Your guide to the ASX reporting season
Morningstar’s equity analysts explain what to expect, and what investors should focus on, as ASX companies release their earnings for the February 2023 reporting season.
The February reporting season has kicked off, giving investors a detailed view into how Australia’s listed companies performed over the previous six months.
To help you prepare, we’ve put together a calendar with the reporting dates of more than 150 ASX companies under Morningstar coverage.
View the Morningstar earnings calendar here.
Dates are subject to change as companies may alter their reporting date.
As always, the outlook statement released by companies will be a major focus – but that rings especially true this time around given the financial impact of the RBA’s consecutive interest rate rises are yet to bite.
But there’s few signs of that just yet. After a stellar start to the year for local equities, the median price to fair value estimate for Morningstar’s ANZ coverage is at a 4% discount.
Eight weeks ago, stocks were trading 7% below fair value on average, and in October 2022 the average discount was around 15% when the market was cheaper than it had been in more than a decade (excluding the early Covid selloff).
While there are less bargains now compared to a year ago, that doesn’t mean they won’t come.
Morningstar’s director of equity research Mathew Hodge says there is a risk the market will fall materially from here as the impact of higher rates are felt in the real economy.
But share markets don't always react rationally to results, either, and buying opportunities can arise from disappointing earnings.
What to watch in key sectors
We sat down with Morningstar’s team of equity analysts to get a sense of what investors should be focused on this reporting season.
The RBA’s fastest interest rate tightening cycle in decades is a boon for banking margins, even as loan growth is slowing according to Morningstar banking analyst Nathan Zaia.
“A key part of our thesis for the banks has been higher interest rates will mean higher margins, and we've started to see that come through and we think there'll be more upside in the next sets of results,” Zaia says.
So far, mortgage defaults remain around historic lows, but Zaia will be monitoring for any updates from the banks on bad debts.
“Banks have good data on customers transaction accounts, so money coming in, coming out. So it'll be interesting to see if there's any commentary around what they're seeing.”
Morningstar mining analyst Jon Mills says lower dividends may be the theme across the sector given the volatility over the last six months of 2022.
“The big exception is thermal coal and so with our thermal coal mine coverage, Whitehaven (WHC) and New Hope (NHC) in particular, we're expecting higher dividends than in recent times,” Mills says.
Costs will be another factor, given soaring inflation. The Consumer Price Index rose to 7.8% over the year to the December quarter, according to the ABS.
“We're looking to see whether that's starting to moderate and that'll be apparent in the guidance that these companies provide not only in the operating cost side, but also on the capital guidance or capital expenditure guidance.”
Investors should look at this group through two lenses, Morningstar director of equity research Johannes Faul explains: Discretionary (retailers selling non-essential goods, like clothing) and staples (those selling essential goods, like groceries).
“In discretionary we've already seen some of the companies pre-reporting their earnings, those earnings have been quite solid and actually beat our expectations for the first half,” Faul says.
“Having said so, we think that the much-discussed cost of living pressures that are increasingly rampant in Australia or taking hold in Australia will have an impact and will have a severe impact in the second half.”
Margins will be key for essential retailers, like Woolworths, Coles, and Endeavour.
“We really want to see where the margins are heading… because we're seeing a lot of inflation on the top line in food in particular. And that in isolation would mean margins would increase, but there's two offsetting effects and one might be that they lose traffic to discounters or clubs like Costco.”
Pent-up demand has driven a travel and leisure boom, but Morningstar director of equity research Brian Han says rising interest rates will start to crimp discretionary spending power across the board.
“So what that means is faced with those two opposing forces, it is even more important that investors have a very clear idea about what the intrinsic value of a leisure company is based on mid cycle earnings,” he says.
“That way they can take advantage of the likely volatile stock price to provide them with the opportunity, to have a margin of safety, whether on the upside or on the downside.”
It’s been an exceptional period for energy producers, with the war in Ukraine driving oil and gas prices sky high.
But Morningstar senior equity analyst Mark Taylor says investors shouldn’t be anchoring their future hopes on this year's earnings.
“These have been exceptional times with Russia's invasion of Ukraine. There've been very high gas prices in particular,” he says.
“But next year is going to be a very different story, earnings are going to come back to Earth.”
Still, Taylor says the sector remains cheap.
“Woodside's a 5-Star rated stock at the moment, so they've got a very bright future too, particularly on the gas side where renewables are going to take decades to come in and replace gas. So we're projecting very healthy prices for well over a decade.”
How investors can prepare
Morningstar believes in owning high-quality businesses for the long term, however buying them at the right price is key.
For investors, that means laying the groundwork now.
Hodge says investors should assemble a company wish list with an understanding of the businesses, growth outlook, resilience, cash flow generation and competitive position.
“What would my wish list look like? Well, I’d want businesses with strong competitive positions, pricing power and either robust cash flows and dividends or growth prospects at least in line with nominal GDP growth,” Hodge says.
“Also important is to have diversification. Not just by sector but by investment drivers,” he adds.
