Weekly Wrap 28 August

Bell Direct
August 28, 2020

We saw 35 companies report this week, the busiest reporting season week in August. Most results came in line or beat expectations, while a handful of reports dragged the chain.

In this week’s wrap, Jessica covers:

  • (0:09) Reporting Season’s final dash
  • (0:19) Sectors: Tech shines, while Utilities dampen
  • (0:55) Who beat, who met, and who missed expectations?
  • (2:52) The reporting season big picture
  • (3:21) Results to watch next week: Bubs Australia (ASX:BUB) and Cooper Energy (ASX:COE)
  • (3:48) Ex-dividend dates coming up including: Ansell (ASX:ANN), Steadfast Group (ASX:SDF) and Amcor (ASX:AMC)
Read Transcript

Thanks for your company for the weekly wrap this Friday the 28th of August.

I’m Jessica Amir, a market analyst with Bell Direct.

Well reporting season made its final dash this week, 35 companies release results ahead of the season wrapping up Monday next week.

Most results beat or met expectations, tech stocks shone the brightest.

Better than expected economic news, construction and private spending data also boosted sentiment.

As a result, trading levels spiked to their highest levels in nine weeks and the ASX200 tested out a new two-month high.

But with damp and disappointing report cards from utilities and energy stocks, the market lost a touch of shine but the ASX200 managed to hang on to a weekly gain of 0.3% as the close of trade Thursday.

Of the 35 companies that reported this week, 15 beat market expectations and they included the likes of Adelaide Brighton (ASX:ABC), AMA Group (ASX:AMA), Afterpay (ASX:APT), Cleanaway Waste Management (ASX:CWY), Impedimed (ASX:IPD), Jumbo Interactive (ASX:JIN), Moneyme (ASX:MME), Perseus Mining (ASX:PRU), Readytech Holdings (ASX:RDY), Reece (ASX:REH), Seven Group (ASX:SVW), Whisper (ASX:WSP) and Worley Parsons (ASX:WOR).

Now of those, Afterpay shares soared 16% to a new record high, rubbish business Cleanaway Waste Management shares cleaned up 14% to a 12 year high seeing them both take a top spot on the ASX200 performance table.

But if you step back and looked at all the companies that outperformed a common theme is tech, with innovative companies bringing home the bacon.

You can see cloud CRM business Whisper in the mix, as it delivered much stronger revenue and earnings.

You’ve got Afterpay, seeing online customers double in a year with customers rising 21,000 from April to June alone.

Online gambling company Jumbo Interactive reporting elevated customer spending levels and Readytech, the online student management company, saw stronger earnings and subscribers than the market expected.

Now if you move to the 14 companies this week delivering results in line with analysts expectations known as consensus, they included Accent (ASX:AX1), Cardno (ASX:CDD), Eagers Automotive (ASX:APE), Flexigroup (ASX:FXL), Frontier digital ventures (ASX:FDV), National Storage (ASX:NSR), Platinum Asset Management (ASX:PTM), Polynovo (ASX:PVN), Regis Resources (ASX:RRL), Spark New Zealand (ASX:SPK), Steadfast Group (ASX:SDF) and Western Areas (ASX:WSA).

Looking at the six companies that disappointed, they included Bravura Solutions (ASX:BVS), Home Consortium Ltd (ASX:HMC), Japara Healthcare (ASX:JHC), Lovisa (ASX:LOV) and Whitehaven Coal (ASX:WHC) fell 27% dragging its shares to a four year low seeing it book a seat at the worst weekly performers table.

While Bravura (ASX:BVS) fell 17% this week.

Australia’s biggest gas and electricity company APA Group (ASX:APA) fell 6%.

Both of their biggest falls since COVID-19 emerged.

So how does this fit into the big picture?

Well of the 237 companies that reported so far, the overwhelming majority 44% have been in line with market expectations.

38% nicely surprised, 17% didn’t deliver the goods.

The market is continuing to navigate the uncertainty caused by COVID-19, however the structural shifts formed of how we’re now living our lives has unveiled some excellent investing opportunities.

Now moving to what to watch next week, companies reporting include organic baby and goat milk business Bubs Australia (ASX:BUB), they report on Monday.

The market’s expecting a $4.9 million loss.

Bubs is a Citi and Bell Potter rated speculative hold stock with a $1 target.

On the same day, Cooper Energy (ASX:COE) reports results, markets expecting a $5.5 million loss.

COE is a Citi hold stock with a $45 price target.

Companies that are going ex-dividend next week include on Monday Ansell (ASX:ANN), Alumina (ASX:AWC), Bingo (ASX:BIN) and Fortescue Metals (ASX:FMG).

On Tuesday Australian Ethical Investments (ASX:AEF), Steadfast (ASX:SDF), Super Retail Group (ASX:SUL).

Wednesday Amcor (ASX:AMC) Iress (ASX:IRE), Treasury Wine Estate (ASX:TWE) and on Thursday, Altium (ASX:ALU), BHP (ASX:BHP) and Perpetual (ASX:PPT).

So what do you need to know about these?

Well with interest rates so low, investors are looking for income in the share market.

But keep inmind if you are moving money from other asset classes like from your cash in your bank account and putting it into shares, this carries risk.

So take care when adjusting your investment portfolio and always ensure that you’re not moving away from your longer term goals, always remember set a goal, set a time frame, keep your costs low and diversify.

So what else to watch next week?

Well on the economic side of things, the RBA meets on Tuesday, rates expected to remain on hold at 0.25% and economic data or GDP is out for the second quarter of 2020 on Wednesday.

Remember first quarter GDP fell 0.3% but Q2 is tipped to be the darkest yet spelling out how COVID-19 halted economic activity from April to June.

Now some estimates that GDP will fall 8% but the RBA forecasts GDP to slide 6%.

Citi’s expecting a fall of 6.5%, most of the pain likely to come from services and construction which was impacted by lockdowns.

But think about what the world’s peak economic body, the OECD, is predicting for our peers, well they’re predicting GDP to fall by 22% in the UK and Q2 and by 10% in the U.S. so Australia looks like it’s in much better shape.

On behalf of everyone here at Bell Direct, have a happy and safe weekend.

I’m Jessica Amir, look forward to seeing you next week.

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