Earnings season wrap: Rio Tinto's dividend surprises

Nicholas Grove  |  10/02/2017Text size  Decrease  Increase  |  

David Ellis: NAB was a little bit soft but only a touch, still pretty much in line, $1.6 billion cash profit for the quarter. It was only a trading update and trading updates can be volatile. No change to our long-term positive view, no change to our $31 fair value and no change to our wide economic moat. Looks alright. I'm expecting a pretty solid full-year result later in the year.

Macquarie Group didn't specify their earnings. So, it was quite a general high-level update, trading update. Macquarie confirmed their full-year guidance, which is broadly in line with the $2 billion profit reported for the 2016 financial year. Overall, pretty steady as she goes. Some of the divisions are doing better than others. But overall, the result for the 2017 financial year, which we're forecasting about $2.1 billion, we think that will be achievable. So, a pretty solid overall result.

Nicholas Grove: And anything in the NAB or MQG results that came as a surprise?

Ellis: Well, with NAB, we got a pleasant surprise with bad debts. Bad debts were significantly lower than I thought and we'll probably see that across the sector, the four major banks this year, which will surprise a few people. Margins disappointed a little bit. They were broadly stable, but that followed quite a sharp decline in the previous six months. So, margins surprised a little bit on the soft side; bad debts surprised a little bit on the positive side.

Grove: And MQG, no real surprises?

Ellis: No. No real surprises. Strong balance sheet. As I said, the guidance was the general guidance. The vague guidance was confirmed and no change to our fair value, no change to our earnings forecast for the full financial year.

Adam Fleck: Transurban's results were basically as expected. The company is reaping the fruits of its labour from some prior investments including working on wrapping up some of its US assets and saw some good traffic growth there. It saw some continued weakness in the Melbourne CityLink, not really a surprise given some of the widening they are doing there. We expect that will have a more advantageous response from a growth perspective looking out in 2018 and beyond, but basically, as expected. This wide moat company really continues to enjoy good growth from pricing and solid profitability improvement.

Mark Taylor: CIMC's earnings were in line with expectations, a moderate increase on the previous corresponding period. But the quality of the increase was in question because it was driven largely by higher depreciation and lower tax rate.

Mathew Hodge: Yes. So, I mean, it was a pretty strong result I guess. The market really kind of knew that. I guess the surprise was the company had the ability to pay out more as a dividend and did and that's a positive thing in our view, something that miners weren't doing, planting too much back in the ground. But if they are going to return more money to shareholders, that's a positive.

Video Archive...

Possible $2.5bn tailwind to drive hybrid demand in 2017
22/02/2017  Strong supply dynamics and ongoing economic stability should create significant opportunities for hybrid investors in 2017, according to John Likos, senior credit analyst, Morningstar Australia.
Earnings season wrap: Telstra feels competitive heat
17/02/2017  As the 1H17 earnings season rolls on, Wesfarmers posts a bumper profit, Newcrest restores its interim dividend, while Telstra's profit falls as it feels the heat of intense competition.
Earnings season wrap: Rio Tinto's dividend surprises
10/02/2017  Rio Tinto delivers a surprise full-year payout of US$1.70, NAB records a soft first quarter, and CIMIC posts an annual net profit in line with Morningstar's expectations.
Leveraging the opportunity of international students
07/02/2017  Co-founder and CEO of Navitas, Rod Jones, explains the firm's business model, which is built largely around international students and university partnerships.
Xero CFO gives outlook for 2017 and beyond
02/02/2017  Sankar Narayan, chief operating and financial officer of accounting software firm Xero gives his insights on the company's business model and outlook, with Morningstar analyst Gareth James adding his views
Asia growth engine not threatened by Trump, says Barings
30/01/2017  Long-term investors in China and wider Asian equities should not worry about President Trump, says Barings head of Asian equities Hjung Jin Lee.
Shifting fortunes for ANZ, more of the same for CBA in 2017
12/01/2017  Australian banks are well-positioned as they head into 2017, with ANZ moving from least profitable in 2016 to become one of the sector's top performers and CBA remaining an investor favourite.
Is Trump a threat to emerging markets?
12/01/2017  Is President Donald Trump a threat to emerging market returns? Paul Jackson from the UK-based Source ETF considers the outlook for sector and where investors can find the best opportunities.
Platinum, Aussie banks and Peter Warnes among top interviews of 2016
22/12/2016  We look back on some of our most notable interviews of the year, as Morningstar analysts and external experts helped us delve into some of the biggest events that shaped Australian and global markets in 2016.
Oil price finds sweet spot, while mining hits rock bottom
20/12/2016  The rise in oil prices should see improved performances from Australian producers in 2017, while mining services companies will continue to struggle amid weaker Chinese demand, says Morningstar equity analyst Mark Taylor.
How Greek mythology can make you a better investor
07/12/2016  Don't be over confident or follow the herd, and like Odysseus, learn to have yourself "tied to the mast" when it comes to long-term investing.
Supermarket headwinds prompt fair value cut for majors
06/12/2016  Growing competitive pressures and a declining revenue outlook for Australia's two grocery giants now look to be part of a longer-term, structural shift.
What returns should you expect from markets?
01/12/2016  As market risks rise, investors must adjust their profit expectations--gone are the days of 8 per cent returns. But there are still growth opportunities out there if you know where to look.
Why healthcare stocks got a bump from Trump
28/11/2016  Australian healthcare and pharmaceutical companies continue to enjoy a purple patch, and for various reasons including the recent US election result, explains Morningstar's healthcare equities analyst Chris Kallos.
Equity and hybrid investors react as bond prices tumble
24/11/2016  The negative correlation between bonds and equities is reasserting itself following the US election of Donald Trump, according to John Likos, Morningstar's senior credit analyst.
2 global themes that are finding favour among ETF investors
15/11/2016  Australian retail investors are increasingly turning to ETFs for specific tactical exposures to global themes, particularly in the context of large-scale market events such as US election 2016.
Maintain discipline and stick to fundamentals when selecting stocks
14/11/2016  Steer clear of fads, maintain a disciplined approach and focus on company fundamentals in building and maintaining your investment portfolio, says Anton Tagliaferro, investment director, Investors Mutual
How Trump could impact economic growth
10/11/2016  Slowdowns in trade and immigration could hold back the US, and infrastructure spending could boost GDP, but it's too early to make any major changes to our economic forecast, says Morningstar's Bob Johnson.
President Trump: What should you do?
10/11/2016  Donald Trump has beaten Hillary Clinton to become the 45th US president. What should investors do?
Software companies worth watching amid tech deployment phase
08/11/2016  Kate Howitt, portfolio manager at Fidelity International discusses some of the core phases in technological disruption and identifies software companies among those currently presenting opportunities.