TOL - 4th Sep, 2024
The 2024 Reporting Season: 8 Key Insights
Financial markets provide opportunity to increase exposure to some good and great Australian businesses.
As we wrap up the August 2024 reporting season, several key trends and economic conditions have emerged across various sectors, reflecting the diverse pressures and opportunities currently influencing the Australian market.
1. Real Estate & Housing
The housing market continues to face significant supply constraints, driving up prices and limiting new developments.
Key Stock Insights:
- REA Group (REA): Listing volumes are improving, supported by strong market demand.
- Mirvac (MGR): Housing supply remains incredibly restricted, highlighting ongoing challenges.
- Stockland (SGP): New home enquiry levels are stable, with signs of potential growth despite broader market challenges.
2. Financials & Insurance
Rising interest rates and economic uncertainty are leading to increased financial stress among consumers.
Key Stock Insights:
- CBA: Personal loan arrears have reached a three-year high, indicating potential stress in consumer finances, though Baby Boomers demonstrate strong saving behavior.
- QBE: The company anticipates a slowdown in double-digit insurance premium growth as the market approaches saturation.
- ANZ: An increase in 90+ day past due loans, especially with fixed loan expiries rising, suggests potential future credit risks.
3. Consumer Goods & Retail
Consumer spending remains cautious amid economic uncertainty, though specific niches continue to perform well.
Key Stock Insights:
- Nick Scali (NCK): Order count is slowing, reflecting broader caution in consumer spending.
- Super Retail Group (SUL): Sales in the auto and fishing categories are accelerating, driven by consumer interest in outdoor activities.
- JB Hi-Fi (JBH): Sales growth is not only holding but accelerating in Australia, showcasing resilience in the electronics retail sector.
4. Industrials & Manufacturing
The industrial sector faces mixed conditions, with strong demand in certain areas but pressure from rising costs and cyclical downturns.
Key Stock Insights:
- James Hardie (JHX): Home construction is outperforming, though pressure mounts from challenges in the Australian housing market.
- BlueScope (BSL): The company is experiencing a cyclical pullback in construction, with resilience in the auto sector despite softening manufacturing demand.
- Ansell: Elevated manufacturing and energy costs continue to impact the company’s bottom line.
5. Technology & Media
Digital transformation remains a driving force, with companies capitalizing on the shift towards online and safety-focused services.
Key Stock Insights:
- News Corporation (NWS): Digital segments continue to drive growth, underscoring the focus on future expansion in this area.
- Life360 (360): Safety concerns are fueling growth, reflecting a strong demand for security and monitoring services.
6. Commodities & Resources
The global commodities market is influenced by shifts in supply and demand, with particular pressure from rising costs and export dynamics.
Key Stock Insights:
- Sims Metal (SGM): China’s steel exports are rising rapidly, coupled with elevated freight costs, impacting global commodity pricing.
- Whitehaven Coal (WHC): Anticipated declines in coal supply could influence future revenue amidst shifts in global energy demands.
7. Infrastructure & Utilities
Strong government and private sector investments are driving robust activity in infrastructure projects.
Key Stock Insights:
- Seven Group (SVW): The company continues to capitalize on a strong infrastructure pipeline, highlighting ongoing demand and investment opportunities.
- Suncorp (SUN): Rising costs associated with natural hazards reflect the growing impact of climate change on the insurance sector.
8. Retail & Consumer Staples
Retailers face a mixed environment with pockets of growth, especially in discretionary and staple categories.
Key Stock Insights:
- Vicinity (VCX): Retail sales accelerated in the June quarter, though discretionary spending is on the decline.
- Dominos Pizza (DMP): Franchisee numbers are stabilizing after a period of decline, indicating potential recovery.
Summary: As we navigate these diverse economic conditions, it’s clear that while certain sectors face significant challenges, there are also areas of strong performance and opportunity.
We view the current environment as a great opportunity to increase exposure to many good and great businesses around Australia.
#Blackwattle #Quality #Investing
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Blackwattle is a new generation Australian Fund Manager that is dedicated to delivering exceptional investment outcomes. At Blackwattle, we will always invest our own capital alongside our clients.
Our skin-in-the-game approach ensures that we are personally invested in the portfolios we manage, demonstrating our unwavering alignment to our clients' success.
To date, we have committed $10m of our own personal capital. With a combined investment experience of over 135 years across our team, averaging 19.5 years per person. In aggregate, our teams have previously invested +$18.5bn of capital. Our investment philosophy centres investing in ‘Quality’ businesses and people, ensuring that our clients' capital is positioned for success.
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The information in this article has been prepared by Blackwattle Investment Partners Pty Limited (ABN 24 663 839 094) (BIP). BIP is a corporate authorised representative of Blackwattle Licensing Pty Limited (ACN 665 711 839 AFSL 547 617) (corporate authorised representative no. 001304362).
This article contains general information only and is not intended to promote or recommend any particular product or services offered by BIP. It has been prepared without taking into account the objectives, financial situation or needs of any investor. Before making an investment decision, investors should read the relevant offer document and seek professional advice to determine whether the investment is suitable for them.
This article is current as at the date indicated, and may be superseded by subsequent market events or for other reasons. No representation or warranty is provided as to the reliability or accuracy of the information contained in this article. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. All investments contain risk and may lose value.
Neither BIP nor its related bodies corporates guarantee the performance of any financial product or the return of an investor’s capital. Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct. Actual returns could differ significantly from any forecasts, estimates or projections provided. Past performance is not a reliable indicator of future performance.
Please contact BIP if you would like to know more about the products and services we offer.
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Blackwattle is a new generation Australian Fund Manager that is dedicated to delivering exceptional investment outcomes. At Blackwattle, we will always invest our own capital alongside our clients. Our skin-in-the-game approach ensures that we...
Expertise
No areas of expertise
Blackwattle is a new generation Australian Fund Manager that is dedicated to delivering exceptional investment outcomes. At Blackwattle, we will always invest our own capital alongside our clients. Our skin-in-the-game approach ensures that we...
Expertise
No areas of expertise
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