Best calls to action – Wednesday, 22 February
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 22 February 2023, 6:00 AM
- Sectors Covered:
- Equity Strategy and Quant
Coles Group (ASX:COL) - Cycling COVID lockdowns
COL's 1H23 EBIT was above our forecast but was driven by lower-than-expected D&A. At the EBTDA level, the result was broadly in line with our expectation. Supermarkets EBIT increased 11% (+10% vs MorgansF) while Liquor fell 19% (-12% vs MorgansF).
The sale of Express to Viva Energy is expected to complete in 4Q23 with customary conditions such as ACCC and FIRB clearances received. Management said Supermarkets volume growth returned to modestly positive from mid-January and is expecting more customers to be value conscious as cost-of-living pressures increase.
We make minimal changes to FY23-25F group underlying EBIT with upgrades to Supermarkets offset by downgrades to Liquor and the removal of Express. Our target price stays broadly unchanged at (login to view) and we maintain our Add rating.
Read our full reports and latest price targets on ASX:COL here.
Seek Limited (ASX:SEK) - Jobs ads moderating, yield to help offset
SEK's 1H23 result was ~2% ahead of Visible Alpha consensus at the topline (revenue of ~A$627m, +21% on pcp), with EBITDA of ~A$283m (+13% on pcp) in line and NPAT excluding significant items (A$135m, +9% on pcp) ~4% ahead.
It was broadly a positive result, in our view, however job ad volume growth moderating in 2H23 (particularly ANZ), whilst not unexpected, looks to be a factor in guidance being set at the lower end of previously flagged ranges.
We adjust our FY23F-FY25F EPS by -5%-+1% factoring in the revised guidance, lower topline estimates across our forecast period on additional conservatism and improved EBITDA margins in SEEK Asia. Our price target is lowered to (login to view). Add maintained.
Read our full reports and latest price targets on ASX:SEK here.
HUB24 Ltd (ASX:HUB) - Cash windfall
HUB reported above expectations: underlying EBITDA A$.9m (+23% on 2H22; +10% on MorgansF); and underlying NPAT of A$26.6m (+23% on 2H22). Whilst expected strength, higher earnings on pooled cash drove revenue margin and the result 'beat'.
Versus 2H22: Avg FUA +6%; platform rev +23%. Revenue margin (+5.6bps to 37.9bps) normalises by ~1.5bp from 2H23. Cost growth was also evident, +25% HOH. This limits 2H23 Platform EBITDA growth.
HUB looks to be delivering 'cleaner' financials; the product offering is industry leading (along with NWL); and the runway to secure more clients looks intact. Whilst upside to our valuation is reasonably low, the potential for larger 'transitions' wins is a realistic catalyst within CY23. Add maintained.
Read our full reports and latest price targets on ASX:HUB here.
Monash IVF Group Ltd (ASX:MVH) - Pulling the growth drivers
MVF posted a solid 1H23 result of underlying NPAT of A$12.6m which was slightly ahead of guidance. Despite industry volumes declining in the half, MVF continues to gain market share in its key markets through both organic growth and through acquisitions.
A strong increase in new patient registrations for the 2Q gives us confidence in the pipeline for 2H23. Management has upgraded underlying NPAT guidance to 15% growth to A$25.5m for FY23 (up from guidance provided at its AGM of 10%+ growth).
We have made minor changes to our forecasts, adjusting our cost base down slightly. We have increased our target price to (login to view) and transfer coverage to Emily Porter. We maintain our Add recommendation.
Read our full reports and latest price targets on ASX:MVF here.
Peter Warren (ASX:PWR) - Orderbook deceleration; acquisition acceleration
PWR's 1H23 result was broadly in-line, however showed the impact of higher opex flowing through. NPAT of A$30.2m was +19% on pcp; down 17% on 2H22. Gross margin improved on pcp (impact of Agency model), however fell ~120bps from 2H22 which mgmt attribute mostly to revenue mix (skew to new cars).
PWR's order book closed +4% hoh, reflecting a more balanced demand vs delivery environment. PWR noted that slight (~3%) order book run-off occurred in Jan-23. We are conscious of the operating deleverage impact on earnings as margins normalise; however the consolidation opportunity will assist.
PWR is trading on ~11x our assumed more 'normalised' conditions (FY24/25). Industry consolidation will continue - we expect PWR to be a participant which adds to structural earnings capacity. Adding Toyota is a potential s-term catalyst.
Read our full reports and latest price targets on ASX:PWR 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.