5.4% and operating earnings (EBITDA) up+9.6% on strong mobile performance, while looking ahead management expects modest growth to continue for the 2024 financial year. BUY rated as a defensive holding.
Global
Global markets were weaker investors take a risk-off approach, bond market selling off (sending bond rates higher) as markets digest the Fed’s decision (likewise in NZ) to possibly raise interest rates one more time – the former stating they are still concerned with inflation.
US
Good result from Walmart – forecasting +4% sales growth byend of year – EPS of $6.36 – $6.46. For the quarter revenue rose +5.7% to$ 161.6bn (slightly outpacing analyst’s estimates of ~$160bn). EPS for the quarter of $2.92 per share. Management commented that the strong labour market is keeping sales strong, but warned that rising fuel costs and increased consumer borrowing may impact results – especially moving into next year. It’s a mixed outlook for American “big box” – Home Depot reported a second decline in earnings as consumers moved away from “big ticket” items, while Target reported a decline in revenues as consumers start to “tighten their belts”. Big picture – consumers are starting to run out of money and borrowing at high interest rates isn’t pretty…