Best calls to action – Tuesday, 28 February

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
28 February 2023, 6:00 AM
Sectors Covered:
Equity Strategy and Quant

Dalrymple Bay (ASX:DBI) - Boom

The FY22 result delivered the substantial earnings growth we were expecting following finalisation of Terminal Infrastructure Charge (TIC) negotiations in 2H22. DPS guidance had already been provided and was unchanged (albeit the growth outlook was not reaffirmed).

12 month target price reset to (login to view), due to forecast changes. ADD retained, given forward cash yield of mid-8% and c.6% price growth potential.

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

TPG Telecom Limited (ASX:TPG) - The ship has turned

TPG FY22 result was, pleasingly, inline with expectations. Revenue was up 1.5% YoY and Underlying EBITDA (excluding the gain on tower sales and restructuring costs) was up ~4% YoY to $1,793m.

This was in-line with our $1,786m forecast and consensus expectations while FY23 guidance is ~3% ahead of consensus. This was the first time since merging that positive earnings momentum is obvious across the group.

TPG delivery subscriber, ARPU and EBITDA growth. We retain our Add recommendation and a (login to view) TP.

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

Stanmore Resources (ASX:SMR) - Clear growth options and agenda

Key CY22 financials easily beat our expectations on higher PCI price realisations. We now forecast SMR to reach a net cash position during the 1H23.

SMR enjoys clear M&A advantages in the Bowen Basin and we think positioning for possible acquisitions will far out-rank dividends through 2023.

SMR looks too cheap trading on a +25% free cash flow yield, with +30% capital upside and upside to tight/buoyant HCC pricing.

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

Bega Cheese (ASX:BGA) - Profit will improve from FY24 from pricing and self-help

As expected, BGA's 1H23 result was weak with NPAT down 74%. Margins (especially in the 1Q) were materially impacted by higher milk and other inflationary costs and the lag impact of implementing price rises (didn't take effect until the 2Q).

FY23 EBITDA guidance was reduced to the lower end of its previous range. Rising interest rates will further impact NPAT. We have made large cuts to our forecasts. With low double digit price rises, further efficiencies, synergy realisation and asset sales, BGA expects a much improved result in FY24.

While we continue to have concerns about the dairy industry, we think BGA is now through the worst of it. We rate BGA's new management highly and expect them to deliver improved returns over the coming years. We upgrade to an Add rating.

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

Airtasker Limited (ASX:ART) Macro headwinds but marketplace still resilient

ART released its 1H23 result. While most metrics were pre-released, GMV growth of +58% on pcp (to ~A$132m) and revenue growth of +57% on pcp (to ~A$22m) was a resilient performance from the local services marketplace, in our view.

Whilst some softness was seen at top-of-funnel demand (posted tasks) as consumer confidence remains subdued on macro uncertainty, we note supply side normalisation (labour) has begun and assisted completion rates and helped underpin ART's GMV growth.

We lower our GMV and revenue estimates by ~2-4% across FY23-FY25 on additional conservatism given current macro headwinds, however this has a more subdued impact at the GP (OneFlare contribution) and GPAPA lines (focus on lower cost/organic acquisition channels).

Our price target is lowered to (login to view). Add maintained.

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

Waypoint REIT (ASX:WPR) - Asset sales to slow in 2023

WPR's FY result was in line with guidance with the focus in 2022 on non-core asset sales; capital management initiatives (buy-back completed); and balance sheet (hedging +90%).

The portfolio is valued at $2.9bn across +400 properties with metrics stable. Revaluations saw cap rates expand 16bps over 2022. NTA at $3.02. After two years of steady asset sales (~15% of portfolio), 2023 is expected to be less active.

CY23 distributable EPS guidance to be in line with CY22 which equates to a distribution yield of +6%. We retain an Add rating with a (login to view) price target.

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

Ai-Media (ASX:AIM) - Chat GPT opens the door to further opportunity

AIM's 1H23 result was broadly in-line with our expectations. The company booked revenue of $29.7m for the year (in line with our $29.5m forecast and -8% below consensus expectations).

More importantly, AIM's gross profit dollars increased YoY and HoH. We calculate that gross profit for SaaS (and other) was ~53% of total growth profit. Since its nearly double the margin of legacy and growing much faster this means AIM has cleared the critical inflect point in its transition to a SaaS business.

Growing profits gets much easier from here. Add recommendation retained, Target price trimmed to (login to view).

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

Kina Securities Ltd (ASX:KSL) - Executing well on what they can control

KSL's FY22 Underlying NPAT (PGK106m) was +10% on the pcp and in-line with MorgansE. Overall, we saw this as a broadly solid FY22 result, with bad debts well contained and KSL delivering an impressive ~18% FY22 ROE.

However, the result was somewhat overshadowed by the lingering PNG Corporate Tax issue, which we now include into our numbers, pending any evidence of a more favourable outcome. We downgrade KSL FY23F/FY24F EPS by ~20% reflecting the incorporation of a 45% PNG corporate tax rate into our forecasts, which has offset otherwise mild underlying earnings upgrades (1%-2%).

Our PT falls to (login to view) noting we had previously applied a 10% discount to our valuation allowing for the corporate tax issue. KSL continues to deliver solid underlying profit growth, and trading on ~6x FY23F earnings and a >10% dividend yield, we see the stock as too cheap. ADD maintained.

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

If you would like access or more information, please contact your adviser or nearest Morgans office.

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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.

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