Best calls to action – Tuesday, 24 August

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
24 August 2021, 6:00 AM
Sectors Covered:
Equity Strategy and Quant

Reliance Worldwide - Strong across the board

RWC's FY21 result was comfortably above our expectations. Key positives: Earnings growth for all segments was above our expectations; Group EBITDA margin rose 450bp to 26.1% despite input cost pressures; Balance sheet remains strong. Key negatives: Cash conversion was weaker at 98% (FY20: 128%), although was ahead of management's 90% target; FX translation impact was negative.

No FY22 earnings guidance was provided due to ongoing uncertain market conditions and further potential impacts from COVID. However, July sales growth was positive in all three regions with group sales +9% (or +6% constant FX). FY22F/FY23F/FY24F underlying EBITDA changes by +6%/+6%/+6% on a like-for-like basis after moving our forecasts to USD from AUD (in line with RWC's new reporting currency from FY22 onwards). We maintain our Add rating.

Read our full reports and latest price targets on ASX:RWC here.

Sonic Healthcare - FY21 in line - Pedal to the floor

FY21 underlying results were in line with consensus expectations, albeit above our estimates, with COVID testing driving upside across all laboratory businesses (organic, cc revenue growth +37%).

The base testing business (ex-COVID) continues to demonstrate resilience, up on pcp and FY19 (pre-COVID), while Imaging posted double digit growth and market share gains, offsetting modest sales softness in pandemic impacted Clinical Services.

While no FY22 guidance was provided, the recent uptick in COVID testing on the Delta variant and emerging related activities (eg travel passports; vaccinations), along with a solid base business, strong B/S and ample liquidity for tuck-in acquisitions, underpins a strong outlook. Add.  

Read our full reports and latest price targets on ASX:SHL here.

Camplifyholdings - Prospectus beat highlights business momentum

Camplify (CHL) released its FY21 result, with all key headline metrics (GTV A$32.9m, revenue A$8.4m and take rate 25.7%) coming in ahead of prospectus forecasts/recently provided guidance. The NPAT loss of A$2.1m was also better than our estimates (-A$2.7m).

Whilst FY22 will be about gaining scale and product innovation, management have reiterated they expect year-on-year bookings volume growth to continue due to pent up demand from locked-down regions. We increase our FY22F/FY23F EBITDA forecasts by ~4-9% on improved GTV/revenue growth assumptions and a slightly stronger take rate than previously forecast. Add maintained  

Read our full reports and latest price targets on ASX:CHL here.

Mach7 Tech Limited - Building a solid foundation for FY22

M7T posted an in-line result for FY21. The highlights included a record sales order book and further R&D spend (28% of revenue) into new product development. Pleasingly, FY22 starts with a revenue base of A$23m which will be added to over the balance of the year, making our A$28m forecast comfortably achievable.

M7T also expects to be EBITDA positive for FY22. The share price has been weak over recent months and we see today's release as providing confidence to the market that significant revenue growth is ahead in the coming years. Add maintained

Read our full reports and latest price targets on ASX:M7T here.

Cooper Energy Ltd - Peak negativity not a stretch

Earnings growth in FY22 should see COE better supported, although consensus expectations still remain too high. COE had already pre-released the main numbers in its FY21 result, when it revealed the underlying result would be materially below consensus estimates.

Filter technology chosen by APA/Shell/COE is set to be installed in early 2H'FY22. FY22 EBITDAX guidance is again below consensus, while being better than we had expected. FY21 might prove the low point for COE, so long as FY22 refining requirements are effectively managed.

Read our full reports and latest price targets on ASX:COE here.

Find out more

You can find further detailed analysis of company results this reporting season by browsing our reporting season tag, and view a full list of upcoming results on our Reporting Season Calendar.

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Disclaimer: Analyst may own shares. The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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