February and August are the two biggest months in the stockbroking calendar because that’s when most ASX-listed companies release their half-yearly or annual reports. The ‘reporting season’ is vital for giving investors an up-to-date peek into how their businesses are traveling.
This year we collected earnings results for 293 ASX companies for the period ending 30 June 2019. The key takeaway is that while business conditions are not particularly great at the moment, they’re not as bad as some of the pessimists had feared. Sales revenue was up a solid 8.0% on a year ago – thanks largely to big gains in the resources sector – but rising costs saw total profits and margins stagnate.
This didn’t seem to trouble investors though with most companies enjoying an average share price gain of 0.6% on the day of their profit announcement.
A key reason for their contented mood is that ASX boards really cranked up dividend payments in FY19. The payout ratio – the percentage of company earnings paid out as dividends – rose to 66.7% in the latest period which is well above the long-term average of 52.6%.
What also stood out was that nearly every industry sector had a selection of champion performers, even those like retailing and property which are not popular from a macroeconomic view. Some of the notable ones were Premier Investments (PMV), Baby Bunting (BBN), Webjet (WEB), Goodman Group (GMG), Helloworld Travel (HLO) and Lovisa Holdings (LOV).
Engineering and mining services stocks also shone, especially WorleyParsons (WOR), Ausdrill (ASL), Mastermyne Group (MYE), Macmahon Holdings (MAH) and Imdex (IMD).
Others that really caught our eye were shipbuilder Austal (ASL), patent manager IPH (IPH), computer consultancy Data#3 (DTL), plumbing goods supplier Reliance Worldwide Corp (RWC), Sonic Healthcare (SHL), Treasury Wine Estates (TWE) and CSL.