RESULT BRIEFING FOR SEVEN STOCKS

JB Hi-Fi Ltd

JBH Dividend Details
 
Strong Performance and dividend growth: The shares of JB Hi-Fi Ltd (ASX: JBH) surged about 7.26% in the last one month (as at February 09, 2016) with the reporting of net profit after tax of $ 95.2 million (as compared to $ 88.5 million of HY15) from $ 2.12 billion of sales ($ 1.97 billion in of HY15) for the half year ended 31 December 2015 (HY16), with total sales growth of 7.7% and comparable sales growth of 5.2%. The board also declared an interim dividend of 63.0 cents per share fully franked up 4 cents per share over the previous year.
 

Dividend Growth (Source: Company Reports)
 
The dividend payout ratio is 65%, which the board believes is an adequate balance between distribution of profit to shareholders and reinvestment of earnings for future growth. Gross profit increased by 7.68%, with gross margin down 3 basis points to 21.7% and cost of doing business was 14.14%, resulting in EBIT of $ 138.2 million ($ 130 million in of HY15) and an EBIT margin of 6.5% (6.6% in of HY15). During the half year, the company completed an on market buyback of 0.7 million ordinary shares at a cost of $ 13.2 million to offset the dilutionary impact of shares expected to be issued under the share option scheme. The company has also announced trading updates for January 2016, with total consolidated sales growth of 10.2% and consolidated comparable sales growth of 6.5%. Despite the challenges in the consumer electronic and home appliance retail industry, the company aims to focus on roll-out of JB Hi-Fi HOME with introduction of small appliances in stores, and expects total sales of $3.9 billion and NPAT in the range of $143 million to $147 million for FY16. We accordingly recommend a Hold on the stock at the current price of $21.41
 
 
JBH Daily Chart (Source: Thomson Reuters)
 

AVJennings Ltd

AVJ Dividend Details
 
Geographic strategy paying results and guidance reaffirmed: AVJennings Ltd (ASX: AVJ) announced strong financial results for the half year ended 31 December 2015 indicating revenue growth of 57.9% to $ 187.2 million, growth in profit before tax of 42.2% to $ 23.9 million and profit after tax was $ 16.5 million with a surge of 39.2%. EPS grew by 38.8% to 4.3 cents per share. AVJ’s contract signings rose by 14.6% to 999 lots from 872 in the previous year and settlements grew by 5.2% to 694 lots from 660 lots in the previous year. Work in progress was up 5.5% over the previous year to 1623 lots. Projects including Arcadian Hills, Argyle at Elderslie, Magnolia, Big Sky and Creekwood contributed towards growth. As per the company, the pattern of continuous improvement in results over the past three years validates the diverse geographic strategy. The company mentioned about the increase in the supply and demand for capital city high-density housing which is likely to decrease in the short term. The company still expects to have continued growth in demand for detached and medium density housing. Further, AVJ reaffirmed its contract signings guidance for FY16 of 1800 to 2100 lots. We recommend a Buy on the stock at the current price of $0.56
 
 
AVJ Daily Chart (Source: Thomson Reuters)
 

WAM Capital Ltd

WAM Dividend Details
 
Record profit growth: Among the highlights for the half year to 31 December 2015 for WAM Capital Ltd (ASX: WAM) is the 248.5% increase in operating profit before tax to $ 103 million and 224.9% rise in operating profit after tax to $ 74.6 million. There was a 25.6% rise in the investment portfolio for the 12 months to 31 December 2015 beating the S&P/ASX All Ordinaries Accumulation Index by 21.8%. The company highlighted about the increased fully franked interim dividend of 7.25 cents per share, representing an annualised dividend yield of around 6.7%. The investment portfolio return of 18.3% per annum since inception in 1999 outperformed the market by 10.3% per annum. The company has a conservative balance sheet, a high cash weighting, zero debt, and is capable to withstand the external pressures given the flexible and proven investment approach. WAM also protected its portfolio against the falling market by increasing cash holdings in order to mitigate stress from slowing global growth and volatility in the month of January 2016. Given the above, the stock has surged 11.57% in the last three months (as at February 09, 2016). Based on the above, we recommend a Buy on the stock at the current price of $2.16
 
 
WAM Daily Chart (Source: Thomson Reuters)
 

Genworth Mortgage Insurance Australia Ltd

 

GMA Dividend Details
 
NET Exceeding FY15 guidance but lower profit: Genworth Mortgage Insurance Australia Ltd (ASX: GMA) reported its earnings performance for FY 2015 with a 20% decline in gross written premium (GWP) to $ 507.6 million, a 5.4% increase in net earned premium (NET) to $ 469.9 million, a decline of 29.7% in reported net profit after tax to $ 228 million and a 5.3% decline in underlying net profit after tax to $ 264.7 million. There was a 66.7% increase in ordinary dividends per share to 26.5 cents per share. However, the drop in profit reflected the unfavourable mark-to-market movements in the investment portfolio.
 

