Fat Prophets > Australasian Equities
February 7, 2023 •

Where we took profits and losses in 2023 2023 was a big year in the financial markets. Global stock markets have outperformed expectations, avoiding a feared recession in the US and showcasing resilience in the Australian economy (among developed economies) amidst aggressive rate hikes. The UK and Japan displayed economic resilience, while China faced concerns, leading to mixed economic data. Hong Kong and Chinese stocks declined, with the Hang Seng index down 16% year-to-date. The impact of inflation and interest…

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2023 reflections Global stock markets have performed better than feared in 2023 as a widely expected recession for the US economy was avoided without the negative knock-on impacts that would typically have entailed. The Australian economy has also proved resilient in an aggressive rate-hiking cycle. Most other major countries have been on the same page to varying degrees, although individual stock market performances have varied. As of mid-December, the S&P500 is an impressive 23% higher, in large part thanks to…

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Speedbump Shares in master franchisee – and largest franchisee outside the US – Domino’s Pizza Enterprises (ASX.DMP) continued to be under greater pressure after the release of a ‘strategy update’ wherein management will streamline operations but also exit some unprofitable markets. To be fair, this move was not a complete surprise given the inflationary and other cost pressures coupled with increasing competition post-COVID reopening. However, DMP’s value comes from being a solid defensive exposure in a portfolio given that we’re…

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In better health Although Sonic Healthcare shares have pulled back from 52-week highs, they have staged a nice ascent in 2023 and we believe the recovery has much further to go, with a solid fundamental outlook. The earnings ‘hole’ from lapping those bumper results amid the pandemic has faded and we foresee a robust earnings outlook for the coming years. Surgeries and GP visits have further to recover, with positive implications for Sonic’s business, adding to what are already positive…

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Mobile bill pain for consumers is Telstra’s gain Telstra shares have been strong gainers year-to-date, extending gains from 2022 thanks to several factors, spearheaded by positive financial traction and the increase in dividends. In our view, there is significant optionality for the monetisation of the InfraCo business, although we may have to wait until late 2023 or beyond for a decision here. With mobile price increases on the way and all the signs of a more rational pricing market in…

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Prices Take Some Back Rio Tinto has revealed a reversal in its numbers for 2022, following falls in underlying and statutory earnings, and across all its reporting lines. While the balance sheet continues to be a key standout feature it was regeared but remains pristine. Shareholders saw the annual dividend near halve while no special was paid. The following table shows a summary of Rio Tinto’s key 2022 reporting lines (EBITDA – earnings before interest taxation depreciation amortisation): Source: Rio…

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Pineapple on the Pizza On the release of 1H23 results Domino’s Pizza’s share price has declined sharply. We digest the results and review our recommendation. The Daily view of DMP highlights the breakaway gap towards the major support level of $49.60, current price movements remain within the multi month consolidation range between $49.60 and $75.0. From the beginning when Domino’s pioneered the phone app for ordering pizza they have remained on a consistent expansionary mission to increase store fronts across…

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A new beast Woodside Energy (Woodside) has reported its operational numbers for 2022 and for the first time included the annual numbers for BHP Petroleum. The change is profound, with comparatives for the year reflecting this and supports our belief the acquisition is a major game changer for Woodside. Certainly, records fell in 2022 with overall production and product offerings reporting substantial changes while revenues added to the list. Pleasingly, Woodside reported a beat on an adjusted 2022 guidance. The…

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