2019 Morgans Queensland Conference: Key picks and highlights

About the author:

Andrew Tang
Author name:
By Andrew Tang
Job title:
Analyst - Equity Strategy
Date posted:
22 October 2019, 12:09 PM
Sectors Covered:
Equity Strategy and Quant

  •  Morgans was pleased to host its 29th Annual Queensland Conference featuring 45 companies across a broad cross-section of the economy.
  • This year’s presenters were mostly upbeat about FY20 with the teething troubles from FY19 largely in the rear view mirror, although management teams continue to strike a balance between controlling costs and investing for growth.
  • Contrasting trading updates from Flight Centre (FLT) (negative), Beacon Lighting (BLX) (positive) and Australian Finance Group (AFG) (positive) show that the domestic environment remains patchy but a bottoming out in the housing market is becoming more apparent - a positive read for the consumer.
  • Common themes included: reinforcing and enlarging technology leadership; managing cost inflation; environmental sustainability; putting a focus on offshore growth; and right-sizing for the current infrastructure cycle.

In our summary report released this week, we discuss our key conference picks:

  • Cleanaway
  • Bingo Industries
  • Australian Finance Group
  • Credit Corp
  • Kina Securities
  • Baby Bunting and Motorcycle Holdings

An encouraging start to FY20...

The Morgans Queensland Conference provides an opportunity to take the pulse of corporate Australia and to get a sense of key opportunities and threats across the many industries represented. Corporate outlook commentary was broadly positive, with most companies signaling that domestic conditions have improved early FY20.

Confirmation that the slowdown in the housing market has bottomed (Australian Finance Group (AFG), Beacon Lighting Group (BLX) and Adairs (ADH) bodes well for retail and the economy in general.  

...but some challenges remain

The challenges companies face remain consistent with what we’ve come to expect over the course of FY19. These include:

  • Subdued end markets (though with some evidence of improvement)
  • Lingering impact of global macroeconomic risks (Brexit, Trade Wars and Hong Kong)
  • Headwinds from currency and cost inflation eating away at margins
  • The persistence of devastating drought conditions.

Despite the prevailing uncertainty, many companies presenting at the conference are investing in efficiency gains and/or looking to pass on higher costs to customers.

Key conference themes

Smart management teams continue to create their own opportunities amid the mixed investment climate, rather than being passengers in it.

Corporates are:

  1. Embracing technology and innovation – NextDC (NXT), Megaport (MP1), Corporate Travel Management (CTD), Domino's Pizza Enterprises (DMP), Nanosonics (NAN), Atomos (AMS), Smartgroup Corporation (SIQ) and Data#3 (DTL)

  2. Pursuing offshore acquisitions and expansion – Corporate Travel Management (CTD), Lovisa (LOV), IPH (IPH), Domino's Pizza Enterprises (DMP), Bapcor (BAP) and Megaport (MP1) 

  3. Leveraging the move towards environmental sustainability – Cleanaway Waste Management (CWY), Bingo (BIN)

  4. Broadening the product offering – Beacon Lighting (BLX), Over The Wire (OTW), Emeco (EHL), Star Entertainment Group (SGR), Australian Finance Group (AFG), and Cleanaway Waste Management (CWY)

We summarise the key takeaways from all the company presentations in our full research note (Morgans clients only).

More information

To view further analysis on our key picks and highlights from the 2019 Morgans QLD Conference, Morgans clients can view the full research note. Alternatively, please contact your Morgans adviser or nearest Morgans office for access.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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