Best calls to action – Tuesday, 14 February
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 14 February 2023, 6:30 AM
- Sectors Covered:
- Equity Strategy and Quant
Endeavour (ASX:EDV) - Getting back to normal
EDV's 1H23 result was comfortably ahead of expectations with Retail margin performance the key standout.
Key positives: Both segments delivered earnings and margins ahead of our expectations; Group ROFE increased 80bp to 12.2%.
Key negative(s): Operating cash flow fell 31% due mainly to higher inventory levels; ND/EBITDA (incl. leases) increased to 3.3x (1H22: 3.1x); Online sales fell 20%. Management said trading has stabilised across the group in the first five weeks of 2H23 with Retail sales flat (+0.2%) and Hotels sales up 31.5% on the pcp.
We adjust FY23/24/25F EBIT by +7%/+6%/+5%.
In our view, the result highlighted management's ability to control costs despite inflationary pressures. While the regulatory environment remains uncertain, on balance, we think the risks lie to the upside with the underlying business performing well. Our target price increases to (login to view) and with a 12-month forecast TSR of 13%, we upgrade our rating to Add (from Hold).
Read our full reports and latest price targets on ASX:EDV here.
Aurizon (ASX:AZJ) - Some temporary impacts...temporary price decline?
1H23 earnings (EBITDA -7% on pcp, EPS -34%), cashflow, and DPS (-33% on pcp) were below expectations, and FY23 EBITDA guidance was downgraded 4%. 12 month TP reduced to (login to view).
Implies both attractive valuation metrics and a share price rebound as the market digests the one-offs affecting FY23. We think there is both potential price upside and reasonable yield at the current share price (more attractive looking into FY25F). Upgrade to ADD from HOLD.
Read our full reports and latest price targets on ASX:AZJ here.
JB Hi-Fi (ASX:JBH) - 1H23 earnings: Value through the cycle
The 1H23 result was in line with JB Hi-Fi’s January preannouncement. We have made no major changes to our estimates, increasing our FY23 EPS forecast by 1.6% and reducing our FY24F EPS forecast by 2.5%.
We retain an ADD rating and (login to view) target price.
Read our full reports and latest price targets on ASX:JBH here.
Beach Energy (ASX:BPT) - Improvement on the horizon
BPT delivered a soft 1H23 result, down 10% on pcp, driven by cost increases and production declines. Guidance for FY23 has been downgraded with production reduced by 7% and field operating costs up by 12%.
FY24 production guidance to be provided at the full year result but management clarified that legacy aspirational targets (up to 28MMboe) are no longer relevant. We still see sufficient upside to our revised price target of (login to view) and retain our ADD rating.
Read our full reports and latest price targets on ASX:BPT 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.