Sat, Oct 23, 2021 @ 01:02 GMT
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Australian FY21 Earnings Season Overview

Starting in late July, a handful of companies begin reporting earnings for the 12 months from July 1, 2020, to June 30, 2021, before reporting activity picks up a gear in the second week of August.

A feature of the 2021 financial year has been a remarkable economic turnaround supported by unprecedented central bank policy responses and government intervention, fostering a more robust rebound than even the most optimistic forecasters predicted.

This has ensured consensus expectations remain supported. Morgan Stanley has F2021e EPS growth now at 26.0% and F2022e at 18.7%. The 12-month forward market P/E is 17.25x, with Industrials ex-Financials at 30.2x.

However, the extended and deepening lockdown in NSW, along with snap lockdowns in other states and rising cost pressures, are threatening guidance. There is a risk of a more volatile than usual reporting season for companies with a domestic focus.

However, the outlook is not all dire. Vaccine supply and rollout is ramping up, a critical element in reaching the governments’ vaccination targets to end this lockdown and prevent future lockdowns.

A second factor is increased financial support from the State and Federal Government, including the Disaster Payment of $750 per week for those who cannot work due to mobility restrictions.

Regarding the key dates to watch, Week 2 (August 9 – August 13) includes reports from the Commonwealth Bank of Australia (CBA), a company that will shortly be previewed in more detail.

Week 3 (August 16 to August 20), approximately 50 companies report, including three companies to be previewed in detail, BHP Group Ltd (BHP), Australia and New Zealand Banking Group Limited (ANZ), and CSL Limited (CSL).

Week 4 (August 23 – August 31), 47 companies report including three companies that will be previewed in detail, Qantas Airways Limited (QAN), A2 Milk Company Limited (A2M), and Woolworths Group Ltd (WOW).

Australia’s benchmark index, the ASX200, this week traded to fresh record highs above 7500 after large M&A activity involving Square Inc (US SQ) and Afterpay (APT) as well as Santos (STO) and Oil Search (OSH).

Technically there is scope for the index to extend its gains towards trend channel resistance near 7600, with dips likely to find support at the lower trend channel near 7200 in the coming weeks.
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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