Every February and August, Wren Advisers collects data from ASX-listed companies as they report their yearly and half-yearly results. For the period to 30 June 2020, the news was mostly poor as you might expect but there were also some curious trends.
|For period to: 30 June 2020||Current||10 Year Average|
|Companies in sample||259||232|
|Median sales (%)||4.2||6.5|
|Median Pre-Tax Profit (%)||-17.3||4.6|
|Median Net Profit (%)||-20.8||3.6|
|Median EPS growth (%)||-21.6||2.3|
|Median Net Margin (%)||10.0||10.9|
|Median Dividend Yield (%)||5.3||4.9|
As you can see, yearly revenue growth was relatively solid at 4.2% but from there on the numbers get worse. Net profits were down by 21%, around 30% of stocks reported a loss and a near-record high 46% of companies cut their dividend.
By far the best individual performers were gold companies. Most announced profit increases of at least 40% and the cash flows they are generating are remarkable. Very few have any net debt.
Among the other standout performers were Temple & Webster (TPW), Hansen Technologies (HSN), Domino’s Pizza (DMP), Fortescue Metals Group (FMG), Bingo Industries (BIN), The A2 Milk Company (A2M), Austal (ASB), Codan (CDA) and Costa Group Holdings (CGC).
A few other trends are also worth mentioning:
- The gold price averaged US$1,561 per ounce in FY20. It is currently 24% higher at US$1,931 per ounce so the numbers for FY21 are very promising at this stage.
- At the other end of the spectrum are energy stocks where most companies reported dismal results. Senex Energy (SXY), Woodside Petroleum (WPL), Oil Search (OSH) and Santos (STO) all posted losses while earnings at Whitehaven Coal (WHC) and Origin Energy (ORG) were down by more than 90%.
- Investors are paying up for stocks that seem to offer ‘blue sky.’ Technology-based companies like Pointsbet Holdings (PBH), Class (CL1), WiseTech Global (WTC), Adacel Technologies (ADA) and Hansen Technologies (HSN) all had share price moves of greater than 20% on their profit announcement.
And finally a brief word on the banks. Although only Commonwealth Bank (CBA) and Bendigo & Adelaide Bank (BEN) released their full-year results during August, both reported falling cash profits, had lower interest margins and cut their dividends.
The other operating metrics don’t look dire and bad debts are well under control for the time being. However the loan moratoriums will have to be wound back eventually and credit growth was only 2.4% in the year to July 2020.