Treasury Wine Estates Ltd
Interim 2018 financial performance & outlook: Edging slightly up on January 31, 2018, Treasury Wine Estates Ltd (ASX: TWE) in the first half 2018 has reported 37% growth in the reported Net Profit After Tax (NPAT) to $187.2m and 25% increase in the Earnings Before Interest, Tax, SGARA and material items (EBITS) to $283.3m. Moreover, TWE has completed the integration of Diageo Wine’s supply chain and the company’s cumulative run-rate COGS savings target of $100m from its Supply Chain Optimisation initiative was achieved in 1H18. Additionally, TWE has announced a series of transformational changes to its route-to-market in the US, that includes changes spanning a number of key states, and range from implementing direct and hybrid sales and distribution models, to changing distributors. In addition, TWE has reaffirmed FY18 consensus EBITS forecast of $524m and expects EBITS growth to accelerate to 25% in FY19. TWE stock has risen 10.03% in three months as on January 30, 2018 and is trading at a high level. TWE has declared an interim dividend of 15 cents per share, 75% franked, which is 2 cents per share increase (+15%) and represents a 54% payout ratio. Meanwhile, group’s net debt has also gone up that led to a drop in net assets. The trading scenario indicates that the stock is “Expensive” at the current price of $17.12
Beach Energy Ltd
Acquired Lattice Energy & revised the FY18 guidance for production and capital expenditure: Beach Energy Ltd (ASX: BPT) has acquired the conventional upstream oil and gas business, Lattice Energy, from Origin Energy Limited with an economic effective date of 1st July 2017 for $1,585 million. Moreover, BPT has increased the standalone FY18 production guidance to 10.6 – 11.0 MMboe from previously mentioned range of 10.0 – 10.6 MMboe. The company in the December quarter has posted 3% increase in the production to 2.6 MMboe and revenue grew by 17% to $208 million. For FY18, the capex is expected to be within the range of $405 – 455 million, comprising Beach expenditure of $255 – 285 million (previously $220 – 260 million) and Lattice expenditure of $150 – 170 million (previously $205 – 275 million). Meanwhile, BPT stock has risen 34.83% in three months as on January 30, 2018 and fell over 4% on January 31, 2018 at the back of commodity price movement and a mixed view on the capital expenditure. As of now, we give a “Sell” recommendation on the stock at the current price of $1.30
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Key statistics: Beach standalone (pre-Lattice) (Source: Company Reports)
GUD Holdings Ltd
NPAT from continuing operations grew due to the Automotive businesses: GUD Holdings Ltd (ASX: GUD) in the first half 2018 has posted 61% growth in the Reported NPAT to $28.4m. This took into account the discontinued operations contributing a $2.5 m profit in FY18 compared to a loss of $4.6m in FY17 and Oates business sale that was announced in November and completed in early January. The NPAT from continuing operations grew 16% to $25.8 m due to the strong growth in Automotive businesses inclusive of recent acquisitions. Moreover, GUD has acquired AA Gaskets group effective from 1st December 2017. Additionally, GUD has announced an interim dividend of 24 cents per share fully franked, payable in March 2018. However, for FY18, GUD expects the underlying EBIT to be around $90 million, including seven months’ contribution from AA Gaskets and only six months from Oates. The company was previously expecting the underlying EBIT in FY18 of between $90 million and $94 million. GUD stock has risen 26.7% in last one year as on January 30, 2018, and looks ‘Overvalued’ at the current price of $12.26
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