Spark, Fletcher’s & Wisetech Jump | A2 Slides

22 August 2019

Global markets were ​higher overnight as ​Wall Street​ rose on upbeat earnings from retailers pointing to strength in US consumer demand, and stocks held gains after minutes from the Federal Reserve’s meeting last month showed that policymakers had debated a more aggressive rate cut.

Closer to home, ​it was a massive day in terms of stocks reporting under our research coverage. Announcements were made by companies including Spark, Fletcher Building, A2 Milk, Wisetech, and Select Harvests. While we touch on the news-flow below, we will release full updates on the stocks in our weekly report. Earnings season so far has been mixed across Australasia.
 

Stock in Focus: Spark (SPK:NZX / SPK:ASX)

​​​​​​​​​​​​​​​​​​​​​​​Spark posted the biggest gain​ on the NZX yesterday ​as it announced an 11​% increase in annual operating earnings​ which​ was in line with expectations​.​ ​I​nvestors were buoyed by its guidance to maintain annual dividends at 25 cents per share for the current year​, with Spark offering an attractive 6% dividend yield in a low interest rate environment.

We currently have a ​BUY recommendation on​ Spark.
Members should look out for a full update on​ Spark to be released in our weekly report.

  
Australia & New Zealand Market Movers

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The Australian market ​was lower yesterday (ASX 200 index ​-0.​94​%) as growth stock earnings disappointed expectations.​ ​Stockland, a2 Milk and Brambles led the market's fall after posting results lower than expectations and flagging softer outlooks​. ​

​Tech darling WiseTech Global surged 11% a​s the logistics solutions company posted a 57% increase in total revenue to $348.3 million and a 33% lift in net profit after tax to $54.1 million. Next year it expects revenue growth of 26% to 32% and EBITDA growth of 34% to 42%.
Select Harvests​ share price rose ​10% after giving a crop update​ that 2019 yields are above the industry standard and have exceeded the previous forecast.The company also revealed that demand from China has grown significantly, with strong demand from traditional export markets and domestic customers as well.

The New Zealand market ​sold off on Wednesday (NZX 50 index ​-​0.​87​%)​ with index leader A2 Milk weighing on the market. 

A2 Milk shares fell 1​2% despite another strong ​lift in annual revenue and ​47% increase in ​net profit as a massive marketing push helped it make further inroads in its core China and the US markets. It also announced plans to exit the UK. ​What disappointed investors were weaker than expected margins, and the share price moves illustrate how much growth is being priced into A2 Milk shares at the current juncture. 
Fletcher Building's return to profit and a $300 million share buyback met a lukewarm response from analysts and investors with the result being well flagged and headwinds in Australia continuing. ​In contrast to A2, the bar was set very low for Fletcher's.​

 

3 Things Markets Will be Watching this Week

  1. Australasian earnings season ​gathers momentum this week with a number of​ major​ companies set to make profit announcements.
  2. ​Minutes from the Reserve Bank of Australia's latest meeting are released Tuesday.
  3. Minutes from the last US Federal Reserve Meeting are also published on Tuesday. 

 

Have a Great Day,
 

Team

It was a massive day in terms of stocks reporting under our research coverage. Announcements were made by companies including Spark, Fletcher Building, A2 Milk, Wisetech, and Select Harvests.

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