Best calls to action – Monday, 28 February
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 28 February 2022, 6:00 AM
- Sectors Covered:
- Equity Strategy and Quant
GQG Part. - Strong outperformance should solidify flows outlook
GQG reported broadly in-line with prospectus forecasts and expectations: management fees +80% to US$396.2m; operating profit +96% to US$323.4m. Against a volatile/weak market in CY22 to-date, GQG has delivered strong relative outperformance across its four strategies.
This should help solidify the near-term flows outlook. 1Q22 has begun solidly, with US$2.2bn of inflows to-date. GQG has seen a valuation de-rate along with the broader sector, however we view it as unwarranted.
Both relative investment performance and flows remain strong. We view GQG's ~11x FY22 PE as attractive versus its diversity of earnings; current flows momentum; and expected growth. Add maintained.
Read our full reports and latest price targets on ASX:GQG here.
Adbri Ltd - Clear drivers cement the FY22 outlook
ABC's FY21 result came in ahead of our forecasts and consensus expectations and was supported by ongoing net cost savings, strong volume growth across cement, concrete and aggregates, an increased contribution from its JVs and realisation of property profits.
Outlook comments were positive and confirmed that earnings growth is targeted in FY22. Key drivers are comprised of: a broadly favourable market outlook, non-repeat of A$16.2m in costs, solid contribution from M&A, incremental property profits and partial recovery in Alcoa lime volumes.
We upgrade our forecasts and maintain an Add rating, with the stock's valuation (FY22F PE ex. Property of ~16.9x) undemanding and further forthcoming detail on its Property strategy a potential catalyst to close the gap to our valuation.
Read our full reports and latest price targets on ASX:ABC here.
Medibank Private Ltd - Steady progress
MPL's 1H22 NPAT (A$212m) was 2% above Bloomberg consensus (A$208m) and up ~5% on pcp. Group operating profit (A$286m) grew ~12% on pcp, but was offset somewhat by lower investment income (A$31m vs A$72m in pcp) at the bottom line.
All-in-all, we saw this as a clean result benefitting from solid policyholder growth, continuing benign claims levels in a favourable environment, and reduced costs on leverage and benefits from MPL's productivity program. We make relatively nominal changes to our MPL forecasts, downgrading FY22F/FY23F EPS by ~1%.
Our target price is lowered to (login to view). We think MPL is executing well in driving a broadly consistent growth trajectory, and with >10% TSR upside on a 12-month basis, we move to an ADD rating.
Read our full reports and latest price targets on ASX:MPL here.
Mach7 Tech Limited - Growth set to continue
M7T posted its 1HFY22 result which was above expectations, recording EBITDA of A$3.6m (MorgansF: A$1.2m). We are focused on the growth of the sales order book, currently at A$22.1m (pcp: A$10.9m), which we see as the lead indicator.
Management has noted it remains on track to achieve consensus revenue of A$28m (pcp: A$19.3m) and achieve a positive EBITDA for FY22. We see this as an important milestone and believe investors will start to reward this consistency.
We have made no changes to our forecasts and valuation of (login to view). We maintain our Add recommendation.
Read our full reports and latest price targets on ASX:M7T 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.