18 Sharing Tips – September 12, 2022
Jabin Hallihan, Morgans
Silk Logistics Holdings (SLH)
This integrated logistics provider recorded an underlying group net profit after tax of $15.8 million in fiscal 2022, an increase of 45% compared to the corresponding period. SLH continues to evaluate merger and acquisition opportunities as a way to add additional capacity in port and contract logistics. Management has also signaled the likelihood of adding more warehousing sites to bolster the business. Our price target is $3.50.
Lovisa Holdings (LOV)
This fashion jewelry and accessories retailer has developed a vertically integrated business model capable of responding quickly to changing trends. The company offers a wide range of products and achieves high gross margins. Investors have reacted positively to its result for the 2022 financial year. LOV offers good prospects.
Smartgroup Corporation (SIQ)
SIQ provides salary conditioning and fleet management services. Despite vehicle supply disruptions, SIQ reported revenue of $113.6 million in its 2022 half-year result, up 4% from the corresponding period. In our opinion, SIQ is undervalued.
Woodside Energy Group (WDS)
The energy giant posted a strong result in the first half of 2022, with earnings beating consensus. The company posted underlying net profit after tax of $1.819 billion, up 414% from the prior corresponding period. It paid an interim dividend of $1.09 per share, up 263%. WDS reached our price target, so we downgraded the addition of a hold.
Oz Minerals (OZL)
This copper and nickel miner has rejected a conditional and non-binding buyout offer from BHP Group at $25 per share. OZL’s board believes that BHP’s proposal significantly undervalues its company. Investors may consider holding stocks for a possibly higher bid, while reducing their holdings to cash in on capital gains. OZL was trading at $26.28 on September 8.
Viva Energy Group (VEA)
The company supplies approximately 25% of Australia’s fuel needs. VEA published an impressive result in the first half of 2022. The group’s EBITDA of $611.7 million exceeded the consensus of $562 million. The interim dividend of 13.7 cents was also above consensus. In our view, the company is trading near the top of the cycle, so we suggest investors consider trimming their holdings.
Tony Locantro, Alto Capital
This explorer has published high-grade copper results from the Jericho project, southeast of Cloncurry in Queensland. Drill data from 56 holes will be incorporated into a revised mineral resource estimate expected at the end of October 2022. Jericho has an existing resource of 9.1 million tonnes at 1.4% copper. In our view, the stock is highly speculative and suitable for investors with a risk appetite.
International Proteomics Laboratories (PIQ)
Proteomics International and Sonic Healthcare USA have signed a binding and exclusive letter of intent regarding an exclusive license for PromarkerD in the United States. The PromarkerD blood test can predict kidney function decline in type 2 diabetes. An early blood test for endometriosis showed encouraging signs with 78% accuracy. This adds to the pipeline for PIQ.
Evolution Mining (EVN)
Underlying after-tax profit of $274.7 million for fiscal 2022 was down 22% from the prior corresponding period. The gold producer declared a fully franked dividend of 3 cents. As conditions remain challenging for gold producers in response to the impacts of COVID-19 and rising costs, EVN is well positioned for a recovery.
Maronan Metals (MMA)
In August, MMA launched its first exploration drilling program at its flagship Maronan project near Cloncurry in northwest Queensland. The Maronan project contains 30.8 million tonnes at 6.5% lead and 106 grams per tonne silver. The project has 11 million tonnes at 1.6 percent copper and 0.8 grams per tonne gold. The drilling aims to test possible extensions of the reported resources.
Woolworths Group (WOW)
The supermarket giant’s share price rose from $32.88 on June 20 to $36.57 on September 8. The group’s net profit after tax of $1.514 billion in the 2022 financial year increased by 0.7% compared to the previous corresponding period. Although cost pressures have eased, we are concerned about the impact of widespread increases in the cost of living on its customers in the future.
West Farmers (WES)
The company reported net income after tax of $2.35 billion in fiscal 2022, down 2.9% from the prior corresponding period. COVID-19 had an impact on the result in the first half. Hardware giant Bunnings did well. The company declared a fully franked dividend of $1. In our view, a strong stock price in a headwind environment provides an opportunity for profit taking.
Christopher Watt, Bell Potter Securities
The Lottery Corporation (TLC)
Formerly part of Tabcorp, TLC is a high quality company with reliable revenue. It posted a record result for the 2022 financial year, with revenues up 9.4% compared to the previous corresponding period. TLC improved its profit margins. The company is targeting new domestic and foreign acquisitions. In our view, TLC has strong earnings characteristics in its lottery and keno divisions. Cash generation is attractive.
Mirvac Group (MGR)
Mirvac is one of Australia’s largest residential developers. MGR draws on its portfolio of high quality assets with low leverage and exposure to apartments, which we believe could be a favorable part of the residential market in the near term. It has a significant advantage thanks to a $30 billion development pipeline, despite the potential for declining asset values.
JB Hi-Fi (JBH)
The consumer electronics giant posted a strong result for fiscal 2022. The company revealed a robust business update in July. Despite several interest rate increases, we have yet to see the impact on JB Hi-Fi sales, although we expect momentum to likely slow in fiscal 2023.
REA Group (REA)
We expect REA Group to continue to leverage its dominant position in Australia’s online property listings market with the aim of increasing revenue, profit margins and expanding internationally. Despite this, REA faces a challenging macro-economic backdrop of lower house prices and deteriorating economic conditions. Therefore, it may impact performance if real estate sales volumes decline.
Zip Co (ZIP)
This Buy Now, Pay Later (BNPL) company posted a net loss of $1.1 billion in fiscal 2022. Reducing cash burn is part of the company’s strategy. The company has decided to close its operations in Singapore and the UK. The company is ending its non-essential products. We view the BNPL sector as highly competitive and subject to further regulation.
Platinum Asset Management (PTM)
Platinum is an Australian investment manager specializing in international equities. The underlying funds have performed well over the long term. But in recent times, the company has seen exits. In August 2022, Platinum recorded net outflows of approximately $99 million. We prefer others at this stage of the cycle.
The recommendations above are general advice and do not take into account an individual’s goals, financial situation or needs. Investors are advised to seek their own professional advice before investing. Please note that TheBull.com.au merely publishes broker recommendations on this page. The publication of these recommendations does not constitute an endorsement by TheBull.com.au. You should seek professional advice before making any investment decision.