Suncorp profit hit by natural disasters; Tabcorp reports slightly better results

Announcement posted by de2 Communications 04 Aug 2016

4 August 2016: SYDNEY -- After a very strong July, in which we only saw four down days, the circa 130-point selloff we saw on Monday and yesterday was the pullback we had to have, according to Chris Conway, head of research at the Australian Stock Report.

“Markets don’t go up (or down) in a straight line,” Conway added.

However, he said the overarching bias for the index remains bullish.

“But we would like to see the price action hold up through reporting season and for the bulls to defend the 5400 level. If it is tested, that would increase our conviction on the long side,” he said.

Tabcorp reports slightly better results

In company specific news, Conway said there’s minimal reaction to Tabcorp’s (TAH) results as the stock was slightly up this morning.

“Their numbers and dividends are slightly better than estimates as the digital-betting business recorded strong growth.”

Conway added, “Bottom line, TAH reported solid results and their digital business growth is encouraging. However, the company remains in a very competitive space.

Suncorp hurt by natural disasters

Banking and insurance company Suncorp (SUN) reported an 8 per cent drop in annual profit due to natural disasters that hit the insurance business.

According to Conway, “While SUN was hurt by natural disasters, their banking business has done well. And their life insurance has also seen an uplift in profit, so that is quite encouraging.”

Downer EDI beats expectations

Engineering and infrastructure management company Downer EDI (DOW) reported net profit that’s in line with guidance - $180.6 million.

According to Conway, the market has reacted positively despite company warning that it faces “continued pressure” in its resources-related business

“Downer is transitioning its business to provide more infrastructure services, with more than 55% of group revenues generated from public infrastructure customers,”

He added, “Whilst the numbers were a ‘beat’ and the transition away from volatile mining services is a good idea, companies such as DOW rely so much on winning contracts. We’ve seen what cost blowouts (Waratah) and losing key contracts (Canberra light rail) can do and we would be reluctant to take on such risks.”

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For more information, visit: http://www.australianstockreport.com.au/