JB HI-FI Limited

JBH Details

Healthy Performance and Dividend Growth: JB HI-FI Limited’s (ASX: JBH) stock climbed up 5.774 per cent following the release of its full-year results wherein NPAT recorded decent growth of 12.3 per cent to $233.2 million in FY18 as compared to the prior year. Total sales grew by 21.8 percent and amounted to $6,854.3 Mn in FY18 over the last year. It was mainly driven by the strong sales performance of JB HI-FI Australia (9.4% Y-o-Y) and the Good Guys (67.0% Y-o-Y) with the support of higher demand of communications, computers, Audio, Games Hardware, Drones, Home Appliances, and Consumer Electronics categories during the same period. Resultantly, the Board of Directors declared a final dividend of 46 cents per share fully franked, bringing the total dividend for FY18 to 132 cps, up 14 cps on the prior year and in line with the current Group dividend payout ratio of 65%. It will be paid on 7 September 2018 with the record date of 24 August 2018. However, the Board believes that the dividend payout ratio of 65% is an adequate balance between the distribution of profit to shareholders and reinvestment of earnings for future growth.


FY18 Financial Performance Overview (Source: Company Reports)

Besides this, the group recently announced the appointment of Cameron Trainor to the newly created position of Managing Director Group Merchandise. In this role, Cameron will have overall responsibility for the strategic direction of the merchandise function across the entire group comprising the JB HI-FI, The Good Guys, and JB HI-FI Solutions businesses. Group Chief Executive Officer, Richard Murray, will act as interim Managing Director of the JB HI-FI business pending the appointment of a replacement. Meanwhile, the share price has risen 5.17 per cent in the past three months as at August 13, 2018 and is trading at mid of 52-week high and low levels. The stock has seen a 19.11% of the short position as at August 08, 2018. Based on full-year performance and considering challenging conditions in the Home Appliances market, we maintain our “Expensive” recommendation on the stock at the current market price of $ 24.730.
 

JBH Daily Chart (Source: Thomson Reuters)
 

Magellan Financial Group Limited

MFG Details

Expense Guidance for 2019: Magellan Financial Group Limited’s (ASX: MFG) stock tumbled 3.612 per cent on August 14, 2018 and this may be owing to some profit booking looking at the already high levels. Recently it announced expense guidance for 2019 in which the management expects total group expense (excluding non-cash amortization) to be approximately $105 Mn in FY19 (FY18: $101 Mn). This excludes non-cash amortization charges which are expected to be around $4.2 Mn in FY19. In the recent release on ASX, the company reported NPAT of $211.8 Mn that was up 8% on the PCP basis, with the company expensing the cost of the raising and loyalty bonus associated with the Magellan Global Trust listing. Meanwhile, the share price has risen 15.78 per cent in the past three months as at August 13, 2018 and is trading close to 52-week high level ($ 28.320). Hence, we maintain our “Hold” recommendation on the stock at the current market price of $26.950, considering the aforesaid facts and trading level.
 

MFG Daily Chart (Source: Thomson Reuters)
 

Westpac Banking Corporation

WBC Details

Update on Reinstatement to Official Quotation: Westpac Banking Corporation’s (ASX: WBC) stock climbed up 2.21 per cent on August 14, 2018 after the release of reinstatement to Official Quotation wherein the securities of WBCHBB have been reinstated to official quotation immediately. Due to an operational error by ASX, the securities of WBCHBB were placed into suspension after the close of trading on 10 August 2018. Besides this, the bank notified about the distribution/entitlement of a final dividend of Commonwealth Bank of Australia (CBA). The payment date is on or about September 28, 2018 while ex-distribution/entitlement date is August 15, 2018. WBC is an issuer of Self-Funding Instalments (“SFI”) over securities in Commonwealth Bank of Australia (CBA). On the other hand, the distribution of $0.1000 per security for SFI (Self-Funding Instalments) over securities in Tabcorp Holdings Limited (TAH) as mentioned in PDS (Product Disclosure Statement) and dividends will be applied to reduce the Completion Payment of the SFIs and will be paid on or about 14 September 2018 with the ex-distribution/ entitlement date of 15 August 2018. WBC has a sound asset quality with strong balance sheet and a decent CET1 capital ratio. The group now focusses on Wealth and SME to have more value. Meanwhile, the share price has fallen 2.03 per cent in the past three months as at August 13, 2018 and traded at reasonable PE level (12.01x) among its peer group. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $30.060, considering positive sentiments in the market along with decent fundamentals.
 

WBC Daily Chart (Source: Thomson Reuters)
 

Domino's Pizza Enterprises Limited

DMP Details

Unable to Meet its Profit Guidance for FY18: Domino's Pizza Enterprises Limited’s (ASX: DMP) stock tumbled 6.524 per cent on August 14, 2018 after the release of FY18 results. The market seems to be disappointed with FY18 earnings which is below the guidance for overall business performance. However, the company recorded positive same stores sales (SSS) for Australia (+4.5%), Europe (+5.7%) and Japan (+0.9%) against the previous year, but it lays on below the guidance of 6-8%, 6-8%, 0-2%, respectively for the full year.


FY18 Guidance Assessment (Source: Company Reports)
 
Meanwhile, the share price has risen 24.63 per cent in the past three months as at August 13, 2018 while the group is under the short-selling radar with over 15.15% short positions (as per the ASIC report of August 08, 2018). Based on foregoing, we give a “Sell” recommendation on the stock at the current market price of $49.00.
 

DMP Daily Chart (Source: Thomson Reuters)

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