National Australia Bank Ltd
Sound first quarter FY 18 performance with a drop of 23% in the bad and doubtful debt charges:National Australia Bank Ltd.’s (ASX: NAB) stock rose 2.37% on February 08, 2018 after the company reported 3% growth in the cash earnings for the first quarter of FY 18. The bank has in the first quarter of FY 18 posted unaudited statutory net profit of A$1.65 billion. The revenue grew by 1% due to the strong growth in Business and Private Banking, and Corporate & Institutional Banking revenue. Further, there is a decline of 23% in the bad and doubtful debt charges to A$160 million for the period. There is an improvement in the asset quality as the ratio of 90+ days past due and the gross impaired assets to gross loans and acceptances decreased 5bps to 0.67%. This is due to the continued improvement in the conditions for New Zealand dairy customers. Additionally, at 31st December 2017, the group common equity tier 1 (CET1) ratio was 10.2%. While the FY18 expenses will grow 5-8%, the bank is optimistic of growing across many avenues and will flatten the costs over FY19-20. On the other hand, NAB stock has fallen 10.91% in three months as on February 07, 2018, but is trading at a reasonable P/E. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $28.90
1Q FY 18 Financial Performance (Source: Company Reports)
AMP Ltd
Turnaround to profit:AMP Ltd.’s (ASX: AMP) stock rose 3.58% on February 08, 2018 after the company reported 347% rise in FY17 statutory profit and 114% on an underlying basis. The profits grew due to the recovery in Australian wealth protection earnings and strong operating earnings growth from AMP Bank (+17%) and AMP Capital (+8%). The revenue grew 24% to $18.4 billion. AMP has underlying return on equity of 14.3 per cent in FY 17 and is moving towards the target of 15 per cent in FY 18. However, AMP’s Australian Wealth Management business, which is the largest unit by profit has posted a profit of $391 million for the FY 17, compared to $401 million last year. The fall in profit is due to the lower fees earned inside Superannuation, as Australians transition to MySuper products, as well as due to a reset in fee agreements with AMP Capital. Additionally, AMP has announced the final dividend of 14.5 cents a share, franked at 90 per cent. Meanwhile, AMP stock looks little “Expensive” at the current price of $5.21
FY 17 Financial Performance (Source: Company Reports)
Tabcorp Holdings Ltd
58.2% fall in the statutory profit for 1H FY 18: Tabcorp Holdings Ltd.’s (ASX: TAH) stock fell 6.8% on February 08, 2018 after the company reported for 58.2% fall in the statutory profit in the 1H FY 18. The profit fell due to the tough market conditions that led to buying lottery operator Tatts Group for $4.7 billion. Additionally, TAH has cut its interim dividend to 11 cents per share, from 13 cents a year earlier. Overall, TAH is reshaping the business, which includes implementing the combination with Tatts, exiting Luxbet and Odyssey Gaming Services, and the company’s ongoing investments in areas such as the digital capability, customer acquisition and the risk management and compliance framework. Moreover, TAH has planned at least $130m per annum of EBITDA synergies and business improvement benefits to be delivered in the first full year after the integration. The integration is planned to take approximately two years. Meanwhile, TAH stock has risen 13.30% in three months as on February 07, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $4.76
1H 18 Group Financial Performance (Source: Company Reports)
Mirvac Group
Share buy-back and reaffirmation on operating EPS guidance for FY18: Residential developer, Mirvac Group’s (ASX: MGR) stock edged up slightly after the company announced share buy-back and reaffirmed operating EPS guidance for FY18. MGR has planned to commence an on-market buy-back program for up to 2.6 per cent of MGR securities on issue, which is a part of a disciplined capital allocation strategy. The buy-back is expected to start on 23 February 2018, and to remain in place for 12 months. Moreover, for FY 18, MGR has reaffirmed operating EPS guidance of between 15.3 cents and 15.6 cents per stapled security, which represents the growth of between 6 and 8 per cent. The company has also reaffirmed the distribution guidance of 11.0 cents per stapled security, which is a growth of 6 per cent. However, in the first half of FY 18, the company has reported the statutory profit of $465 million compared to the $508 million in the corresponding period last year. The profit fell due to the lower property revaluation gains in the investment portfolio compared to the prior corresponding period, as well as the timing of residential lot settlements, which is in line with the company’s expectations. As a result, MGR stock has fallen 16.33% in three months as on February 07, 2018 and is trading at a low level. Given the mix of updates, we put a “Hold” recommendation on the stock at the current price of $2.06
Rio Tinto Ltd
US$1.0 billionShare buy-back programme: Rio Tinto Ltd.’s (ASX: RIO) stock fell after the company announced the share buy-back programme. The company will initiate a US$1.0 billion share buy-back programme of Rio Tinto plc’s ordinary shares of 10 pence each. This is in addition to the US$1.925 billion on-market buy-back of Rio Tinto plc shares, of which US$195 million has been completed to date. The remaining amount under the programme is expected to be completed by December 2018. Moreover, for 2017, RIO has declared the cash returns to shareholders of $9.7 billion, which includes $5.2 billion of record dividends, including the final dividend of $3.2 billion. In 2017, RIO has reported 69% growth in the underlying earnings to $8.6 billion. The consolidated sales revenues for FY 17 were $40.0 billion, $6.2 billion higher than 2016, primarily due to the higher average commodity prices. The EBITDA margin grew to 44 per cent in 2017, compared with 38 per cent in 2016. Meanwhile, RIO stock has risen 18% in six months as on February 07, 2018 and is trading at slightly high levels. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $77.54
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.