Stocks

PGG Wrightson (PGW) shares edged lower on its result as it cut its interim dividend slightly from last year down to 12 cents per share, cautioning investors of further volatility and softening macroeconomic outlook and lowering their earnings outlook. PGW revealed a solid result for the first half of the 2023 financial year, where operating earnings (EBITDA) came in at $47.8m, which was a touch higher than the same corresponding period last year. Unfortunately downgraded their full year earnings (EBITDA) guidance down to $57m, from $62m due to cyclone related uncertainty, and weak economic outlook affecting real estate business.

Fletcher Building shares were lower when it revealed a weak earnings guidance for the 2023 financial year a couple of days ahead of its half year earnings announcement – shaving off most of the gains made in February as market anticipated Flecther to be a major benefactor to the rebuild following the major floods across the north island. However, Fletcher announced they anticipate 2023 full year earnings (EBIT) are expected to be between $800m to $855m down from its previous guidance of above $855m, while first half trading was strong January and February trading has been impacted by adverse weather events in the upper north island of NZ.

Retain Neutral. Strong earnings ($2.59 vs $2.46 est) show the strength of the consumer but MCD still trades at 23x earnings; we prefer to wait for the stock to rerate.

QBE stock was up strongly after delivering a well-received result for the 2022 financial year; earnings came in at $847m, well ahead of expectations. The result was driven by top-line growth help by gross premium growth and strong investment income (helped by higher interest rate environment). NPAT beat by ~15-21% on the back of stronger investment income & a new reinsurance deal with Enstar which sees the company’s reserve risk reduce significantly.

Ryman Healthcare was put in a trading halt yesterday to announce a $902m capital raise, intended to pay down its debt, lowering gearing (LTV) from 45.3% to 33.9%. Shareholders will be offered one share for every 2.81 at $5.00 each, at a 22% discount to the previous trading price. Ryman has historically avoided capital raises, preferring to use debt, but as the company is already quite highly geared management has no choice but to go the capital raising route.

CSL shares rose +0.9% as the market responded relatively positively to the release of the company’s half-year results. For the six months ended 31 December, CSL reported a 19% increase in revenue to US$7,183.5m and a +10% lift in net profit after tax (NPAT) in constant currency to US$1,957m. This was driven partly by a five-month contribution from Vifor Pharma, strong growth in immunoglobulin and albumin sales, and record levels of plasma collections.

A surge in stock price doesn’t change the fact that Meta posted a sequential decline in earnings and revenue, while the Metaverse continues to burn through billions.

Contact Energy shares were up higher after delivering their 2023 half year result, which was down from the previous year but in-line with expectations. Operating earnings (EBITDAF) came in at $246m, down -24% from the previous year largely due to weaker wholesale pricing against a stronger corresponding period. Contact also reported a non-cash write down of $120m due to the lower storage capacity of tis Ahurua gas storage facility resulting in a reported net loss of $7m.

We downgrade Apple upon declining hardware sales that we don’t see ebbing in ’23.