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Contact Insights – March 2022 – A Take on the February Reporting Season
A Take on the February Reporting Season
While reporting season was relatively solid with net positive revisions, this is as unusual as the current macro environment which includes: emergence from COVID-19, impacts from massive stimulus, tight supply chains, roaring commodity prices and now a major European conflict. Key Contact holdings that saw consensus FY22 upgrades of over 10% included Nine Entertainment (~20%), Monadelphous (~10%), Harvey Norman (10%) and Kelsian Group (~10%).
More Beats than Misses
The outbreak of war in the Ukraine dominated headlines in February as investors looked to reduce risk. The increased uncertainty came at a time when several macroeconomic indicators were already slowing, combined with concerns around inflation and tighter monetary policy already weighing on sentiment. Most global markets finished the month lower. By comparison, the Australian Equities market increased by 2.1% in February. The relative strength was partly attributable to a higher proportion of resources and commodities companies in our index and less technology stocks relative to offshore peers. In addition, the February reporting season was characterised by generally robust results with more beats than misses. The EPS outlook for the Australian market was upgraded (Chart 1) and valuation and yield metrics now appear more attractive.