HLVR Penetration (Source: Company Reports)
 
The company exceeded the FY15 guidance with NET growth slightly ahead (guidance of up to 5%) and progressive dividend pay-out ratio of 62.2% as opposed to earlier stated guidance of 50% to 70%. The market conditions pressurising GWP include lower LVR mix and the high LVR segment impacted by reduced lender risk appetite and increased investor loans. The company stated that the NET is expected to drop by as much as 5% with full year loss ratio to be between 25% and 35% and ordinary dividend pay-out ratio in the range of 50% to 80% for FY16. Nonetheless, given the potential in the stock, we recommend a Buy on the stock at the current price of $2.33
 
 
GMA Daily Chart (Source: Thomson Reuters)
 

Whitehaven Coal Ltd

WHC Details
 
Returning to profitability: The shares of Whitehaven Coal Ltd (ASX: WHC) have plummeted 36.29% in the last one month (as at February 09, 2016) at the back of difficult market conditions while the company reported a net profit after tax of $ 7.8 million for the half-year ended 31 December 2015 (as opposed to the loss of $77.9 million in previous corresponding period). All the key metrics improved over the previous corresponding period (pcp) with sales revenue growing 54% to $ 574.3 million, operating EBITDA 104% to $ 106.4 million on the back of a 40% increase in operating margin, operating cash flow rising by 421% to $ 118.3 million while net debt was lower at $ 924.9 million and gearing down to 24%. WHC also reported that the unit costs fell to $ 58/tonne which is down 8% over the pcp. Improved production and sales from Narrabri and first commercial production and sales from Maules Creek led to record ROM and sales of coal of 7.1 Mt and 7.3 Mt, which is 59% and 55% higher respectively, than the pcp. As for the guidance, the company aims to improve its financial position over the next three years at the back of increases in production and improving margins. We recommend a Speculative Buy on the stock at the current price of $0.375
 
 
WHC Daily Chart (Source: Thomson Reuters)
 

Downer EDI Ltd

DOW Dividend Details
 
Guidance Downgrade: Downer EDI Ltd (ASX: DOW) released its results for the half year ended 31 December 2015 showing a decline of 3.4% in total revenue to $ 3.26 billion and total revenue, including joint ventures and other income, witnessing a decline of 1.2% to $ 3.54 billion. Earnings before interest and tax dropped by 20.1% to $ 113.2 million and profit from ordinary activities after tax attributable to members declined by 23.9% to $ 72.1 million.
 

Transport Services Performance (Source: Company Reports)
 
The company declared the interim dividend per share of 12 cents per share, 100% franked and the dividend on Redeemable Optionally Adjustable Distributing Securities was 2.40 cents. The operating cash flow of $ 178.1 million was 30.9% lower than the previous year, reflecting an increase in unresolved project claims. The company downgraded its FY16 guidance of net profit to $180 million from the earlier target of $190 million. Nonetheless, the underlying cash conversion, gearing and restart of buyback do suggest some positives. Given the above coupled with DOW’s capabilities, we put a Speculative Buy on the stock at the current price of $3.12
 
 
DOW Daily Chart (Source: Thomson Reuters)
 

Navitas Ltd

NVT Dividend Details
 
Surge in top and bottom line: Navitas Ltd (ASX: NVT) reported solid interim results for FY 2016 and reaffirmed its guidance for the year. A rise of 8% has been reported for the group revenue to $ 517.5 million and underlying EBITDA surged 16% to $ 82.8 million. Net profit after tax rose by 12% to $ 45.1 million and reported net profit after tax increased by 44% to $ 45.5 million. Earnings per share grew by 12% to 12 cents per share and reported EPS by 45% to 12 cents per share. NVT also enhanced the interim dividend per share fully franked by 2% to 9.6 cents per share. This result comes at the back of increases in progression-to-University and past rates for University Programs and the continued delivery of strong student experience and academic outcomes across all the divisions. However, the second half is said to be impacted by the completion of the Macquarie University contracts in February 2016, and as such, the group has reaffirmed guidance that FY16 EBITDA is expected to remain broadly in line with FY 2015. We recommend a Hold on the stock at the current price of $4.54
 
 
NVT Daily Chart (Source: Thomson Reuters)

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