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Morningstar runs the numbers

Lex Hall  |  09 Jun 2020Text size  Decrease  Increase  |  
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We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 5 June.

1 per cent

The average amount by which local telecommunication company shares fell have fallen since the 20 February sell-off. This compares to a 17 per cent decline for the S&P/ASX200, says Morningstar’s Brian Han. And they’ve done this without tapping shareholders, bucking the trend of equity raising that has been so prominent recently. In the month of April alone, 60 Australian corporates raised just under $9 billion according to data provider Refinitiv. This marks the highest monthly total since the 2008 global financial crisis. “Amid a sea of capital raising elsewhere, these five companies have tapped the credit market to shore up their balance sheets without going to the equity market,” says Han. “And they can do that because these creditors agree that these earnings are very defensive and very resilient.”


That’s Morningstar’s fair value estimate for online retail juggernaut Kogan.com. The company, which Ruslan Kogan founded in 2006, hit a share price record of $13 on Friday amid news it had doubled its sales during April and May and as lockdown measures propelled online shopping. The share price jump puts the company at a 60 per cent premium to Faul’s $8 estimate. Faul has his reasons to be bearish and key among them is the stiff competition in online retail, led by multinational behemoth Amazon.com.


That’s the revised fair value estimate for videoconferencing company Zoom. Morningstar analyst Dan Romanoff has lifted his estimate from US$62 following Zoom’s recent quarterly result. Romanoff says the no-moat company has addressed lingering security problems and is primed for growth, even if the current valuation is hard to justify, especially given the company’s high data costs. “With no hint of exaggeration, this is the strongest relative quarter we have seen in 20 years of software coverage,” Romanoff says. “We see a long runway for growth as the company gains traction with its Zoom Phones solutions as well, and we are impressed by management’s ability to drive strong growth while also delivering on the bottom line—to put it mildly.”


The new commission—or lack thereof—asked by IG Markets. The UK trading platform has followed the lead of Israeli-born platform eToro, which launched a similar deal for US trades only two weeks ago. The only cost for investors looking to buy and sell international shares on the IG platform, including US and UK shares, is a 0.7 per cent currency conversion fee. IG Markets head of Asia Pacific and Africa Kevin Algeo says the platform's move to $0 commissions has been customer-led, with clients demanding better pricing on Australian and international shares trading. He adds the writing is on the wall following the move by the big four US brokerage houses—Charles Schwab, Fidelity Investments, E*TRADE, and TD Ameritrade—to dump commissions late last year.


The amount of cash on hand available to blood plasma giant CSL. The company is one of the top picks of Morningstar analyst Nicolette Quinn, who has left her fair value estimate unchanged at $282, and made no adjustments to her outlook for fiscal 2021. "CSL at 3-stars is not a bad buy," Quinn says. Barring any major changes within the company, the fair value estimate will continue to increase each financial year in line with the rising cost of equity. "We expect current plasma shortfalls will be offset by increased donations as a result of the economic downturn once travel and social distancing restrictions are alleviated," she says. "Beyond 2021, we continue to forecast five-year compound revenue growth of 9.4 per cent and EPS growth of 11.5 per cent."

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is senior editor for Morningstar Australia

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