Best calls to action – Friday, 24 February

About the author:

Author name:

By Andrew Tang

Job title:

Analyst - Equity Strategy

Date posted:

24 February 2023, 6:00 AM

Sectors Covered:

Equity Strategy and Quant

Qantas Airways (ASX:QAN) - Still flying along

QAN's 1H23 result was strong with underlying NPBT at the top end of its guidance range driven by strong travel demand, high airfares, and cost improvements from its A$1bn transformation program. Cashflow, balance sheet and capital management were the highlights.

We are perplexed at QAN's share price reaction today. It provided bullish outlook commentary around the strength of travel demand likely continuing well into FY24, which we thought would have driven a rerating.

We continue to view the discount being applied to QAN vs pre-COVID multiples as unwarranted. Add maintained.

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

Ramsay Health Care (ASX:RHC) - 1H beat- despite challenges, momentum to continue

1HFY23 results beat, with revenue gains across all regions on increased surgical activity, although profit was aided by NRIs, acquisitions and government payments.

While COVID-related headwinds are subsiding, labour shortages and inflationary pressures remain, dampening a full recovery in margins and underlying profitability.

We continue to view a gradual uplift in volumes and improving leverage, given improved payor terms, better recruitment/retention, likely French Government revenue guarantee extension (until 31-Dec-23), and additional capacity gains.

We have adjusted our FY23-25 earnings higher, with our price target increasing to (login to view). Add.

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

Eagers Automotive (ASX:APE) - Order book continues to charge up

APE's underlying PBT of A$405.2m (+1% on pcp) slightly beat expectations. 2H22 PBT of A$210m was up 7.7% HOH. FY22 DPS was +13.6% to 71cps.

APE set a FY23 revenue target of A$9.5-10bn (+11-17%) underpinned by FY22 acquisitions; BYD sales/deliveries; and organic growth initiatives. Order book growth continues at ~30% growth per half (including into CY23), underpinning both revenue and margin outlook in FY23 ( and likely well beyond).

The order book has over a two-year run off period (yet to commence) providing solid near-term visibility. Cycle aside, APE is executing on building a sustainably higher earnings base via further consolidation, ongoing efficiency, new OEM strategies and new sales channels. Add maintained.

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

Tourism Holdings - Merger is off to a strong start

THL reported a strong 1H23 result which materially beat our forecast as the business is recovering strongly from the COVID tourism downturn, while benefiting from historically high rental yields and record vehicle sales margins.

Reflecting the strong operating conditions, FY23 NPAT guidance was recently upgraded. We have upgraded our forecasts. The prospects for the merged group are so strong that THL will now resume dividends with the FY23 result (one year earlier than expected).

We continue to believe that the merger synergies are conservative and will be upgraded over time. Trading on an FY25F (recovery year) PE of 8.8x, we believe THL is materially undervalued. We reiterate our Add rating with a new target price of (login to view).

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

Universal Store (ASX:UNI) - 1H23 Earnings: Look Sharp

UNI reported strong growth in 1H23, with sales up 35%, 5% above forecast, and post-AASB 16 NPAT up 44%, 4% above forecast.

Our post-AASB 16 EBITDA estimates are effectively unchanged in FY23 and rise 2% in FY24.

We reiterate our Add rating with an increased target price of (login to view).

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

Maas Group (ASX:MGH) - Construction divisions offsetting resi weakness

MGH delivered HY23 earnings at the top end of guidance (pre-announced in Feb-23) and re-affirmed full year guidance for proforma EBITDA of $150-180m.

In reaffirming guidance, the company flagged that residential lot sales would be lower than the pcp of 270 lots (incl build-to-rent), with this weakness offset by strength across the other divisions.

The result reflects a challenging period for MGH where abnormal levels of rain and a deteriorating real estate market adversely impacted the business.

We reiterate our Add rating with a slightly reduced target price of (login to view).

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