Trading Tidbits: TAH, PWR, SEK, SGP

Company News

by Glenn Dyer

A further flurry of earnings reports released Tuesday, including from wagering group Tabcorp Holdings (ASX:TAH), car dealer Peter Warren (ASX:PWR), online jobs market Seek (ASX:SEK) and property giant Stockland (ASX:SGP).


Shorn of its lucrative lotteries business, Tabcorp (ASX:TAH) has hired beancounters to help it slash costs by $80 to $100 million over the next three years, despite reporting stronger results for the December 31 period.

Tabcorp says it will use the cash liberated in the cost cutting campaign to reinvest in growth in wagering – especially its digital gambling strategy amid between now and 2025.

Tabcorp has targeted $80 million to $100 million in savings across the business to reduce annual operating expenses from a projected $700 million by the 2025 financial year.

The wagering company has hired Boston Consulting Group (BCG) to design the “Genesis” program, which is planned to cut across six pillars of the business to reduce annual operating expenses to between $600 million and $620 million by the 2025 financial year.

CEO Adam Rytenskild said in Tuesday’s statement the company wants to lift its share of digital punting from just over 25% to 30% by 2025 (and the cost cutting will be invested to achieve that).

“We’ll do this with a transformation of our entire wagering ecosystem, including new products for punters, a reinvigoration of Sky Racing that will include a greater integration with TAB and the implementation of our new marketing strategy.

“The successful launch of the new TAB App, which helped us retain digital market share despite the introduction of a new competitor, has provided a strong launch pad to reach our 30% target,” he said.

He said more detail would be released at the investor day in May. Tabcorp shares jumped 4% to $1.04 on Tuesday.

The company helped the share gain by trimming its guidance for operating expense growth in FY23 to +2-3% growth, compared with +3-4% growth previously.

Group revenue for the half rose 11$ to $1.275 billion, Group EBITDA rose 24% to $197 million “reflecting 58% growth in cash wagering revenue following a strong rebound from the COVID impacted 1H22.”

Tabcorp reported a $52 million net profit for the half year to December 31, easily topping market estimates of $40 million.

A fully-franked interim dividend of 1.3 cents per share was set (no valid comparison because of the spinoff of Lotteries Corporation impact).


Despite much of the economy returning to normal post-Covid, there’s one sector where there doesn’t seem to have been much of a change: car selling is still booming.

New and used car prices took off during the lockdowns because of supply shortages, a lack of computer parts especially, and a knock-on effect to the second-hand sector where people snapped up near new versions of the new cars they couldn’t get their hands on and sent prices soaring.

Six months on from the freeing-up of the economy, the re-opening of borders and sectors to normal activity, the drift away from online sales and the gradual ending of supply shortages, there’s still good money in selling new and old cars, if the December half year results from Peter Warren Auto (ASX:PWR) is any guide.

Helped by a big acquisition of a rival car seller in late 2021, PWR lifted vehicle sales, earnings, revenues and dividend for the six months to December.

And the company is confident it can continue in that vein in the June half, telling the market on Tuesday:

“We recognise the macroeconomic environment, consumer sentiment and variability in vehicle supply. Our proactive and disciplined approach has delivered a strong H1 FY23 result and we are confident that this approach will enable us to achieve a robust full year result underpinned by a substantial order bank and our diversified revenue from service, parts, finance and used cars.”

Revenue jumped 28% to $999.0 million, from the December, 2021 half figure of $777.9 million. That saw profit before tax jump 27% to $43.2 million and an after-tax result of $30.2 million, up 27% and an indication that the company managed to hang onto margin in the half.

The recently acquired Penfold Motor Group added $151 million to revenue and $5.9 million to before tax profit. The Penfold Motor Group was acquired on December 1, 2021 “and has performed above expectations”, according to directors.

Interim dividend was raised to 11 cents per share from 9 cents a year earlier.

CEO Mark Weaver said, “The performance of our recently acquired Penfold Motor Group has exceeded our expectations and is a clear demonstration of our disciplined approach to acquisitions. We look forward to expanding our operating footprint further as we execute on our growth strategy.

“Our substantial order book (up 61% year on year at December 31) provides a degree of certainty regarding our outlook. This puts us in a strong position and we continue to be proactive in mitigating the challenges around inflation, consumer spending and vehicle supply. We remain disciplined in our approach and we expect to benefit from the diversity of our revenue streams.

PWR shares rose 1.4% to $2.78.


Shares in online employment group Seek (ASX:SEK) were bounced around in trading on Tuesday after the company produced fairly solid interim results with a 7% rise in net earnings off the back of higher revenue.

Interim dividend was lifted a cent to 24 cent per share but that improvement was not greeted well by investors.

