Results Road Map: Wednesday, 26 August
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 26 August 2020, 5:44 PM
- Sectors Covered:
- Equity Strategy and Quant
Getting down to business
TPG Telecom (ASX:TPG) reported a complex set of statutory accounts and, as expected, did not declare a dividend.
They also provided proforma numbers for 1H20. These were in-line with our forecasts.
As expected TPG did not provide specific guidance (they merged ~1 month ago so are still getting the lay of the land).
However, the key outlook commentary from management was around the capital intensity of the merged business.
They expect total capex in the years ahead, including the 5G rollout, to be broadly similar to the last few years. This means TPG will generate healthy free cash flow.
We make minor changes to our EBITDA forecasts.
Our price target reduces following our forecast changes. We retain our Add recommendation. View target price and full analysis (Morgans clients only).
Let the scale benefits begin
HUB24 (ASX:HUB) reported underlying FY20 NPAT of A$10.1m, up .5% on the pcp.
2H20 NPAT missed expectations based on one-off elevated share-based payments.
The Platform division performed largely in line with expectations (2H EBITDA +8% half on half).
HUB rolled forward and increased its FUA target, now being A$28-32bn by FY22-end.
The mid-point implies ~75% uplift over two years. Adviser numbers up ~27% on pcp in part support HUB's net inflow expectation of ~A$5.5bn pa in FY21/22. We view the margin achieved (from ANZ) on pooled cash as a medium-term risk (although contracted medium-term).
We factor in some compression from 2H23.
Despite strong recent share price performance, we continue to view the scale opportunity for HUB as attractive, driving longer-term value. Add maintained. View target price and full analysis (Morgans clients only).
Delay of launch a disappointment
The Nanosonics (ASX:NAN) FY20 result was broadly in line with our expectations.
- Revenue now represented by 70% of consumables
- Installed base up 13%
- Lower SG&A
- Growing cash balance
Although not unexpected the commercial launch of the next generation product has been delayed until FY22 (was FY21).
However additional positive enhancements may assist the launch and market entry.
We have adjusted our forecasts to remove revenue from the new product in FY21, which results in a slightly lower valuation.
We maintain our Add recommendation in this quality growth name. View target price and full analysis (Morgans clients only).
Wagners Holdings Company
Cautiously optimistic for FY21
FY20 underlying EBIT was in line with our expectations and 2H20 trends clearly illustrated that an earnings recovery is underway.
With leverage at elevated levels, Wagners (ASX:WGN) will need to carefully manage its balance sheet position.
Positively, capex needs are moderating, it has access to significant liquidity and term debt facilities have recently been extended to Jan-22.
Due to the major project work already secured, outlook comments suggest an improved FY21 result is expected.
We forecast EBIT of A$17.6m (+96%).
With the potential to secure further major project work and longer-term upside from its successful CFT/EFC execution, we maintain an Add rating. View target price and full analysis (Morgans clients only).
Significant acquisition firepower
People Infrastructure's (ASX:PPE) FY20 EBITDA of $26.4m came in ahead of recently provided guidance of $24-25m and our forecasts of $24.2m.
The company is in a strong net cash position ($10m) and declared a final dividend of 4.5cps (fully franked) which was in-line with our forecasts.
We expect strong organic and acquisitive growth from the company over the forecast period and reiterate our Add recommendation.
Following earnings changes our target price increases. View target price and full analysis (Morgans clients only).
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