Report
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Australian Industrials - There's Still More Meat on the Carcass
- Global optimism has added fuel to valuation premiums in a broad measure of Australian Industrial stocks over the past 5 months. But it has not boosted the revenue outlook which remains weak. EPS growth in these stocks still depends on continuing cost-out.
- Many of them have a good track record in delivering cost-out, which has made them attractive momentum plays even on a modest EPS outlook. BSL, QAN, CSR, DOW, NUF, BKW and AMC have been the star performers.
- Stocks with large and frequent impairment charges have generally delivered lower returns. ORI, ALQ, SPO and ORA have all had a history of large and frequent impairment charges and this has detracted from performance. BXB and FBU joined the club following the H117 results.
- Cost management performance measured either historically or against peers suggests WOR, FBU, ORA, QUB, CIM, MND, IPL, SVW and GNC have the ability and industry pressure to ramp-up cost-out to provide a surprise lift in EPS leading into the upcoming reporting season.
Provider
Macro Strategy Advisors Pty Ltd
About us:
- The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
- Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist. He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA.
Aim of our business:
- To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.
Services:
- A fortnightly research note.
- Regular presentations and data support delivered by understanding our clients interests and investment process.
- We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
- As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.
Our Edge:
- Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
- We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
- Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
- Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.
Shane Lee
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