Adairs Ltd (ADH):
Homewares retailer Adairs' net profit rebounded 45.4 per cent to $30.6 million in 2018 as a more fashionable range of bed linen lured more customers into its bricks and mortar and online stores, boosting sales and gross margins. After a horror year in 2017, when earnings fell 21 per cent, earnings before interest and tax rose 46.9 per cent to $45.3 million in the 12 months ending June, inline with the company's guidance range of $44 million and $46.5 million and consensus forecasts around $45.9 million. Topline sales rose 18.8 per cent to $314.8 million as eight new stores and seven refurbishments augmented strong same-store sales and online growth. Same-store sales rose 14.3 per cent, after falling 1.4 per cent in 2017, and online sales surged 75.1 per cent to $41.5 million, representing 13 per cent of total sales. Gross margins rose 110 basis points to 60.3 per cent after falling from 61.0 per cent to 59.2 per cent in 2017 after a "fashion miss" in the second and third quarters forced the retailer to slash prices to clear excess stock. The new financial year had started well, with same-store sales up 5.4 per cent in stores and online in the first seven weeks of 2019.
Brambles Limited (BXB):
Brambles may be sending fresh produce logistics arm IFCO to market earlier than expected, but analysts reckon it should still fetch up to 18-times forecast earnings before interest and tax. "IFCO sale/demerger plan somewhat unsurprising, but timing earlier than expected," Macquarie analysts told clients on Monday morning. "While Brambles were undertaking a strategic review of the asset, we are a little surprised by the timing of the announcement given the underlying momentum in the business (18% two-year EBIT CAGR). "That said, the ROCI generated by IFCO is below other Brambles businesses at 8.2% in FY18, or 13.8% excluding goodwill (US$685m)." Macquarie's team reckons IFCO is worth $US2.1 billion to $US2.6 billion, or about $1.81 per Brambles share. Citi is expecting a slightly bigger sale price, valuing IFCO at 18-times forecast earnings before interest and tax or $US2.7 billion. "We make no changes to our financial forecasts to reflect changes to the carrying of the IFCO business at this point in time," Citi told clients on Monday morning.
BWX Ltd (BWX):
Skin and hair care group BWX has said two of its senior executives and private equity firm Bain Capital, who together made a $800 million takeover offer for the company, have completed due diligence but need until mid-September to complete work on the offer. An independent BWX board committee, which undertook a strategic review after the offer, said it would continue talks with the Bain consortium to reach an acceptable binding offer. BWX, a marketer of branded skin and hair care products, received the unsolicited offer in May from Chief Executive John Humble, Finance Director Aaron Finlay and Bain Capital, for $6.60 per share, valuing the company at $803 million.
G8 Education Ltd (GEM):
Childcare centre operator G8 Education has delivered a 22 per cent fall in first half net profit to $23.7 million as it adapts to changes in the sector. It comes after the company warned of slower occupancy growth in February when it announced its full year result. G8, Australia’s second-largest childcare centres operator, booked an earnings before interest and tax down 21.2 per cent to $48.1m. The company declared an interim dividend of 4.5 cents per share fully franked. Revenue grew 7.6 per cent to $396.4m driven by fee increases, acquisitions and new centre openings. In its first-half update today, the company said occupancy growth in July and August is encouraging and demand is expected to improve as a result of the new child care subsidy.
Infigen Energy Ltd (IFN):
Wind power producer Infigen Energy has flagged the likely return of dividend payments this coming year after posting a 41 per cent increase in full-year profit and forecasting an increase in electricity generation. Net profit rose by $13.4 million to $45.7 million, buoyed by accounting for a deferred tax asset related to the expected future use of unrecognised tax losses. Underlying gross earnings, regarded as more representative of actual performance, climbed 7 per cent to a record $149.1 million on higher production and an increase in Infigen's electricity price in NSW despite softer wholesale prices. Managing director Ross Rolfe said Infigen's refinancing, announced in February, lowered corporate debt and created the opportunity for the board to consider resuming dividends this financial year. He said Infigen is "starting to see the benefits" from the more flexible corporate funding facility heading into the 2018-19 year. The company, the former Babcock & Brown Wind Partners, is forecasting production will rise by up to 14 per cent this coming financial year as its new Bodangora wind farm in NSW comes online. But it also cautioned that production from its individual wind farms may be "slightly reduced" as El Nino wind patterns are forecast to return.
