Results Road Map: 31 August 2020
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 31 August 2020, 10:00 AM
- Sectors Covered:
- Equity Strategy and Quant
As easy as 1, 2, 3
Next DC's (NXT) FY20 result was at the upper end of guidance and FY21 guidance was in line with consensus expectations. The result and outlook demonstrate how uncorrelated digital infrastructure is to economic cycles and showed how high quality NXT business model and earnings streams are.
In FY20 NXT generate over $100m of EBITDA and cash flow.
On our forecasts the current contracted pipeline combined with channel partner sales should see EBITDA exceed $200m in the next four years and potentially $300m in the next five, if options granted to CSP customers are exercised.
We upgrade to an Add recommendation. View target price and full analysis by logging in. (Morgans clients only).
Costa Group Holdings
The winds are shifting
Overall, Costa Group's (CGC) interim result was in line with our forecasts. However, Produce was materially weaker than expected, while the International segment materially exceeded expectations.
With domestic drought related headwinds having eased, water security materially improved and produce prices/demand generally favourable, outlook comments were positive and a strong 2H20 result is expected (cycling a weak pcp).
The outlook for the 2020 citrus crop has improved since the AGM, which implies prior FY20 guidance (while withdrawn) of ~A$144m EBITDA-SL remains achievable. We sit slightly below at A$141.5m.
With the potential for operating leverage to return in FY21, Add rating retained. View target price and full analysis by logging in. (Morgans clients only).
Cycling outa FY20 in a much better position
Motorcycle Holdings' (MTO) FY20 EBITDA result came in above the top-end of guidance and was 6% above our forecast. 2H20 represented a very strong period of trading with 18% revenue growth converting to +133% EBITDA growth. MTO has materially strengthened its BS and exits FY20 in an immaterial net debt position, removing a key market concern over the past few years.
While trading conditions are clearly elevated given current government stimulus (and have continued thus far in FY21), we note new bike volumes are still ~33% below their CY16 peak.
Significant structural cost out activity undertaken in recent years provides increased flexibility for any future volatility.
MTO is trading on 7x PE (pre AASB16) and 5.5% yield based on our FY21 forecasts. Add maintained. View target price and full analysis by logging in. (Morgans clients only).
Continuing to deliver
Shine Justice's (SHJ) FY20 result was solid and came in ahead of our forecasts across most measures and EBITDA exceeded guidance for growth in the order of 10%. The company has guided to a continuation of normalised EBITDA growth and expects growth in FY21 to be in the high single digit range.
This has resulted in us upgrading our EBITDA expectations over the forecast period.
Litigation has traditionally been a defensive industry and the company's strong result in COVID impacted times illustrates this. Following our target price increasing to $1.44/share (from $1.23/share) we reiterate our Add rating. View target price and full analysis by logging in. (Morgans clients only).
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