“I’d hazard a guess that many [Australian] portfolios are dominated by either the health of the domestic housing markets, or China’s growth.”
Reporting season schedule
Here's a summary of when companies are due to hand report their earnings in Febrary 2023.
You can also use the search bar to look up any company via its ASX ticker.
Week 1: 30 Jan-3 Feb
Tues - Centuria Industrial REIT (CIP)
Wed - Credit Corp (CCP)
Thurs - Pinnacle Investment Group (PNI)
Week 2: 6-10 Feb
Tues: Region (RGN), Transurban (TCL), Macquarie Group (MQG)
Wed: Suncorp (SUN), Amcor (AMC), Boral (BLD), BWP Trust (BWP)
Thurs: AGL Energy (AGL), Charter Hall Long WALE REIT (CLW), Mirvac Group (MGR), ANZ Group Holdings (ANZ)
Fri: News Corp (NWS), REA Group (REA), Unibail-Rodamco-Westfield (URW)
Week 3: 13-17 Feb
Mon: Aurizon Holdings (AZJ), Beach Energy (BPT), Carsales.com (CAR), Contact Energy (CEN), Endeavour Group (EDV), Insurance Australia Group (IAG), JB Hi Fi (JBH), Lendlease Group (LLC)
Tues: Ansell (ANN), Breville Group (BRG), Challenger (CGF), CSL (CSL), Dexus (DXS), James Hardie (JHX), Seven West Media (SWM)
Wed: Commonwealth Bank (CBA), Cochlear (COH), Corporate Travel Management (CTD), Fletcher Building (FBU), Fortescue (FMG), GUD Holdings (GUD), Netwealth Group (NWL), Pro Medicus (PME), SkyCity Entertainment (SKC), Seven Group Holdings (SVW), Treasury Wine Estates (TWE), Vicinity Centres (VCX), Wesfarmers (WES)
Thurs: Abacus Property Group (ABP), ASX (ASX), Bapcor (BAP), Charter Hall Retail REIT (CQR), Domain Holdings (DHG), Goodman Group (GMG), Growthpoint Properties Australia (GOZ), Magellan Financial Group (MFG), Newcrest Mining (NCM), Origin Energy (ORG), South 32 (S32), Sonic Healthcare (SHL), Super Retail (SUL), Southern Cross Media (SXL), Telstra (TLS), Whitehaven Coal (WHC), AMP (AMP), National Australia Bank (NAB)
Fri: Doterra Royalties (DRR), Hotel Property Investments (HPI), Inghams Group (ING), GQG Partners (GQG), QBE Insurance (QBE), Westpac (WBC)
Week 4: 20-24 Feb
Mon: A2 Milk (ATM), Bendigo and Adelaide Bank (BEN), BlueScope Steel (BSL), Charter Hall Group (CHC), Chorus (CNU), NIB Holdings (NHF), GPT Group (GPT), Ampol (ALD), EVT (EVT), oOh Media (OML)
Tues: Arb Corp (ARB), BHP Group (BHP), Coles (COL), HUB24 (HUB), Mercury NZ (MCY), Monadelphous (MND), Seek (SEK), Stockland Corp (SGP), Tabcorp Holdings (TAH), Alumina (AWC), Viva Energy Group (VEA), Costa Group (CGC), Iluka Resources (ILU)
Wed: AUB Group (AUB), Domino's Pizza Enterprises (DMP), Ebos Group (EBO), EML Payments (EML), Flight Centre (FLT), National Storage REIT (NSR), Platinum Asset Management (PTM), Steadfast Group (SDF), Spark New Zealand (SPK), Woolworths (WOW), WiseTech Global (WTC), Scentre Group (SCG), Santos (STO), Worley (WOR), Eagers Automotive (APE), Oz Minerals (OZL), Rio Tinto (RIO)
Thurs: Auckland International Airport (AIA), Air New Zealand (AIZ), APA Group (APA), Blackmores (BKL), Cleanaway Waste Management (CWY), IDP Education (IEL), Insignia Financial (IFL), Medibank Private (MPL), MyState (MYS), Nine Entertainment (NEC), Perpetual (PPT), Qantas (QAN), Qube Holdings (QUB), The Star Entertainment Group (SGR), The Lottery Corp (TLC), Zip Co (ZIP), AVITA Medical (AVH), Ramsay Health Care (RHC), FINEOS (FCL), Humm Group (HUM), Atlas Arteria (ALX), Smartgroup Corporation (SIQ), Bega Cheese (BGA)
Fri: Ardent Leisure (ALG), Brambles (BXB), Healius (HLS), Mineral Resources (MIN), Port of Tauranga (POT), Ventia Services Group (VNT), Helia Group (HLI)
Week 5: 27 Feb-3 Mar
Mon: APM Human Services International (APM), Downer (DOW), Genesis Energy (GNE), Kogan (KGN), Cromwell Property Group (CMW), Woodside Energy Group (WDS), TPG Telecom (TPG), Invocare (IVC)
Tues: Tyro Payments (TYR), Harvey Norman (HVN)