Woolworths Group Limited

Improved Sales Momentum Throughout the Group: Woolworths Group Limited (ASX: WOW) is engaged into food, general merchandise and specialty retailing via chain store operations with the market captialisation of $45.87Bn as on 21^st May 2019.Recently, by release dated 2^nd May 2019, the company reported its third-quarter sales for FY19 and, with respect to Australian food, the customer metrics remained strong with VOC NPS of 47 and store-controllable VOC of 80%.

The customer metrics were below in comparison to the prior year and quarter. The decline had been driven by lower scores for fruits and vegetables because of higher prices and supply issues following recent extreme weather conditions impacting availability. WOW’s Australian Food business witnessed improved sales momentum along with Easter-adjusted sales growth of 4.7%, which is resultant of lower deflation and more settled weather. The company stated that post slower sales growth in 1HFY19, the company had witnessed improved sales number in Q3 along with Easter-adjusted comparable growth of 5.9% for Endeavour Drinks.

Due to investment in improving its range, service and convenience for customers, the company expects lower EBIT in FY19 as compared to the prior year for Endeavour Drinks.
  
In the context of BIG W sales, the company reported strong sales growth with Easter-adjusted comparable sales growth of 7.4% and the company is expecting a loss before interest and tax in the range of $80-$100Mn for FY19 for BIG W. Additionally, the company witnessed a rise of 35.1% in its online sales.

 
Q3FY19 sales (Source: Company Reports)

In the release, the company mentioned that it had discontinued its petrol business by selling it to EG Group on 1^st April. The sales number for this business in Q3 witnessed a decline of 8.2% on an Easter-adjusted basis with a decrease of 7.0% in Easter-adjusted comparable volumes.

In another update, one of the Company’s Directors, Gordon Cairns had acquired 413 shares for the consideration of $30.0990 per share. As a result, after the change, the count stodd at 31,621 shares.

Future Priorities: The company would continue to invest in its online and convenience offering, which includes scaling up “Food for now “and “food for later” throughout its metro stores. The company’s goal includes ensuring a seamless experience for increasingly connected customers. For FY19, the company would remain focused on productivity improvement.

Stock Recommendation: The company expects on-going progress with respect to BIG W, along with a further reduction of losses in FY19.The stock got closed at $33.750 per share with PE multiple of 26.29x as on 21^st May 2019. With respect to the stock’s past performance, it had provided a return of 9.95%, 21.37%, 22.09% on one -month, three month, and six-month charts, respectively. The company’s annual dividend yield stands at 2.73%. Additionally, the company would also be focusing on its safety performance. Hence, considering the above factors and outlook, we maintain our “Hold” rating on the stock on the current market price of A$33.750 per share (down 3.073% on 21^st May 2019).
 

Crown Resorts Limited

Termination of Confidential Discussion with Wynn Resorts: Crown Resorts Limited (ASX: CWN) is into casino and gaming along with businesses and investments in key international markets with a market capitalisation of ~A$8.82Bn as on 21^st May 2019. On 10^th April 2019, the company, by release, updated the market about the announcement made by Wynn regarding the termination of all discussions with Crown regarding any transaction.

A Quick Look at Half Yearly Results: The Crown Resorts Limited reported normalised NPAT, which is attributable to the parent, amounting to $194.1Mn, reflecting a growth of 0.9%.Additionally, the company also presented NPAT, attributable to the parent, stood at $174.9Mn, depicting a growth of 9.9% before significant items in the pcp. CWN also declared an interim dividend of 30 cents per share in 1H FY 2019.

With respect to Australian resorts performance, the company reported that nomalised revenue witnessed a fall of 1.2% and stood at $1,536.7Mn.The non-gaming revenue stood at $400.9Mn, depicting a rise of 2.8%.


Crown Resorts Limited Group Result (Source: Company Reports)

What to Expect from Crown: The company is planning to continue to improve the underlying performance of Crown Melbourne and Crown Perth. The company has maintained its strategy of focusing towards Australian operations and development projects as well as maximising the shareholder returns which might attract the attention of the investors moving forward.

Stock Recommendation: Crown Resorts Limited would continue to grow Crown Digital, which includes wagering and online social gaming.With respect to the stock’s past performance, it delivered a return of 12.81% and 12.33% in the past three-months and six-months, respectively. While on a YTD basis the stock offered a decent return of 11.37%. The company is having an annual dividend yield of 4.6% which can be considered at decent levels. Hence, considering the aforesaid facts and decent outlook, we give a “Buy” rating on the stock at the current market price of A$12.970 per share (down 0.46% on 21^st May 2019).   

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