Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Morningstar runs the numbers

Lex Hall  |  10 Feb 2020Text size  Decrease  Increase  |  
Email to Friend

 

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 7 February.

 

100

A dividend payout ratio over 100 may indicate that a company’s dividend is in jeopardy because no company can continue to pay out more than it earns indefinitely. Across the Morningstar Australia GR AUD Index, the payout ratio averages around 74 per cent. The payout ratio is a key number in evaluating dividend safety. But it's not the only stat to consider. "It's the context for the way you think about other aspects of dividend safety,” says Josh Peters, former editor of the Morningstar Dividend Investor newsletter. “But what's a good payout ratio for a utility – say 70 per cent – would be much too high for a steel mill or an oil refiner, which are much more volatile businesses where earnings could be wiped out at the bottom of a cycle and the dividends get cut," he says.

1.7 trillion yuan

Or $364 billion. That’s the amount The People’s Bank of China injected over two days to stabilise markets that had plunged after extended New Year holidays. This triggered a major recovery. For Morningstar head of equity research Peter Warnes, it’s more compelling evidence central banks have the markets’ back, no matter what. The fear the coronavirus will affect global economic growth has hit commodity markets and particularly oil. Benchmarks West Texas Intermediate and Brent have slumped in the past two weeks, both down nearly 20pc since the Iranian commander Qasem Soleimani was killed by a US drone strike. “Oil is the lubricant of the global economic engine and if central banks are going to ensure economic growth is going to be protected at all costs, then oil prices will likely recover,” says Warnes.

Nine

That’s the number of global epidemics since 1998, notes Morningstar Investment Management’s Carolyn Szaflik. From the SARS outbreak in 2003 to the twin strikes of ebola in 2014 and 2016, and a bout of Zika in between, disease has made headlines and jostled markets. But each time, the outbreaks – and the financial losses – were eventually contained. “Market participants tend to react to such unforeseen outbreaks,” says Szaflik, “but markets tend to recover by the six-month mark. This suggests that sentiment drives early losses, but sustained economic impacts are less perhaps investor fears at the onset.”

26 per cent

That’s the discount to fair value for Aussie biotech Avita Medical, according to Morningstar analyst Nicolette Quinn. Avita’s flagship product is RECELL, which creates “spray-on-skin” from a small skin sample in 30 minutes. “Despite a number of new products being approved in the regenerative skin market, we believe that RECELL will gain significant share based on clinical performance, ease of use, and relative price point," Quinn says. “We expect the high forecast uncertainty is the likely reason for the market currently undervaluing Avita, but the latest results suggest approximately 20 per cent market penetration one year into commercial launch which affirms our longer run expectations of the product potential.”

$115 million

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

That’s the amount of deposits recorded by “neobank” Xinja - a sum it amassed in just 20 days, putting it on pace to reach its goal for the year in just one month. "It's very exciting and probably a little terrifying," said Xinja chief executive Eric Wilson. Neobanks seek to compete on two key fronts: price and technology. As rates plunged in 2019, rates offered on neobanks’ respective savings accounts rose to the top. Savers looking beyond the big banks can secure conditional rates of up to 2.25 per cent. Ratecity research director Sally Tindall says digital start-up banks face an uphill battle to wrestle market share from the big four. "We’re in an age where people are taking to disrupters with huge enthusiasm in other industries,” Tindall says. “But Australians are notoriously loyal to their bank. More than three-quarters of our savings are with the big four and their subsidiaries. Neobanks are unlikely to rock this boat any time soon."

Most popular articles

Top videos

 

 

 

is senior editor for Morningstar Australia

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend