Weekly | JLG, TAH, APE - Impressive Earnings Defy Market Trends

As of the close on Friday,$S&P/ASX 200(XJO.AU)$ closed at 7,278.30 points, up 2.29% in the past 5 days.

During the last 5 trading days,  $Johns Lyng(JLG.AU)$ was up 17.46%; $TABCORP HOLDINGS LIMITED(TAH.AU)$ added 10.39%; $Eagers Automotive Ltd(APE.AU)$ was up 10.20%; $KAROON ENERGY LTD(KAR.AU)$ rose 10.18%; and $MINERAL RESOURCES LTD(MIN.AU)$ increased 10.02%.

1. $Johns Lyng(JLG.AU)$ +17.46% on strong revenue and earnings

Johns Lyng, insurance building and strata services firm, rallied on Tuesday following a strong year of revenue and earnings.

1) Strong Financial Results and Outlook

• The company reported impressive financial results for the period, including a 43.2% increase in revenue to $1.281 billion.

• Earnings before interest, tax, depreciation, and amortization (EBITDA) rose by 42.9% to $119.4 million.

• A final dividend of 4.5 cents per share, bringing the total dividend for 2023 to 9 cents, up from 5.7 cents in the previous financial year.

• Sales outlook expected to increase by 18.5% in the current period and EBITDA forecasted to rise by 20.1%.

2) Strategic Acquisitions

Johns Lyng completed six acquisitions during the 2023 financial year, with an additional three takeovers closing after June 30.

The company also mentioned that it is assessing additional strategic acquisitions, indicating growth and expansion plans.

3) Record CAT (Catastrophe) Results

The company benefited from increased business related to natural disasters, often referred to as "CAT events."

Contracts were won for repair work arising from floods in various Australian regions and a hurricane in the US.

This "record FY23 CAT result" is expected to contribute to the company's financial performance in future years, providing visibility and stability.

2.  $TABCORP HOLDINGS LIMITED(TAH.AU)$ +10.39% on $66.5 billion profit

Tabcorp Holdings soared 10.39% this week after the wagering company reported a $66.5 billion profit in FY23, marking the company's first full year of operation post-demerger.

• Net Profit After Tax (NPAT): Tabcorp reported a NPAT of AUD 66.5 million ($42.7 million) for FY23.

• Revenues: The company generated revenues of AUD 2.4 billion ($1.53 billion), representing a 2.6% increase compared to the previous year.

• EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization): Group EBITDA reached AUD 391 million ($251.2 million), up from AUD 381.6 million ($245.25 million) in the prior year.

• A fully franked dividend of 1.0 cent per share, with a payout ratio of 60% of NPAT before significant items and equity accounted loss.

In addition to financial figures, management provides updates on TAB25 vision - a three-year strategic business mission is said to be on track.

The initiative aims to achieve several key objectives, including a 30% digital revenue market share, 10% return on invested capital (ROIC), and operating expenditure (Opex) in the range of AUD 600– AUD 620 million in FY25.

 3. $Eagers Automotive Ltd(APE.AU)$ sales accelerates ahead of targets, beating forecasts in FY23

Eagers Automotive Limited engages in the ownership and operation of motor vehicle and truck dealerships in Australia and New Zealand.

1)Positive Financial Results and Forecast

Eagers Automotive APE reported strong interim results for 2023, with a 14% increase in sales to AUD 4.8 billion compared to the previous corresponding period. This performance puts Eagers ahead of schedule to achieve its AUD 1 billion full-year sales growth target.

Revenue forecast has been upgraded to AUD 9.5 billion, up from AUD 9.4 billion.

2) Buoyant Vehicle Sales and Order Backlog

Despite rising interest rates and cost-of-living pressures, vehicle sales have remained robust.

This resilience is attributed to factors such as the backlog of orders from the pandemic, supply chain disruptions, and chip shortages affecting vehicle imports.

The company still maintains an elevated order bank, although it is slightly lower than at the end of 2022. This suggests that demand for vehicles remains strong, and there is no immediate need for discounts.

Despite the positive aspects of Eagers' performance and outlook, the company's shares are overvalued. This suggests that the market may have already priced in the positive developments, and the stock may not offer significant upside potential at its current valuation.

4. $KAROON ENERGY LTD(KAR.AU)$ beats estimates and returns to Profitability

Karoon Energy has reported its Full Year 2023 results, which show significant improvements in financial performance and production metrics.

Key Financial Results

• Revenue: US$566.5 million, a substantial increase of 47% compared to FY 2022.

• Net Income: US$163.0 million, a significant turnaround from a loss of US$64.4 million in FY 2022.

• Profit Margin: 29%, a shift from a net loss in the previous fiscal year. The move to profitability is primarily attributed to higher revenue.

• EPS: US$0.29, a positive outcome compared to a loss of US$0.12 in FY 2022, surpassing analyst estimates by 2.2%.

Karoon Energy's FY 2023 results demonstrate substantial growth and a shift to profitability, driven by higher revenue and improved production metrics. The company's ability to surpass analyst EPS estimates suggests positive momentum in its operations.

5. $MINERAL RESOURCES LTD(MIN.AU)$ +10.02% driven by strong financial results and Citi’s upgrade

Financial Results

• Revenue: soared by 40% to $4.8 billion for the fiscal year

• Underlying EBITDA: surged by 71% to $1.8 billion.

• Dividend: Mineral The fully franked final dividend reached 70 cents per share, bringing the total payment for the year to $1.90 per share, representing a significant 90% increase.

The impressive performance in the lithium sector contributed to the company's ability to offset the impact of the impairment charges on its overall financial results.

Additionally, the brokerage Citi upgraded its rating on Mineral Resources to "buy" from "neutral" and raised its price target, indicating a positive outlook for the company's future performance. Citi also noted that expectations for the lithium business are likely to reset, suggesting improved prospects for this segment.