A rare bit of good news for investors about one stock at least – The Perth based shipbuilder and defence contractor, Austal says it has been told by the US Navy it is performing “mission essential functions” and been urged to keep making ships.
We continue to highlight the strong fundamentals underpinning CWY. We also like the defensive nature of its earnings/cashflow, as well as the largely vertically-integrated business model and balance sheet capacity.
It has taken many years so it is not before time that Australia’s biggest waste management company looks like it may finally be getting its act together. Transpacific Industries has completed its name change to Cleanaway Waste Management, and reported a half year profit of $23 million to turnaround last year’s December half loss of $42 million. Revenue also went up, by 8 per cent to $747 million.
The virus impact on Cleanaway Waste Management's operations has largely netted out to flat, given falls in demand for collections in Commercial & Industrial, other than supermarkets, have been offset by increased residential collections. The company says it's still on track to meet prior FY20 guidance but has withdrawn guidance nonetheless.
Cleanaway Waste Management's guidance to a flat first half is disappointing, Macquarie concedes, but not deserved of the subsequent -13% sell-off. The second half should see improvement thanks to price increases, cost reductions and hopefully, as the broker puts it, stable commodity prices.
At the investor briefing, the company provided no further update on its outlook. Macquarie believes there is solid earnings visibility and clear long-term growth options, while management execution is a key ingredient.