Posted on Tuesday, 19th January 2010 by admin
INVESTOR returns are heading from boiled lollies to chocolates as buoyant business conditions drive a host of profit upgrades, and the prospect of higher dividend payments.
More than $650 million was added to the market worth of companies, including Computershare, Flight Centre and a handful of small fry, as they revealed trading results were exceeding expectations.
The statements underscore the expectations of listed companies for vastly better results over the next few weeks. The forecasts are in sharp contrast to the blood-letting this time last year as business activity dived in response to the banking collapse that followed the shattered confidence in global markets, and at a time when many expected an extended economic recession.
Their confidence comes in the wake of Friday’s move by Commonwealth Bank to steer a coterie of highly paid stockbroking analysts in the right direction after CBA worked out the brokers’ consensus of a $2.7 billion result from the December half was about $200 million lower than the bank’s internal estimates.
A year ago, the brokers were also more negative than the bank, their predictions undershooting its first-half performance by about 20 per cent.
Ironically, the run in bank shares inspired by CBA’s profit guidance came to an abrupt end yesterday as investors took their profits and sold down the banks.
That resulted in a 1 per cent sharemarket fall overall, which made even more notable the average 8 per cent gain in share prices achieved by those companies that revised their earnings outlooks.
Computershare, which specialises in helping companies manage their dealings with shareholders, had its profit crimped last year by the decline in company floats.
As the market turned in 2009, Computershare gained the benefit when its client companies started to raise money through share issues, and through new listings such as the Myer retail group.
While deals like Myer might not recur in the current six months, Computershare still said it thought it could lift what it calls “management earnings” by 20 per cent for both the first half and full year.
That suggests those management figures, in which Computershare adds back certain charges to give what it believes is a more accurate reflection of performance, will see it report a full-year profit of close to $350 million, given the $290 million earned last year.
Travel-related companies like Flight Centre were last year hit by downturns in business and leisure travel, but founder and managing director Graham Turner said Flight Centre had enjoyed a strong first half and he expected the second half would be even stronger.
Flight Centre raised its forecast for the full year to June 30 from about $130 million before tax, to about $170 million.
Debt recovery specialist Collection House was at its best share price levels since 2007 after managing director Tony Aveling produced unaudited profit guidance figures suggesting its after-tax performance will be about 55 per cent better.
Mr Aveling said Collection House, which sources most of its business by recovering customer debts for banks and service providers like phone and energy companies, opted to use its money to pay off debt, rather than borrow more to buy the debts of others and try to chase defaulters.
He also said shareholders could expect an increase in interim dividend, contributing to Collection House shares rising beyond 90¢, before settling to a 12¢ gain at 84¢.
Data#3, which earns money organising bulk government and business software purchases, rose 55¢ to $9.20, another record high, as the company reaffirmed expectations that it will report a 16 per cent profit rise to $6.8 million before tax for the first half of the financial year.
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