20 stocks to watch this February ASX reporting season

LiveWire01-25

The Australian research team at Morgans has provided a comprehensive preview ahead of the first-half 2023-2024 reporting season. Prepared by analysts Alexander Mees, Andrew Tang, and Tom Sartor, it ...

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Prepared by analysts Alexander Mees, Andrew Tang, and Tom Sartor, it ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/20-stocks-to-watch-this-february-asx-reporting-season\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>20 stocks to watch this February ASX reporting season</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n20 stocks to watch this February ASX reporting season\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-01-25 09:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/20-stocks-to-watch-this-february-asx-reporting-season><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The Australian research team at Morgans has provided a comprehensive preview ahead of the first-half 2023-2024 reporting season. Prepared by analysts Alexander Mees, Andrew Tang, and Tom Sartor, it ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/20-stocks-to-watch-this-february-asx-reporting-season\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"CL","symbol_name":"高露洁","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/20-stocks-to-watch-this-february-asx-reporting-season","article_id":"2406868402","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/20-stocks-to-watch-this-february-asx-reporting-season","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2406868402","pubTimestamp":1706144404,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"The Australian research team at Morgans has provided a comprehensive preview ahead of the first-half 2023-2024 reporting season. Prepared by analysts Alexander Mees, Andrew Tang, and Tom Sartor,it includes a look at where Morgans expects to see earnings growth, including a handful of ASX cyclical names.  The report also assesses different parts of the market including small-caps and troubled sectors such as the A-REIT space.Rising rates, recessionary fears and weak investor sentiment provided plenty of reasons for investors to hide in defensives in 2023. However, as conviction around a cyclical peak in interest rates firmed, a rotation to growth and cyclicals ensued late in the year with defensives all underperforming the ASX 200. We continue to favour a rotation away from defensives  as earnings growth broadens across the market.Avita Medical . We expect guidance to be hit. 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Prepared by analysts Alexander Mees, Andrew Tang, and Tom Sartor, it includes a look at where Morgans expects to see earnings growth, including a handful of ASX cyclical names.  The report also assesses different parts of the market including small-caps and troubled sectors such as the A-REIT space.\nWe think the tide is turning for small-caps, and now is an opportune time to build exposure to forgotten small-caps including Helloworld (ASX: HLO), Credit Corp (ASX: CCP), IPH Limited (ASX: IPH), Clinuvel (ASX: CUV), Veem (ASX: VEE), Vulcan Steel (ASX: VSL) and DGL Group (ASX: DGL).\nWe update our strategy heading into February. First, on the back of the late surge in 2023, we advocate being opportunistic on pullbacks. Second, given the ongoing macro concern, we do not think the “focus on fundamental” regime is over - anything other than a path back to historically low rates and plentiful liquidity is likely to keep investors on the hunt for near-term cash and earnings generation. And last, cyclicals typically find valuation support as interest rates come down, providing an attractive alternative to growth and defensives.\nRising rates, recessionary fears and weak investor sentiment provided plenty of reasons for investors to hide in defensives in 2023. However, as conviction around a cyclical peak in interest rates firmed, a rotation to growth and cyclicals ensued late in the year with defensives all underperforming the ASX 200. We continue to favour a rotation away from defensives (telco, staples) as earnings growth broadens across the market.\nLook below the surface – solid earnings growth on offer\nWe see the S&P/ASX 200 index rangebound in 2024. FY24 EPS is forecast to decline 5% before rebounding 5% in FY25, leaving the heavy lifting down to P/E multiple expansion, but at 16x vs the 14.5x 20-year historical average, there is limited scope for further expansion barring a sharp retreat in interest rates. \nWhile we do not expect the index to do much at the headline level, high-level numbers conceal significant variation across sectors. Cyclicals including consumer and commercial services, media, retail and capital goods offer mid-to-high EPS growth into FY24 at lower relative valuations.\nCyclical stocks that look interesting include Acrow (ASX: ACF), GQG Partners (ASX: GQG), Alliance Aviation (ASX: AQZ) and Santos (ASX: STO).\n\nAmong some of the key results we’re watching for this earnings season, some of the names we expect to provide positive updates include:\n\nAvita Medical (ASX: AVH) (Add, $4.32, PT$6.40). We expect guidance to be hit. With revenue growth of 45-48%, the expanded indication into full-thickness skin defects represents 10x the market size of burns alone. We think this underpins a significant runway for growth in coming years and expect management to guide quarterly and full-year revenue, as well as profitability.