Delta, Dividends and Small Caps feature
This year’s reporting season revealed a strong rebound to earnings and dividends in the face of a delta variant that has temporarily delayed but not derailed the outlook.
Summary
- ASX200 earnings grew +26% in FY21 – broad-based recovery to earnings, driven by Resources and Banks. Earnings expectations for FY22 remain robust at +20%.
- Investors are looking through the Delta variant – despite having more downgrades, investors rotated to reopening plays (COVID losers e.g. RHC & TCL).
- Reopening the economy will remove a tailwind for COVID beneficiaries – online retail & auto-related sectors.
- Dividends have recovered faster than expected – supported by sound balance sheets (Cash) and improving profitability.
- Small Caps were a positive surprise for June half-year earnings – ex-ASX100 companies had more results beating earnings estimates than ASX100 companies.
- Growth leadership is shifting to offshore earners – offshore earners are expected to grow earnings at a higher rate over FY22-23 (e.g. AMC & ALL).
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