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S&P/ASX 200 Monday – ASX reporting season recap

The S&P/ASX 200 (ASX: XJO) is expected to take a backwards step at the open on Monday according to ASX futures. Here’s what you need to know as we head into the final week of reporting season.

ASX finishes flat for the week

The ASX 200 finished 0.2% lower for the week, down just 0.1% on Friday, despite a strong US lead. Suncorp Group Ltd (ASX: SUN) was the highlight, beating expectations despite reporting a 33% fall in profit and finishing up 11% for the day.

Over the week, it was the IT sector, behind WiseTech Global Ltd (ASX: WTC) up 40%, and healthcare behind CSL Limited (ASX: CSL) that supported the market despite the hit of Victoria’s lockdowns becoming more clear.

Australian retail sales grew 3.3% in July from June, with household goods up 30% as consumers divert their $100 billion travel spend to improving their homes. This came as Scentre Group (ASX: SCG) locked out Mosaic Brands from some 129 stores.

It was a day for the small caps, with few big names reporting, our short summary follows:

Stunned the market in a positive way, adding 11.1% after retaining its dividend, but cutting by 50% to 10 cents per share. Underlying profit weakened less than expected, falling 33% to $749 million as both banking and insurance were hit by impairments and claims. Net interest margin of 1.94% was strong.

Comment: Looking solid despite higher funding costs.

Finished 3.8% higher after reporting a 26% increase in sales and a 59% improvement in profit to $15.2 million following a difficult few years. The Sukin brand demands 55% of sales with 4,000 new stores in the US, Asia, Europe and even Target.

Comment: Strong result with 10% sales growth forecast in FY21.

Reversed recent gains falling 2.3% despite announcing 132% year-on-year sales growth in July and 36% increase in revenue to $349 million. Strong growth in Australia, 24%, UK, 33%, and the EU 30%, with 30% growth in first purchases on the platform. Strong free cash flow of $38 million and 6.8 million unique customers, a global platform.

Comment: Great result, a global Kogan.com Ltd (ASX: KGN).

Poultry producer rallied 3.0% as volumes increased 4.3%, benefitting from huge demand as the population was forced to stay at home. Previously flagged issues relating to their processed alternatives meant a 28% cut to the dividend after profit fell 62% to $40 million.

Comment: Quality defensive business with cost base now rest.

MyState Ltd (ASX: MYS)

Finished 3.9% higher despite cancelling their dividend and closing six branches. Profit fell 3% to $30 million, however home loans growing 70% faster than the market. Wealth management lost AUM of $100 million.

Comment: Tough business but ramping up loan issuance.

For a run-down of four key reports from the week, check out the second instalment of our ASX results recap:

My three takeaways from the week

The S&P 500 delivered a fourth straight weekly rally, finishing 0.7% and adding 0.3% on Friday as Apple (NASDAQ: AAPL) finished 5% higher. The US election campaign is beginning in earnest with the backdrop of an improving economy, manufacturing PMI increasing to 53.6, despite another spike in coronavirus cases.

With a lot of action this week, my three takeaways were:

  1. It’s time for a new set of blue chips – Reporting season has exposed the structurally challenged nature of many Australian businesses, there is a new group of mid-caps, enabled by technology, ready to take over.
  2. Look past the headlines – One-off or significant events, underlying vs. statutory profit. It’s never been more important to review every earnings report with a fine-toothed comb.
  3. Vaccine may be hopeful – It was a week of hope according to our politicians, yet 25% of the country remains under strict lockdown with little economic support. Whilst we are all hoping for a vaccine, I’m not confident enough to bet on it yet.

This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.


Disclosure: Drew Meredith is the author of this post. He may maintain positions in the securities mentioned.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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