Reporting Season Road Map: 29 August 2019

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
29 August 2019, 1:30 PM
Sectors Covered:
Equity Strategy and Quant

Two stocks we're happy to buy today: 

Macquarie Group Ltd (MQG) – Gaining some flexibility

MQG has announced a non-underwritten institutional placement (A$1bn) and accompanying share purchase plan to the market. Management says the raising is to support significant investment across the group and also due to recent APRA changes in measuring counterparty credit risk (SA-CCR).

Positively, management noted the 1H20 result is now expected to be +10% on pcp (~A$1.44bn), while full year guidance remains for NPAT to be slightly down on FY19.

We downgrade our MQG FY20F/FY21F EPS by ~3%-4% reflecting the dilution of the raising.

Our MQG price target falls (access by Morgans clients only). Trading on ~15x FY20F PE we still see MQG as relatively inexpensive and maintain our Add call with ~10% TSR upside on a 12 month basis.

Morgans clients can view detailed research note for further analysis.

OZ Minerals – Critical Carra execution approaching

Softer 1H financials as a function of delayed sales will partially revert in the 2H, and are less important than critical value drivers approaching.

Re-confirmation of the Carrapateena construction schedule and budget ahead of its ramp-up remains our focus given its dominant impact on our valuation.

Our valuation moderates (client access only) on lower short-term copper price assumptions and adjustments for 1H actuals.

OZL's recent pullback again looks overdone versus fundamentals supported by strong execution, a low cost base and robust cash operating margins. 

Morgans clients can view our share price target and detailed research note for further analysis.

More information

Morgans clients can access further analysis in our latest reports on Macquarie Group and Oz Minerals. 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.

 
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