Best calls to action – Monday, 15 August
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 15 August 2022, 7:00 AM
- Sectors Covered:
- Equity Strategy and Quant
ResMed Inc. (ASX:RMD) - 4Q solid; underlying demand remains "incredible"
4Q was ahead of expectations, with strong demand, Philips' device recall gains and price rises helping expand GMs but operating margins flat on higher opex. Notably, the newly launched card-to-cloud device helped to mitigate supply chain constraints, improving device ability to meet demand, with "material" gains expected until electronic components come back online.
Importantly, the component environment is "stable to improving", with suppliers sticking with commitments and production volumes expected to increase, underpinning sequential revenue growth through FY23.
Although supply constraints and logistical challenges remain in flux, patient flow is above pre-COVID levels across most regions and demand outstrips supply, which portends increasing backlogs, we believe a multi-year opportunity for RMD to growth at or above market and solidify its market leadership position.
We adjust FY22-24 forecasts and introduced FY25 estimates, with our DCF/SOTP based target price decreasing. Add rating maintained.
Read our full reports and latest price targets on ASX:RMD here.
Stanmore Resources (ASX:SMR) - Strong 1H beat plus Mitsui value accretion
We think SMR's "Mitsui" (20% SMC stake) acquisition is attractively priced, providing material accretion to equity value. De-gearing to net cash pushes out to CY24, limiting the scope for dividends in the interim.
The 1H result beat our expectations strongly, reminding investors of the significant earnings power (66% 1H EBITDA margins) in the asset base. We think the worst of the met price cycle has passed, and that SMR looks compelling trading at only 0.65x NPV. Maintain Add rating.
Read our full reports and latest price targets on ASX:SMR here.
Alliance Aviation (ASX:AQZ) - A bump in the road
AQZ's FY22 result was slightly weaker than expected, delivering underlying NPBT at the bottom end of its guidance range. The E190 ramp up has been delayed once again. We have revised our forecasts.
We remain positive on the growth trajectory of AQZ and maintain an Add rating. The key share price catalyst is ACCC approval of the Qantas (QAN) takeover offer.
Read our full reports and latest price targets on ASX:AQZ here.
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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.