Reporting Season Summary: 24 Feb 2015
About the author:
- Author name:
- By Fiona Buchanan
- Job title:
- Co-Head of Research, Senior Analyst
- Date posted:
- 24 February 2015, 2:09 PM
- Sectors Covered:
- Property, AREITS
Healthscope (HSO)
1H15 result
NPAT: A$82.7 million; Dividend: 3.3cps
The result was in-line with expectations.
Morgans comment
Headline numbers look in-line, with underlying EBIT of A$142.9m on revenues of A$1,233.7m. Notably, operating profit margin increased 50bp to 15.7%, with the main hospital and international pathology divisions delivering double digit earnings growth and margin gains, but with expected weakness seen in Australian pathology (earnings down 24.3%) on Medicare fee cuts and rent pressures. Overall, an in-line result that should be taken favourably by the market.
Virtus Health (VRT)
1H15 result
NPAT: A$17.2 million; Dividend: 13cps
The result was in-line with expectations.
Morgans comment
In-line with our forecast but below consensus - we expect some share price weakness today. Following the low growth produced this half - as stronger 2H is mainly driven by recent acquisitions.
QBE Insurance (QBE)
1H15 result
NPAT: A$742m; Dividend: 22cps
The result missed expectations.
Morgans comment
Overall there are positives in the result. Current year performance was relatively expected ex the one-off discount rate movement and QBE has not topped up prior year claims for the first time in many results. However guideline reflects a continued challenging environment of low bond yields, currency and soft top line. We expect downgrades to consensus NPAT forecasts maybe in the low double-digit range.
Qube Holdings (QUB)
1H15 result
NPAT: A$54.7 million; Dividend: 2.7cps
The result missed expectations.
Morgans comment
Overall the underlying result was below our forecasts, but really driven by a significant increase in depreciation in the Ports and Bulk division that meant NPAT was 6% below our forecast. Revenue and EBITDA were in-line. The market will take the result as a slight miss, so the stock may be down marginally today. Fundamentally though, we think the QUB story remains intact, particularly with the rest of the result (excluding the depreciation jump in P&B) looking reasonable.
Senex Energy (SXY)
1H15 result
NPAT: A$1.6 million; Dividend: 0cps
Morgans comment
SXY's share price will be driven by near-term oil price fluctuations. That said, we like the company's western flank oil production, and believe the company will fund the attractive gas projects with cashflow from oil production. SXY is well positioned to benefit from rising east coast gas prices given production from the Hornet gas field, impending production from the Vanessa gas field and the strategic gas acreage position in the Surat Basin. We are happy to continue accumulating stock at current levels.
BHP Billiton (BHP)
1H15 result
NPAT: US$5.3 billion; Dividend: US 62cps
The result beat expectations.
Morgans comment
The most interesting aspect of BHP's result was the reduction in forecast capex over FY15-16 by what we think is a combined total of around US$6bn. Clearly this capex has given way to sustain the groups progressive dividend policy and credit rating which BHP recently re-committed to preserving. Falling commodity prices have forced BHP to put its money where its mouth is. We think that fundamental investors will see this restraint as positive, such that BHP does not continue to expand into falling markets. Similar trends across the industry will curb supply side growth. Robust demand growth will then help to re-balance oversupplied commodity markets and lift prices. This is what the marginal investors need to see to re-enter BHP again. Overall, a very solid result, fundamentally positive, without being thrilling.
Flight Centre (FLT)
1H15 result
NPAT: A$100.3 million; Dividend: 55cps
The result beat expectations.
Morgans comment
Overall the result was better than expected due to the addition of Top Deck. Full year guidance appears very achievable. FLT looks like it may be through the worst of it. Expect the shorts to cover.
Oil Search (OSH)
1H15 result
NPAT: US$483 million; Dividend: US 8cps + US4cps special dividend
Morgans comment
Further exploration and appraisal drilling results are expected over the coming months with the company involved in a number of wells. While the OSH share price will likely follow oil price movements, we see value for longer-term investors at current levels and are happy to accumulate a quality oil and gas company with upside to further LNG development opportunities.
Watpac (WTP)
1H15 result
NPAT: A$6.2 million; Dividend: 2cps
The result was in-line expectations.
Morgans comment
There is value here for the patient investor - however WTP still remains a higher risk/reward proposition given the uncertainty in Mining earnings (and the potential for impairments to create negative newsflow). Capital management will be a positive and WTP has the balance sheet to do it. Longer term corporate appeal also features with BESIX holding +20%.
More information
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