Best calls to action – Friday, 25 February
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 25 February 2022, 6:00 AM
- Sectors Covered:
- Equity Strategy and Quant
Lovisa Holdings Ltd - 1H22 result: The jewel in the crown
In our opinion, LOV's 1H22 result was nothing short of remarkable. +21.5% LFL sales growth, complemented by an accelerated store rollout and increased gross margins saw EBIT up 59%, 20% above our forecast.
We increased our EPS estimates by 12% in FY22 and 8% in FY23. We reiterate our ADD rating. Our target prices increases from (login to view).
If LOV get this right, it could be one of the biggest success stories in Australian retail.
Read our full reports and latest price targets on ASX:LOV here.
Nextdc Limited - These NEXTDC's build competitive advantage
NXT's 1H22 result was ahead of our forecasts and came with a small upgrade to FY22 guidance. Noteworthy was the ~8% upgrade to capex guidance which bodes well for future growth. NXT typically builds only what they have line of sight to leasing; including recently announced gen 4/5 regional/edge sites in smaller cities.
Based on the mid points FY22 revenue guidance has been upgraded 1%; EBITDA guidance upgraded by 1.5%; and capex guidance upgraded by 9%. Minor changes to our forecast, (login to view) target price and Add retained.
Read our full reports and latest price targets on ASX:NXT here.
Eagers Automotive - Order book shifts up a gear
APE reported underlying PBT of A$401.8m (guidance A$390-395m), up 92% on the pcp. The 2H result absorbed a ~A$25m PBT lockdown impact (mgmt estimate). Demand continues to outstrip supply, resulting in a record order book (+215% on the pcp).
We expect this would be >4-months of deliveries. The margin sustainability 'debate' will likely persist until supply normalises.
Near-term margins should prove resilient given the embedded GP in the order book, removing lock down impacts, and ongoing efficiencies. APE announced a (non-binding) agreement to establish a JV with Chinese based EV manufacturer, BYD. The JV will be the exclusive national BYD retailer in Aus. Vehicle supply is the swing factor to near-term (FY22) earnings.
Sustainably higher earnings can be driven via further consolidation, EA123 strategy execution, ongoing efficiency, and new OEM strategies (BYD). Add maintained.
Read our full reports and latest price targets on ASX:APE here.
Atlas Arteria - Showing leverage to recovering traffic
The FY21 result showed the expected leverage to recovering traffic volumes.
We retain an ADD, given recent share price decline has lifted potential returns. 12 month target price (login to view). Forecast DPS paid over FY22 of 43.5cps.
Read our full reports and latest price targets on ASX:ALX here.
Earlypay Ltd - Factoring in another guidance upgrade
EPY reported underlying NPATA of A$7.7m, up 118% on the pcp and well ahead of original expectations (guidance provided early February). Normalising for lower tax, NPATA was +77% and EPS was +42% on the pcp.
Momentum continued from last half, stepping up Invoice Finance (IF) TTV (+35%); lease originations (+142%); and new client growth of +35% on pcp. FY22 NPATA guidance was upgraded (again) to A$15m+ (from A$14m+ in early Feb-22; originally A$13m in Nov-21). Implied 2H22 NPATA is A$7.3m+. EPY has shown resilience through the Covid period and is now showing accelerated momentum.
If the group can prove that its technology-led strategy can deliver sustainable client growth, we expect a multiple re-rating to be achieved on a higher earnings base. Trading on <9x PE, Add maintained.
Read our full reports and latest price targets on ASX:EPY here.
Airtasker Limited - 2H marketing ramp set to drive GMV growth
Airtasker (ART) largely pre-released key business metrics and line items at its recent 2Q22 trading update, with GMV of ~A$84m, +16% on pcp and revenue of ~A$14m (+10% on pcp) implying a ~16.7% take rate.
Underlying pro forma EBITDA was -A$3.2m (with management estimating a ~A$2m impact due to COVID-related restrictions on GMV and tasker support). The platform showed resilience/adaptability in a challenging operating environment, in our view, having bounced back strongly post lockdowns easing (December weekly GMV run rate of A$4.5m).
We make only minor GMV changes over our forecast period. Our price target remains largely unchanged at (login to view). Add maintained.
Read our full reports and latest price targets on ASX:ART here.
Maas Group Holdings - Continuing to execute the game plan
MGH's interim result was in line with guidance for EBITDA to be ~35% weighted to the 1H22. A strong liquidity position will support the continued execution of its growth initiatives. With FY22 guidance (EBITDA +52-65%) reiterated, organic growth across Construction Materials and Real Estate is set to accelerate over the 2H22.
M&A is nearing completion, which will provide a strong foundation for the business heading into FY23 and we continue to see scope for Residential Real Estate to organically surprise to the upside over FY23/24.
We remain attracted to MGH's strong medium-term growth outlook and maintain our Add rating and (login to view) target price.
Read our full reports and latest price targets on ASX:MGH here.
Panoramic Resources - First half profit a line in the sand for Savannah restart
Half year financials show A$11m cash on hand at 31 December. With two shipments now dispatched, payments received or in progress since 31 December of ~A$40m, and US$15m in undrawn finance facilities, PAN's finances appear in good shape to continue operational ramp up.
Mining activities have been impacted by the WA border closure but are likely to normalise with upcoming reopening.
The company does not report any forecast impact on FY22 production. With nickel prices up approx. 20% since 31 December while copper and cobalt credits remain strong, and PAN forecast to increase production this half, we remain positive on the stock.
Our 12-month base case price target lifts (login to view), and we move the stock to an Add. On an upside case using spot metal pricing, the target price would move to 50cps.
Read our full reports and latest price targets on ASX:PAN here.
Camplifyholdings - Paving the way for a good 2H
Having recently released its 2Q22 trading update last month, most of Camplify's (CHL) key 1H22 headline metrics were known. 1H22 GTV of A$22.9m was up ~62% on pcp, with total revenue of A$6.8m (+109% on pcp) highlighting a very strong take rate of 29.1% (vs 22.9% in 1H21).
CHL's GM of ~55% (ex van sales) was impacted by an insurance revenue accounting policy change (to AASB4). We lower our FY22F/FY23F/FY24F EBITDA by ~8%-27% with higher topline growth estimates driven by a stronger take-rate assumption tempered by a lower GM (aforementioned accounting policy change).
Our price target is lowered to (login to view) on the above changes and a slight lowering of valuation multiples used (given recent sector de-ratings). Add maintained.
Read our full reports and latest price targets on ASX:CHL here.
Silk Logistics - Proving up the potential
The strong growth in 1H22 was above our expectations. The FY22 Outlook implies further solid growth into 2H22. 12 month target price of (login to view). ADD retained
Read our full reports and latest price targets on ASX:SLH here.
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Disclaimer: Analyst may own shares. 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.