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Reporting season winners and losers: Where to invest
The August reporting season revealed markets facing low growth, low interest rates and falling consumer confidence, but one portfolio manager has indicated that it is still possible for investors to get ahead.
Reporting season winners and losers: Where to invest
The August reporting season revealed markets facing low growth, low interest rates and falling consumer confidence, but one portfolio manager has indicated that it is still possible for investors to get ahead.
Nest Egg spoke with Tribeca Investment portfolio manager Jun Bei Liu to discuss the winners and losers from this year’s reporting season.
Winners
Ms Liu echoed the recent sentiment of Ausbil portfolio manager Michael Price in championing the health sector as a defensive share unimpacted by global uncertainty and able to provide strong growth for investors.
In the space, Ms Liu noted NanoSonic as August’s top health performer, “which is due to the suggestion that they are close to launching their next product”.
CSL was another healthcare company that had a strong performance over reporting season.
Ms Liu also highlighted stronger numbers from blue chips, including Woolworths.
The in-betweeners
While some companies have reported strong numbers, it hasn’t been enough to keep some investors interested.
The education sector’s IDP Education was given a shout-out by Ms Liu, with the company reporting “phenomenal growth” that was misunderstood by investors at the time, Ms Liu said.
Despite such an investment setback, Ms Liu noted IDP Education as expected to recover quickly.
Cleanaway also suffered the wrath of uninterested investors, with Ms Liu noting that it has achieved double-digit growth.
Disappointing results
A2 Milk – Ms Liu noted that the dairy company’s data update was reasonably strong. However, they had to invest more the “mum and bub” shops in China, meaning the margin outlook is much weaker than expected, which resulted in a weakening of the share price.
Mining companies – Despite strong growth in commodities, Ms Liu indicated that a majority of mining companies (excluding Rio Tinto and BHP) are “at the mercy of Chinese growth”.
While acknowledging that some of the larger mining companies have paid special dividends due to the strong prices of resources recently, Ms Liu warned that it is still a difficult time for the industry, considering its links to global market performance.
“Mining is hard; you’re relying on China to stimulate the economy,” Ms Liu concluded on the matter.
Don’t buy just because it’s cheap
While Ms Liu expressed positivity about equity markets, with global interest rates remaining low, she reminded investors to be hesitant in buying shares that have fallen during the reporting season.
“You have to get the earning right. Don’t buy something just because it has fallen or because it’s cheap. You want to buy something that has quality earnings and has been misunderstood by the market,” Ms Liu explained.
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