Author: Shawn Hickman

DOW -20.42%: The contractor came clean this morning about an accounting issue, having incorrectly recognised revenue from a long-term, maintenance contract to the tune of $40m. As a result, they cut FY earnings guidance by $8-10m and had to explain away issues with their internal systems that led to the embarrassing mess.

Crude oil has quickly surrendered its recent gains as recession fears again became front and center of investors’ minds, it’s bizarre how strong economic data is driving recession fears but it, unfortunately, demonstrates that investors have limited confidence that the Fed can balance its fight against inflation without avoiding a painful economic downturn.

FMG has already bounced ~50% from its November low but it’s still only trading on a P/E for 2023 for 10.3x while it’s expected to yield almost 10% over the next 12 months – importantly its payout is forecast to fall over the coming years in line with a declining iron ore price.

VUK +10.63%: Rallied strongly overnight in the UK and today in Oz following a strong FY22 result that showed impressive leverage to rising interest rates. Their 2H22 profit before tax (PBT) result of £401m (£789m for FY22) was 7% ahead of consensus.

CAJ -4.55%: the diagnostic imaging company hosted their AGM today with shares closing weaker on the session. They flagged a number of near-term efforts to drive further revenue growth including an additional 8 radiologists to be brought on by next quarter and adding a number of MRI machines to improve margins.

Excuse the pun but what a difference a week makes, SFR has surged ~30% from its recent low accelerating higher on the weak $US and positive noises from China. We can see further upside from this high beta copper play, especially with BHP still looking to take over OZ Minerals (OZL), but we are likely to lighten our holding into further strength assuming it unfolds into 2023.

ELD -22.94%: the ag group posted solid FY22 numbers today for their September year-end, but shares struggled with the CEO departing and soft outlook commentary. EBIT was up 39% to $232m, near the top of their guidance range and in line with estimates.

DIS -13.16% Q4 results out after market on Wednesday with the negative reaction overnight warranted. The only positive was subscriber growth in their streaming business ~30% above consensus which implies their target for achieving streaming profitability in fiscal 2024 should become reality.

WHC –8.5%: the coal giant struggled today after downgrading production guidance on the back of persistent wet weather. Their main asset, Maules Creek, has been heavily impacted by rain, seeing guidance dropped 1.5Mt, or 12% at the midpoint.

SGM -9.7%: Fell sharply today on a weak quarterly update saying that soft market conditions were persisting with cost pressures also impacting margins. They went on to say scrap metal markets are in a ‘bit of disarray’ with high costs of scrap not being reflected at the other end, putting pressure on margins.