Seek shares fell, rose and then eased again to be down 1.7% at $23.90 by Tuesday’s close. The story of solid sales, profit, and dividend growth during the first half just didn’t do it for many investors on Tuesday.

Revenue jumped 21% to $626.7 million thanks to the very strong Australian and NZ jobs markets; profit after tax rose 7% to $135 million and on a statutory basis, profit totalled $978 million after a one-off boost of $843 million of profits from the disposal of Discontinued Operations – SEEK Growth Fund.

That profit reflected the difference between the company’s share of fair value of the SEEK Growth Fund and the carrying value of the assets.

Seek said its ANZ jobs market revenues were up 19% and EBITDA was up 8% and Seek Asia revenue was up 25% and EBITDA up 78% vs pcp (in constant currency).

Seek CEO Ian Narev said “Across our Asia Pacific markets, demand for labour remained high during H1 23 which led to increased job ad volumes. In the second quarter, volumes reduced moderately across all markets, and had the usual seasonal variation. Yield increased through adoption of depth products, particularly in Asian markets.

“Across ANZ, volumes were higher than in the corresponding half last year, but lower than the peaks we saw in H2 22. Yield increased through higher depth adoption and increased variable ad prices. Our dynamic pricing structure is providing the ability to respond to changes in the marketplace and better align price to value.

“In Asia, a new budget-based contract structure based on our ANZ approach was implemented progressively across our six markets. This was a major milestone for the business, and a direct result of the Platform Unification program. The new contract structure has led to increased substitution of basic ad products with depth products, which combined with higher ad prices, is increasing yield.

“Across Latin America, results continue to be mixed. In OCC, revenue grew due to higher volumes and increased yield, leading to margin expansion. In Brasil, revenue was impacted by the transition to the new candidate business model. The new model is now driving improved hirer and candidate metrics, putting the business on-track for a sustainable break-even EBITDA run-rate by end of this calendar year.

“In China, Zhaopin has been impacted by severe COVID restrictions. Revenue declined 11%, but cost control ensured that EBITDA was in line with H1 22.” Mr Narev said.

All of which seems on the up, so why the volatility in the share price on Tuesday?

Perhaps it was the updated full year guidance which was on the low side.

Seek says that while it expects to achieve its previous guidance, it will now be at the very bottom of its guidance range. That will see revenue of $1.26 billion compared to previous guidance of $1.25 billion to $1.3 billion, and earnings (EBITDA) of $560 million and net profit after tax of $250 million.

This compares to previous guidance of $560 million to $590 million and $250 million to $270 million, respectively.


Property group Stockland (ASX:SGP) has joined rivals such as Mirvac in feeling the pain from the wet weather, floods and rate rises in the six months to December.

A couple of weeks ago, Mirvac revealed a shortfall on transactions from its homes business and a slump in revenues and earnings and yesterday Stockland reported a similar experience.

Mirvac talked about the impact of lower valuations as well as the big wet and floods had on residential sales, not to mention higher interest rates.

And that has had an impact on Stockland with hardly any growth in revenue and earnings for the quarter, below market forecasts for the key funds from operations figure and a slide in the size of the distribution to securityholders who will get 11 cents per security against 14.8 cents for the December, 2021 half.

The weak half saw Stockland cut its residential settlement target for the year to 5,500 lots after wet weather delays slowed building, and said there would be no material improvement in weaker sales volumes triggered by successive interest rate rises until the outlook for rates stabilised.

The country’s largest listed, diversified residential developer cut its settlements forecast from 6,000 because of the wet weather on the East Coast and said sales in the six months to December more than halved to 1,804 from 3,815 a year earlier.

But Stockland saw a late improvement in the half and a further improvement in inquiries in the early weeks of 2023.

The developer said sales improved in the three months to December – up to 959 lots from 845 lots in the September quarter – and inquiry levels in January and February were up about 50% on pre-Christmas levels.

Stockland reported a 3.1% dip in revenue to $1.15 billion for the six months ended December 31, and a 65% slump in net profit to $301 million – reflecting a drop in revaluation gains on assets from $538 million to just $7 million (Mirvac saw a similar situation).

Funds from operations, an industry measure of profit, rose 0.7% from a year earlier to $353 million, and on a per-security basis to 14.8¢, which was less than the market estimates of 16.1¢.

Stockland said its June 30 FFO per security guidance is being maintained at 36.4 to 37.4 cents on a pre-tax basis, “with lower MasterPlanned Communities (MPC) settlements due to wet weather production impacts expected to be offset by a stronger contribution from the Commercial Property segment and higher MPC margins than previously expected and tax payable now expected to be at the lower end of the previous guidance range of 5-10% of pre-tax FFO.”

Stockland securities fell 3.3% to $3.76.

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?