Azzet reports on three ASX stocks with notable trading updates today
Breville sinks on underwhelming outlook
The market appeared less than impressed with Breville Group’s (ASX: BRG) 1H FY25 result today with the kitchen appliance maker’s share down around 3% at the open.
Negative sentiment belies what was a pretty strong result with the group posting record revenue for the first half of $997 million and profit of $97.5 million which beat the consensus forecast by 1%.
The group's 18 cent interim dividend was in line with expectations.
Underscoring the result was double-digit growth across all three geographies in global product, in constant currency, with growth in the coffee category leading the charge.
What the market may have taken issue with today was a fall in the Global Product gross margin to 37.4% from 38.1% in the previous period due to elevated shipping costs in EMEA and the strong US$.
In light of the slightly stronger half, Citi felt the FY25 earnings growth guidance of 5-10% was a little undercooked given the consensus previously implied 12% growth.
Other highlights from today’s 1H results include:
13.0% Global product segment revenue growth (constant currency).
Earnings growth of 10.5%.
10.1% revenue growth.
Net debt of $55.1 million compared with $97.5 million last year.
Strong underlying cash generation.
Net profit growth of 16.1%.
Breville Group CEO, Jim Clayton noted that cooking, globally, was in high single digit growth with Food Preparation experiencing a small single digit decline.
“The strength of our new product launches, expansion into new markets and the continuing coffee tailwind supported this growth as consumers remained loyal to trusted brands during the headwinds of ongoing cost-of-living pressures,” Clayton said.
While Clayton acknowledged uncertainty surrounding U.S. trade policies, he noted that some 2H25 inventory was sent to the U.S. early as a hedge against potential tariffs.
Breville Group has a market cap of $5.3 billion making it the 107th largest stock on the ASX; the share price is up 23% over 1 year and up around 5% year to date.
Multiple indicators indicate that the stock is in a long-term uptrend.
Consensus is Hold.
Macquarie Group up on promise of superior mid-term performance
Macquarie Group’s (ASX: MQG) share price was up around 2% heading into lunch after the diversified financial stock delivered a mixed third-quarter trading update.
The market appears to have overlooked some uninspiring numbers – including flat net profit after tax for the nine months to 31 December year-on-year – in favour of some encouraging underlying commentary.
The group told investors today that it is planning to significantly scale up its push into the private credit sector with plans to boost its private credit portfolio, currently around $25 billion, by deploying more than $3.2 billion in 3Q25 through focused investment in credit markets and bespoke financing solutions.
“Our team feel they have the capacity to identify much greater volume of investment than that at short returns they’ve been generating, since the spreads are not compressing and at those sorts of ratios they’ve been able to deliver, which are very, very low,” said the group’s CEO Sherma Wikramanayake.
“Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing investment in our operating platform; a strong and conservative balance sheet; and a proven risk management framework and culture.”
In an attempt to refocus the group’s attention on private credit, Macquarie has decided to close its U.S. debt capital market down.
Highlights
Looking across the group’s results today, Macquarie highlighted the net profit contribution from its asset management arm which was “substantially” up during the period due to higher performance fees, investment income in asset management and continued loan growth in the banking unit.
By contrast, profit contributions from commodities, the global markets division and the Investment banking arm of Macquarie Capital were “substantially” down due to subdued conditions in certain commodity markets and the unfavourable impact of timing of income recognition primarily relating to North American Gas and Power contracts.
Wikramanayake reassured investors that the return on equity (ROE) would return to its 18-year average of around 14%.
“Over the medium term we are aiming for a mid-year teens REO,” she said.
“In terms of the underlying business, we would be aiming for a mid-teens ROE…”
The group did not provide earnings guidance for FY25.
Macquarie's board approved an extension of the on-market share buyback of up to $2 billion for a further 12 months as of November.
Macquarie also noted that its financial position "comfortably exceeds regulatory requirements", with a group capital surplus of $8.5 billion and a bank common equity tier 1 (CET1) ratio of 12.6%.
Macquarie has a market cap of $88.5 billion making it the ASX’s 7th largest stock; the share price is up around 14% over 1 year and up around 6% year to date.
The stock’s share price appears to be in a long-term uptrend confirmed by multiple indicators.
Consensus is Hold.
Charter Hall Social Infrastructure rallies on 1H FY25 update
Charter Hall Social Infrastructure’s (ASX: CQE) share price was up around 8% today after the REIT reported its half-year results for the six months ended 31 December. As we’ve seen elsewhere across the reporting season, the market favoured underlying commentary over mixed numbers.
The REIT, which invests in childcare centres, healthcare facilities, and transport hubs, reported a 3.7% year-on-year decline in operating earnings of $28.5 million, which equates to 7.6 cents per share, down 5% from the 8 cents per share reported in H1 FY 2024.
Operating earnings were down 3.7% year on year to $28.5 million.
While partially offset by net divestment activity over the half, the REIT reported like-for-like net property income of $51.6 million, representing 3.2% growth.
Net tangible assets (NTA) remained unchanged year on year at $3.82 per share and the REIT paid a total of 7.5 cents in unfranked dividends for the half year, down 6.2% from H1 FY 2024.
Other noteworthy numbers today include:
Weighted average debt maturity is 3.4 years.
Balance sheet gearing was reported at 31.0%, at the lower end of the REIT's target.
$2.1 billion property portfolio.
Long weighted average lease expiry (WALE) of 11.9 years and 100% occupancy.
43% of rental income is subject to market rent reviews in the next 4 years.
Average hedge of 85% through June 2025.
Increased FY25 distribution guidance to 15.2 cents per unit, up from 15 cents.
The REIT's fund manager Travis Butcher noted, "recent market rent reviews on 15 properties delivered a 16.4% increase, highlighting the under-rented nature of the REIT’s childcare portfolio."
There are 60 market reviews or 11% of REIT’s income remaining in FY25 which provides further opportunity for additional rental growth.
59% of the operational property portfolio by gross asset value was independently valued as at 31 December 2024 at a passing yield of 5.3%.
Beyond the numbers
Management told investors that active portfolio curation remains a key strategy for the REIT to deliver earnings and distribution growth.
The acquisition of a pathology laboratory in Western Australia leased to Clinipath Pathology at a 6.4% yield was funded through the divestment of 16 childcare assets throughout the half for total consideration of $84m at an average yield of 4.6%.
This highlights the ongoing demand and liquidity for childcare properties.
“CQE will continue to execute on its strategy and actively manage the portfolio of high quality social infrastructure assets to maintain income security and capital growth,” the REIT noted.
“We expect that there will continue to be significant growth opportunities in social infrastructure assets, driven by favourable demographic trends and the essential nature of the industry, including government backing.”
Charter Hall Social Infrastructure has a market cap of around $1 billion putting it slightly outside the ASX300; the share price is down around 3% over 1 year and up around 9% year to date.
Ord Minnett is forecasting a uptick in retail rental growth on sales estimates of 2%-3% in 2025.
The broker has a Buy on the stock and a $3.20 price target.
Consensus is Strong Buy.
The stock’s share price appears weak with little demand.
This article does not constitute financial product advice. You should consider independent advice before making financial decisions.
