WES -7.48% : It’s been ages since Bunnings has gone backwards however that was the case today contributing to a 13% fall in first-half earnings at the group level. They blamed Covid-related disruptions, including extended lockdowns, high levels of absenteeism and supply chain disruptions. Total revenue of $17.8bn was flat YoY and ahead of the market which was expecting $17.3bn however after tax profit of $1.21bn was down -14%, missing the $1.29bn expected while the dividend of 80cps was lower than the 85cps pencilled in. No guidance provided which is customary for WES however price inflation seems to be building and it seems like WES (for now at least) will suck some off this up which could have an impact on margins going forward. WES has been weak leading into this result, we’d looked at it a few times as a ‘buy the dip’ trade however now we expect some downgrades to flow though, we might get the opportunity in WES nearer ~$45, around 20% below where we recently sold it.
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Performance update for March, stocks that drove returns & our current positioning
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Friday 26th April – ASX200 -101pts, Newmont (NEM), Resmed (RMD) & Super Retail (SUL)
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Market Matters Research Lead Shawn Hickman with David Koch
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MM would become bullish WES ~$45
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