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Investment Solutions

Features

ASX Reporting Season: February, 2022, Week 4

Rene Anthony

Saturday, February 19, 2022

Saturday, February 19, 2022

Earnings season draws to a close with a bang, with well over 150 companies across the ASX handing down earnings this week. Here are the most high-profile names to watch.

Earnings season draws to a close with a bang, with well over 150 companies across the ASX handing down earnings this week. Here are the most high-profile names to watch.

It the final (full) week of earnings season, and that means a barrage of companies lining up to report over the coming days. 

While we've seen a number of large-cap heavyweights already report, there are more companies reporting this week than any of the preceding weeks, led by Rio Tinto, Coles, Woolworths, and a host of names from the real estate, industrials and consumer-facing sectors.

A selection of this week high-profile results are shown below, including some of the key barometers for the market.

ASX Reporting Season: February, 2022, Week 4
  • a2 Milk Company (ASX: A2M): A former market darling, the a2 Milk Company (ASX: A2M) has fallen from grace amid the collapse in its daigou channel. Look for a strategy update, as well as the latest on inventory levels, which were a major headache last set of results when the company was flush with aging stock. Volume performance amid pricing pressure in China will be key to how  well the company report is received.

  • Sonic Healthcare (ASX: SHL): One of the primary names leveraged to an uptick in COVID testing, the laboratory services, pathology, and radiology services firm may unveil high growth amid the surge in testing as the Omicron variant spread. However, the transition to rapid antigen tests, and sharp drop in overall testing volumes since the new year may draw some comments from management about the company near-term outlook.

ASX Reporting Season: February, 2022, Week 4
  • Coles (ASX: COL) and Woolworths (ASX: WOW): The supermarket giants have been at the centre of a number of challenges over recent months, including staff shortages, supply chain challenges that prompted stock shortages, and inflationary pressure. Supermarkets generally have pricing power to pass on higher costs to consumers, but the impact of COVID-related costs will be a watch-point in terms of overall margins.

  • Rio Tinto (ASX: RIO): Last to report among its peers, Rio is expected to also show signs of lower iron ore prices in the second-half - something all the other majors have dealt with thus far. Issues with Rio Jadar lithium project in Serbia may be one area investors hone in closely, as the company has invested heavily in this area and faced setbacks including the cancellation of its mining licence.

  • Domino (ASX: DMP): Same-store sales growth was running at 4.5% when the company updated investors in November, so look out for any change here in light of supply chain disruptions and staffing issues as Omicron spread. Domino was one of the first companies to report challenges with inflation, so margins are likely to be under the microscope.

ASX Reporting Season: February, 2022, Week 4
  • Flight Centre (ASX: FLT), Qantas (ASX: QAN), Auckland International Airport (ASX: AIA): Travel sentiment has been hit during the Omicron wave, as confirmed by Corporate Travel Management last week. Commentary on the latest travel activity, particularly out of regions like Europe and North America will be a focal point.

  • Qube (ASX: QUB): One of the biggest logistics players across Australia, Qube results will shed light on the issues impacting container ports and the global supply chain. While challenges are expected to be discussed, including industrial action, the company has also been leveraged to the tailwind associated with strong demand for consumer product imports, and has been able to pass on COVID levies to offset staff isolation costs. The result may well be a classic battle between higher volumes and lower margins.

ASX Reporting Season: February, 2022, Week 4
  • Kogan (ASX: KGN), City Chic (ASX: CCX), Lovisa (ASX: LOV), Harvey Norman (ASX: HVN): Retailers have seen a mixed-bag of results lately given the challenges imposed by Omicron and supply chains. Inventory management and margins will be the key metrics to look for here, especially in light of results that will be in direct comparison with a period where JobKeeper and government handouts were in play.

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