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Reporting Season road map: 15 February 2019

Andrew Tang

Following our assessment of results and market announcements, here are our five top picks for today (Friday 15 February 2019):

Woodside Petroleum (WPL) – In full stride

A strong full year result for WPL, with underlying NPAT of US$1,416m (vs Morgans est. US$1,420m). WPL surprised with a very large final cash dividend of USD 91 cents (well ahead of consensus estimates). Group EBITDA margin improved to 73% (vs 72% in the previous corresponding period). Net debt decreased to US$2,397m.

We retain our Add recommendation. Morgans clients can login to view our share price target and detailed research note.

Telstra Corporation (TLS) – Not just waiting for the world to change

TLS' 1H19 result was a slight beat vs our forecasts and we have upgraded our earnings per share forecasts by approx. 9% in FY19 and beyond. An 8 cents per share dividend was declared (5cps ordinary 3cps special) which was slightly below our 8.5cps forecast. A 16cps dividend could be the base and share price movements over the last six months also suggest a base has been set. To hold 16cps in a post NBN world, TLS needs A$7-8bn of EBITDA. FY19 earnings guidance was reaffirmed, with a caveat that free cash flow is expected to be at the lower end of the range (higher capex/restructuring costs).

We retain our Add rating. Morgans clients can login to view our share price target and detailed research note.

Treasury Wine Estates (TWE) – Disciplined growth

TWE has delivered another half of solid earnings growth despite investing in the business and implementing significant changes to its business model, particularly in the US. Its premiumisation strategy and route to market competitive advantages continue to underpin growth. FY19 EBITS guidance for 25% growth was reiterated and as a sign of confidence TWE has also provided FY20 guidance for a further 15-20% growth (due to the growth of the Masstige and Luxury inventory on its balance sheet). Vintages 2016-2019 should underpin solid earnings growth out to FY22.

We retain our Add rating on this quality, well managed growth company. Morgans clients can login to view our share price target and detailed research note.

Aventus Group (AVN) – Focusing on 'Everyday Needs'

AVN's 1H19 result showed that the portfolio remains in a solid position with good leasing outcomes achieved during the period. On outlook, FY19 FFO guidance of 18.4c was reiterated.

We retain our Add recommendation. Morgans clients can login to view our share price target and detailed research note.

Over The Wire (OTW) – Making good progress

OTW's 1H19 result showed strong growth across the board and was c5% ahead of our forecast at the EBITDA level. Management are targeting 18% or greater organic revenue growth this year and approx. 20% from FY20-onwards. Our FY19 forecasts were already at approx. 18% organic growth (allowing some room for M&A distraction) and we therefore make no changes to our forecasts, valuation or price target.

We retain our Add recommendation. Morgans clients can login to view our share price target and detailed research note.

More information

Morgans clients can access our further analysis in our latest reports on Woodside Petroleum, Telstra Corporation, Treasury Wine Estates, Aventus Group and Over The Wire. 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.