MARKET VIEW
to be rebounding , with the three months to September down 1.4 % YoY , an improvement from down 14.2 % YoY in 2Q20 and a year ago -6.3% YoY .
Finally , Finance indicators could be seen as decelerating . Private credit growth at 2.0 % YoY has slowed slightly from 2.5 % YoY pre-COVID and 2.7 % YoY a year ago . Housing credit growth is 3.3 % YoY , while business , after an initial COVID spike , has more than fully reversed to 2.0 % YoY and personal credit has fallen a sharp 12.5 % YoY . Commodity prices remain resilient , lead by iron ore .
Looking at recent company trading updates and commentary associated with AGMs the outlook is improving albeit an uneven outlook .
Within the Industrials , transport and infrastructure space softness remains . Aurizon ’ s ( AZJ ) 1QFY total volumes fell 2 % YoY , with coal down 5 % but bulks up 13 % YoY . Cimic ’ s ( CIM ) 3QCY revenue fell 18 % YoY and year to date fell 13 % YoY , driving profit down 17 % YoY . Work-on-hand fell 5 % YoY . Cleanaway ’ s ( CWY ) 1QFY EBITDA was flat against the FY20 run-rate , with a stronger September . Transurban ’ s ( TCL ) total 1QFY traffic volumes fell 25.2 % YoY , but Sydney , adjusted for new roads , fell 9.6 % and Brisbane fell 9.1 % YoY . By contrast , lockeddown Melbourne fell 58.6 % YoY .
Within the Consumer sector retail is booming , but gaming has been mixed and travel services poor ( as expected ). Bapcor ’ s ( BAP ) 1QFY revenue rose 27 % YoY on like for like ( LFL ) sales growth of 36 % YoY at Autobarn and 7.7 % YoY at Burson . Coles Group ’ s ( COL ) 1QFY LFL sales growth was a robust 10.4 % YoY , with supermarkets up 9.7 % YoY , liquor 17.8 % YoY and express 10.2 % YoY . Turning to gaming , Crown ’ s ( CWN ) year-to-date Perth gaming revenues rose 16 % YoY , although non-gaming fell 21 % YoY . Melbourne remained closed . Harvey Norman ’ s ( HVN ) fiscal year-to-mid-September sales rose 30.6 % YoY , lifting pre-tax profit by 186 % YoY . JB Hi-Fi ’ s ( JBH ) 1QFY LFL sales boomed , with JB Hi-Fi Australia 27.6 % YoY ( prior comparable period 3.7 %), Good Guys 30.9 % YoY (-1.8% pcp ) and JB Hi-Fi New Zealand -2.5% ( 3.8 % pcp ).
The Property sector saw an upturn in residential and positive industrial , but soft retail mall sales . Goodman Group ’ s ( GMG ) 1QFY net property income was up 2.9 % YoY LFL , whilst work-in-progress grew to $ 7.3 billion . GPT reported 3QCY retail sales ex-Victoria fell 4.3 % YoY , but specialty stores rose 0.8 % YoY . Rent collection rebounded to 90 % from 67 % despite Victoria closures , but remained below 1QCY ’ s 95 %.
Mirvac ’ s ( MGR ) residential exchanges rose 40 % QoQ , with settlements on track to reach the FY21 target . Within its Retail division , 1QFY sales fell a sharp 14.1 % YoY ( specialties -25.4% YoY ).
Materials and energy continued to have profit pressure from falling oil prices , but solid production volumes was a partial off-set , and strong rebounds in building materials were seen . Major oil producers ’ production volumes were generally positive , with Woodside ( WPL ) up 2 % YoY , Santos ( STO ) up 22 % YoY , Oil Search ( OSH ) up 7.2 % YoY and Beach Energy ( BPT ) up 3 % YoY . But much lower oil and gas prices meant revenues were lower by 42 %, 23 %, 48 % and 18 % YoY , respectively .
Banks have been negatively impacted by collective provisioning , though underlying credit demand remained soft . Major bank profits were adversely impacted by a surge in provisioning against future potential loan losses , ongoing customer remediation payments and software write-offs . Underlying profits were soft , reflecting lethargic loan growth , net interest margin pressure and fee declines .
Bruce McLeary
Associate Senior Analyst ( 07 ) 3006 7219 bmcleary @ burrell . com . au
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