Reporting Season Road Map: 20 August 2019
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 20 August 2019, 12:50 PM
- Sectors Covered:
- Equity Strategy and Quant
Following our assessment of results and market announcements, here are our two top picks for today (Tuesday 20 August 2019):
Westpac Banking Corp (WBC) – Pillar 3 update
WBC today released its Pillar 3 update for the Jun-19 quarter. Our base case remains one of no nominal dividend cuts over our forecast period.
We continue to expect a DRP with a 1.5% discount to operate in respect of WBC's final dividend for FY19.
At this stage, we do not see the need for any further discounted DRPs beyond 2H19; in fact, we expect WBC to be neutralising its undiscounted DRPs in FY20F and FY21F. WBC remains our preferred major bank and we retain our ADD rating. Morgans clients can login to view our share price target and detailed research note.
Healius (HLS) – Moving parts, but the PT is recovering
FY19 underlying results were pre-released so did not contain any major surprises, but there were plenty of moving parts with restructuring charges and other non-recurring items, as the company continues its transformation.
Medical Centres and Imaging posted double-digit profit growth, while Pathology was hit by several well-flagged issues (a national bowel contract loss; higher VIC labour costs), but adjusted, saw revenue growth above market and margin uplift.
Encouragingly, 2H momentum was seen across all core divisions, and coupled with ongoing projected cost savings, should improve the earnings trajectory.
We lift our underlying FY20-22 NPAT by up to 5%, which sees our DCF/SOTP target price increase (Morgans clients can login to view our share price target and detail research notes) and we retain our ADD rating. Morgans clients can login to view our share price target and detailed research note.
Morgans clients can access further analysis in our latest reports on Wetpac Banking Corp and Healius. Alternatively, please contact your nearest Morgans office for access.
Disclaimer: 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.