\nA2 Milk (ASX: A2M) (Add, $4.59, PT$5.40) 1H was a period of uncertainty but consensus looks too low. Given the transition to the new GB standards for China Label (CL) IF, we forecast a flat revenue and EBITDA outcome in the 1H. Visible Alpha forecasts 1H EBITDA to fall 5.4%. Modest NPAT growth reflects rising interest rates given A2M’s material net cash position. Solid cash flow generation is expected.\nAcrow (ASX: ACF) (Add, $1.11, PT$1.22) Positive momentum to continue. Following four earnings upgrades in FY23, FY24 EBITDA guidance for 38% growth (at the midpoint) implies another strong year ahead. Focus will be on organic growth opportunities as well as the performance of the MI Scaffold acquisition announced in November.\nSome of those for which we expect negative updates are:\nMegaport (ASX: MP1) (Hold, $9.40, PT$10.00) MP1’s Q2 trading update, which will be released on 30 January, is expected to be tough. This quarter is a seasonally weaker period combined with costs lifting on new sales hires and increased marketing costs. The cadence of sales should lift around Q4. However, MP1 shares could still react negatively to a weak Q2 result.\nPro Medicus (ASX: PME) (Hold, $58.06, PT$51.00) On outlook commentary. No guidance is anticipated in line with the historical stance. No risk to the outlook being anything other than positive, but this is no different from prior reports. Given the stock is trading at historical highs, either a convincing result beat and/or outlook commentary may require a bit more colour to sustain valuation.\nThe Star Entertainment Group (ASX: SGR) (Add, $0.51, PT$0.70) All about the outlook. 2H24 holds particular interest as potential benefits from direct international flights from China may start to materialise. If the company fails to convey positive developments, we believe the impact on the share price may be limited, given its continued weakness.\nValuations, earnings and momentum health check\n\nAggregate valuations: On an absolute basis, the ASX 200 (ex-Resources) is trading at a 5% premium to its 10-year average 12-month forward PE multiple. It’s fair to suggest market multiples should also trade at lower cruising altitudes now relative to portions of the last decade when global interest rates were close to zero. On a relative basis, both the risk premium (earnings yield) and the dividend yield premium that equities offer over and above risk-free rates continue to look skinny. That means the compensation that investors are receiving for taking on equity risk is insufficient, in our view, at current levels.\nGrowing expectations of rate cuts in 2024 have driven recent moves. We’re cautious about the risk that delays to the rate-cutting cycle could easily pare back equity market performance just as quickly – particularly at the aggregate level – as the December rally occurred.\nEarnings momentum: Should the moderation in rates be delayed, then the ever-sharper focus will fall onto earnings per share growth as the other key ingredient to value.\nMarket earnings forecasts have slipped as we head into February, although this has been a consistent theme in recent years. \nForecast EPS growth for FY25 has slipped to 4.0% (from 6.5%). While both are underwhelming relative to EPS growth seen through the 2021-22 post-pandemic recovery years (+10-15%), these growth rates are only marginally below the long-term historical EPS growth rate for ASX Industrials of 6%.\nThere are also pockets of positivity within these forecasts. Consensus FY24 EPS forecasts for Housing (+2.5% sector aggregate), Retail (+3.2%), Contractors (3.3%) and Gaming (+2%) have all been upgraded modestly since the last reporting season.\nWe think investors can take comfort from a reasonably resilient earnings outlook. The conservatism built into market earnings expectations since the pandemic also appears to remain in place, providing some margin of safety on the EPS side of valuation equations.\nThe risk of hiding in defensives\nRising rates, recessionary fears, and weak investor sentiment provided plenty of reasons for investors to hide in defensives in 2023. However, as conviction around a cyclical peak in interest rates firmed, a rotation to growth and cyclicals ensued late in the year with defensives (Utilities, Staples, Telecommunications) all underperforming the ASX 200.\nInvestor crowding pushed defensive valuations well beyond what would be considered reasonable. August reporting season highlighted the risk that elevated expectations carry and that any disappointment will be met with backlash from investors. \nDespite the recent underperformance, we still find difficulty justifying the defensive premium if conditions don’t fall away rapidly. In a surprisingly resilient economic environment, we continue to favour a rotation into cyclicals and believe it provides the best risk/return given superior earnings and valuation metrics.\nTime to rethink REITs\n\nREITs were the best-performing sub-sector of the ASX200 in late 2023 on broadening views that the rates cycle in major economies has likely peaked and that material rate cuts are possible in 2024. While we still see some earnings risk in Retail and Office that could weigh on the sector and valuations on the balance sheets that could fall in 2024, the downside looks more than priced in when we look at discounts to NTA of 20-40%. We also expect strong balance sheets to help buffer any falls in book values. Our preferred A-REITs are Goodman Group (ASX: GMG), Qualitas (ASX: QAL), HomeCo Daily Needs REIT (ASX: HDN) and Dexus Industrial REIT (ASX: DXI).\nThe above article is an excerpt based on Morgans' full 150-page report.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2406868402"}