Australian Investment Blog
ASX:CTX 28/08/2018
Caltex (CTX) under the pump
Stock
Caltex (ASX:CTX) $31.04 as at 28/08/2018
Event
Caltex’s first half result missed market expectations and the stock has traded sharply lower throughout the morning. The numbers were weak, showing the falling appetite for premium fuel, lower refining margins and a soft retail sales result within the business which posted a first half profit of $296m, sneaking into the bottom end of guidance at $295-315m. Key to the result was convenience retail earnings falling 14% to $161m, while acquisitions in NZ and the Philippines were not enough to offset the issues.
The result also came with commentary around its property and fuel portfolios as company conducts asset reviews in an attempt the extract value from current assets. Caltex owns around $2b worth of freehold petrol stations, and announced plans to begin selling down its stake to retail real estate investors rather than going down the IPO route others have used. Initially looking to sell a $500m stake, Caltex eventually plans to be a minority holder of the property business it now owns, seeing strategic property partnerships the way forward to sustainable growth.
Caltex (CTX) Chart
Market Matters Take/Outlook
Downgrades likely following this result as margins come under pressure. Fuel retailing is a business with clear structural headwinds, hence the importance of selling overpriced chips and drinks! The proposed property spin out is a positive.
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