Michael Hill International Ltd (MHJ):
Michael Hill International’s full-year profit has plunged 85.9 per cent after one-off costs associated with the jewellery store chain exiting the US market and closing most of its Emma and Roe stores. Net profit for the year ending June 30 fell to $4.6 million from $32.6 million in 2016/17, while revenue was up 4 per cent to $575.5 million. The ASX and NZX-listed company will pay an unfranked final dividend of 2.50 cents a share, unchanged from a year ago. Chief Phil Taylor said the year was one of ‘recalibration and respositioning’: “While the cost of exiting these businesses had a material one-off impact on the financial result, Michael Hill is a stronger and more resilient business today with a clear strategy for long-term growth,” he said.
National Australia Bank Ltd. (NAB):
National Australia Bank says it expects to be “held accountable” if it is found to have committed any criminal offences, but disagrees with some allegations raised in the financial services royal commission. The banking major was slammed for a string of cultural and behavioural shortcomings in superannuation after counsel assisting the royal commission, Michael Hodge QC, alleged NAB broke criminal laws in relation to charging tens of millions of dollars in fees but providing no service, and failing to put customers first in overseeing super funds. The allegations, raised on Friday night, have put senior NAB executives — CEO Andrew Thorburn and head of wealth Andrew Hagger — under intense pressure amid claims the bank broke super laws on their watch. NAB has also been singled out for failing to appreciate the gravity of the fees-for-noservice scandal. According to Mr Hodge’s closing submission, Mr Thorburn and Mr Hagger were involved in an email exchange over how to minimize reputational impact and compensation in the fee scandal. The allegations could upset the timing of the planned sale or stockmarket spin-off of NAB’s wealth arm, which ranks as the nation’s biggest retail super fund with funds under management of $78 billion. NAB’s culture was criticised over behaviour that indicated “a disregard on the part of the NAB Group for members of the relevant superannuation funds, for regulators and for the law”.
Reliance Worldwide Corporation Ltd (RWC):
A US cold snap that caused more pipes to freeze than usual, along with increasing take-up of Sharkbite push-to-connect plumbing fittings by younger plumbers helped drive net profits up 20 per cent for Reliance Worldwide Corporation but a more subdued outlook for 2018-19 triggered a rare sell-off in the stock on Monday. Reliance had almost doubled its share price in the past 12 months to above $6 during a busy time where it made its biggest ever acquisition, the $1.2 billion purchase of John Guest in the United Kingdom on May 24 and chief executive Heath Sharp said on Monday the company still had an appetite for further bolt-on acquisitions even though its main focus was on a smooth integration of John Guest. But the share price slipped by more than 7 per cent in early trading on Monday to $5.69 as investors factored in higher costs of copper and other inputs, higher import duties in the US which caused a $6 million hiccup in 2017-18 and extra investment to accelerate expansion in the US, the company's biggest market which represents about 72 per cent of all revenues. While unseasonably cold weather in January in the US brought an upturn in business, particularly in the south of the country, Mr Sharp said it was the time and cost savings for the new generation of plumbers from using push-to-connect fittings rather than soldering traditional brass fittings, that was the biggest driver of sales growth in the Americas, which was up 29 per cent to $559.7 million. Total sales across the company climbed 28 per cent in financial year 2018 to $769 million.
Spark Infrastructure Group (SKI):
Spark Infrastructure has highlighted escalating risks to its business from the "unprecedented" level of overlapping reviews of the energy industry but has reaffirmed its full-year guidance for dividends after reporting an 18.9 per cent jump in first-half profits. Chief executive Rick Francis said the reviews being carried out by various energy bodies have the potential to impact regulatory rulings for revenue and tariff settings for network businesses. He said they and the ongoing uncertainty in the energy sector could "add significantly to cost", undoing the work the transmission and distribution businesses have done to reduce costs for customers. "We are concerned that in an industry that requires significant investment to transition efficiently to a new energy future and to maintain a focus on energy price affordability, that these changes will add considerable risk and uncertainty to the process," Mr Francis said. The warning came as Spark, which owns stakes in electricity distribution networks in South Australia and Victoria, as well as an interest in NSW transmission grid owner TransGrid, posted adjusted gross earnings of $420.2 million for the first half, up 7.6 from a year earlier. Operating cash flow rose 6.9 per cent from the first half last year to $130.3 million. The company, which has been expanding in grid connections for new wind and solar plants, declared a first half distribution to shareholders of 8¢ a share and maintained its guidance for full-year distributions of 16¢, up 4.9 per cent.
(Source: AIMS)
Latest comments