Stocks’ Details

Australia And New Zealand Banking Group Limited

A Look at Q1 FY 2019: Australia And New Zealand Banking Group Limited (ASX: ANZ) had released key information related to the December 2018 quarter. The bank’s Level 2 Common Equity Tier (or CET1) ratio stood at 11.3%. With regards to the individual provisions, the bank had faced a charge amounting to $186 million in December quarter which happens to be $14 million higher as compared to the 2H FY 2018 quarterly average of $172 million. As demonstrated by the presentation, ANZ Home loan portfolio have encountered the contraction of $534 million in the quarter ended December and the unfavorable momentum was witnessed in the owner-occupied as well as investor lending.

APRA Level 2 CET1 Ratio (Source: Company Reports)

Not so long ago, ANZ had stated that the final report as well as the insights from of the Royal Commission would be changing the industry for better. The bank is committed to continuing the work as well as investment which is needed to build the bank trustworthy. 

What Are ANZ’s Strategic Priorities: ANZ’s strategic priorities revolves around creating a simpler as well as better balanced bank, focusing towards the areas where it can win, driving a purpose and values led transformation as well as building the superior everyday experience for the customers as well as people.

From the perspective to dividends, the bank’s annual dividend yield stood at 5.98% which is higher than the industry median of 5.3% and this might attract the investors’ attention.

Stock Recommendation: On the daily chart of ANZ, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After observation, it was noticed that the stock price has crossed the EMA and had trended upwards. This reflects bullishness and, hence, there are expectations that the bank’s stock price might rise moving forward.

Also, the bank’s dividend yield is higher than the industry median. On the backdrop of the above-mentioned factors, we maintain our “Buy” rating on ANZ’s stock at the current market price of A$27.350 per share (up 2.281% on 19 February 2019).
 

Telstra Corporation Limited

A Look at HY 2019 Results: Telstra Corporation Limited (ASX: TLS) had recently declared the HY 2019 results which were in line with the anticipations as well as which demonstrated continued growth with respect to the mobile services. These results also demonstrate progress against T22 strategy. In 1H FY 2019, the company had declared the interim dividend amounting to 8 cents per share which is fully franked, and it includes ordinary dividend amounting to 5 cps as well as special dividend which was of 3 cps. It will be paid on 29 March 2019.

Income Statement (Source: Company Reports)

The company stated that interim dividend for 1H FY 2019 happens to be consistent with the capital management framework as well as dividend policy. The company’s EBITDA amounted to $4.3 billion in 1H FY 2019 while in 1H FY 2018 it was $5.1 billion.

What to Expect From TLS: Telstra Corporation had reaffirmed its guidance for FY 2019. There are expectations that the company would be posting total income between $26.2 billion- $28.1 billion while EBITDA (excluding restructuring) would be between $8.7 billion-$9.4 billion. However, the company’s Capex is expected to be between $3.9 billion-$4.4 billion while its free cashflow would be between $3.1 billion- $3.6 billion in FY 2019.

The company stated that its free cashflow would be towards the lower end of guidance largely because cash capex would witness a rise as the company take advantages of the opportunities in an enterprise as well as wholesale fibre markets. Secondly, the cash redundancies would be higher as the company accelerates productivity.

Stock Recommendation: On the daily chart of TLS, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After careful observation, it was noticed that the company’s stock price has crossed the EMA and had trended in the upward direction after the crossover which reflects the bullishness. As a result, there are expectations that the company’s stock price might witness a rise moving forward.

Moreover, the company’s annual dividend yield stood at 3.89% which is higher than the industry median (Telecommunication services) of 1.4%.

Based on the aforementioned factors, we maintain our “Buy” rating on the stock at the current market price of A$3.250 per share (up 1.246% on 19 February 2019).
 

National Australia Bank Limited

Key information about NAB Capital Note 3: National Australia Bank Limited (ASX: NAB) had released a key document which contains the information about the Capital Notes 3 Offer. As per the document dated February 19, 2019, offer size happens to be $1,650 million with the ability to raise more or less. The bank had stated that the net proceeds would be used towards the general corporate purposes. APRA had given the confirmation that the NAB Capital Notes 3, once issued, would be qualifying as Additional Tier 1 Capital for purposes of the regulatory capital requirements of NAB. The face value is $100 per NAB Capital Note 3. On 27 March 2019, Capital Notes of the company is expected to commence trading on ASX on a normal settlement basis.


Key Dates for the Offer (Source: Company Reports)

In 1Q FY 2019, the bank had posted unaudited statutory net profit amounting to $1.70 billion while the bank’s unaudited cash earnings stood at $1.65 billion. As per the Australian Securities Exchange or ASX, the bank’s annual dividend yield stood at 8.18% which is higher than the industry median (banking services) of 6.6%.

What to Expect From NAB: As demonstrated by FY 2018 investor presentation, National Australia Bank happens to be well-positioned for the challenging environment. The bank had maintained its focus towards building a more sustainable business with the help of exceptional customer service.

The bank has been making deployments towards the areas which would be making a material difference.

Stock Recommendation: On the daily chart of NAB, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After careful observation, it was noticed that the stock price has crossed the EMA and had trended in the upward direction after the crossover reflecting the bullishness. Hence, there are expectations that the bank’s stock price might witness a rise moving forward. Also, the bank’s dividend yield is higher than the industry median (as mentioned above).

On the backdrop of the above factors, we maintain our “Buy” rating on the bank’s stock at the current market price of A$24.620 per share (up 1.652% on 19 February 2019).
 

Magellan Financial Group Limited

A Look at 1H FY 2019 Results: In 1H FY 2019, Magellan Financial Group Limited (ASX: MFG) had posted a net profit after tax amounting to $173.5 million which implies the substantial rise of 225% on the YoY basis.Mr. Brett Cairns, Chief Executive Officer (or CEO), had stated that the company’s 1H FY 2019 results were supported by the robust investment performance in the volatile market conditions. The company’s average funds under management witnessed a rise of 35% and stood at $72.1 billion at the end of 1H FY 2019.


1HFY19 Results Summary (Source: Company Reports)

The company had also witnessed significant YoY rise of 66% in the interim dividend in 1H FY 2019 and stood at 73.8 cents per share.

What to Expect From MFG: Magellan Financial Group had stated that its total expenses (excluding non-cash amortization and Magellan Global Trust Unit Purchase Plan) would be around $105 million in FY 2019. As demonstrated in the company’s 2018 AGM presentation, Magellan happens to possess a robust balance sheet.

The company also stated that its business is capital light and it needs limited capital in order to support the business as well as to grow organically.
      
Stock Recommendation: On the monthly chart of MFG, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After observation, it was noticed that the company’s stock price has crossed the EMA and had trended in the upward direction after the crossover. This suggests that the company’s stock price might witness a rise moving forward.

As a result, we maintain our “Hold” rating on the stock at the current market price of A$31.940 per share as it is trading close to 52-week high levels.


Stock Price Comparative Chart (Source: Thomson Reuters)  
 

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