Best calls to action – Wednesday, 23 August 2023
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 23 August 2023, 6:00 AM
- Sectors Covered:
- Equity Strategy and Quant
BHP Group Limited (ASX:BHP) - A miner for all seasons
A solid FY23 result from the big miner, with BHP defending again broad global cost pressures, and further building its competitive advantage. FY23 attributable underlying NPAT of US$13.4bn, in-line with market estimates.
Final dividend declared of US80 cents (vs consensus/MorgE 82/83 cents). Despite lower iron ore and copper prices, and significant inflationary pressures, BHP maintained group EBITDA at 54% with a ROCE of 28.8%.
We maintain an Add rating on BHP with a (login to view) target price.
Read our full reports and latest price targets on ASX:BHP here.
Data#3 Limited (ASX:DTL) - Buy the dip
Despite reporting another record profit (up 22% YoY), DTL's FY23 PBT result was ~8% below consensus expectations, and this caused some share price weakness.
We see the result and outlook as positive and note management's confidence that structural tailwinds (digitisation, Cloud & Gen Ai) combined with a largely economic resilient customer base should see DTL deliver double digit growth again in FY24.
We upgrade our recommendation to an Add (from Hold).
Read our full reports and latest price targets on ASX:DTL here.
Objective Corp (ASX:OCL) - FY23 a year of transition, FY24 a year of ARR execution
OCL has reported another mixed result which saw the company deliver Revenue and EBITDA in line with our expectations, and a 5% NPAT beat, however key Annual Recurring Revenue (ARR) of $94.2m (+10% growth) fell short of management's expectations for targeted 15% Net ARR growth (as well as consensus) due to Simflofy contract roll-offs, deal slippage and the wind-up of non-core service related activity, which aren't likely to repeat into FY24.
To round out its SaaS transition, from FY24 onwards OCL has flagged accounting changes which will see 50-55% of R&D spend capitalised in future periods (previously 100% expensed) aligning earnings recognition with its Tech peers.
While ARR growth appears to be hampered by near-term conversion headwinds, we remain optimistic about OCL's outlook and the opportunities within each business segment to drive improved growth and earnings improvement into FY25 and FY26 however the focus now turns to management execution to deliver on targeted growth from FY24 onwards.
While our EPS forecasts are increased by +21%/+15%/+15% in FY24-26F, our price target is reduced to (login to view) and we retain our Add rating.
Read our full reports and latest price targets on ASX:OCL here.
Monash IVF Group Ltd (ASX:MVF) - Cycling along nicely
FY23 was in line with guidance of underlying NPAT of $25.5m (up 14.%). EBITDA margins were maintained at 25% with cost pressures offset by price rises.
We think FY24 is set for another strong year of growth benefitting from a full year contribution of acquisitions (PIVET and ART), rebound in ultrasound procedures, growth in South East Asia, price rises (5-8%), industry volumes returning to growth and continued market share gains (organic and recruitment of new specialists).
We have made minor changes to our forecasts, increasing revenue by ~5% to incorporate price rises expected in 1H24 and have reset our cost base expectations and interest on higher debt, resulting in ~2% downgrade to underlying NPAT.
We maintain our Add recommendation with a (login to view) price target.
Read our full reports and latest price targets on ASX:MVF 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.