Latest / What the Flux / Bunnings to the rescue | Zip shares plunge 33% | Telstra rings in the revenue

Transcript

Bunnings to the rescue | Zip shares plunge 33% | Telstra rings in the revenue · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brett and I'm Justin
• 0:07
  Speaker 1: and it's Friday, the twentieth of February.
• 0:09
  Speaker 2: Dozzy boy. The unemployment rate for January has just come
• 0:12
  Speaker 2: out and it's unchanged at four point one percent, which
• 0:15
  Speaker 2: is a New York historic low. So the labor market
• 0:17
  Speaker 2: is looking uncomfortably tight and not exactly giving the RBA
• 0:22
  Speaker 2: the confidence that things are on the right track.
• 0:24
  Speaker 1: Going to be a very interesting cash rate next month.
• 0:26
  Speaker 1: Yep Man driven mean coins back in the day, or
• 0:29
  Speaker 1: we take a look back at the biggest mean coins
• 0:32
  Speaker 1: from twenty twenty one and how they're performing in twenty
• 0:34
  Speaker 1: twenty six. And let me tell you right now, the
• 0:36
  Speaker 1: five most popular ones aren't doing too well that. If
• 0:38
  Speaker 1: you want to learn more about how the mean coins
• 0:40
  Speaker 1: then are compared to now, make sure to download the
• 0:43
  Speaker 1: Flux app and check out our latest article.
• 0:44
  Speaker 2: Three Tremendous stories today, Juzzy boy, let's do it for
• 0:48
  Speaker 2: our first. West Farmers has posted a one point six
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  Speaker 2: billion dollar profit jump as Bunnings and Lithium carry the load,
• 0:55
  Speaker 2: but Officeworks has run low on black inc.
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  Speaker 1: Bunning's always hammering home the winds be me and so
• 1:00
  Speaker 1: tell me.
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  Speaker 2: More So West Farmers is the Perth based conglomerate behind Bunnings, Kmart,
• 1:04
  Speaker 2: office works and price line.
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  Speaker 1: It also owns chemicals and energy division through a web set.
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  Speaker 2: Oh and a lithium business to power electric vehicles, because
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  Speaker 2: why not when you're based in Wa.
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  Speaker 1: And now to the numbers, be man. West Farmers sales
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  Speaker 1: climbed three point one percent to over twenty four billion dollars.
• 1:21
  Speaker 2: But it wasn't just their sales and crew. Its net
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  Speaker 2: profit increased more than nine percent to one point six
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  Speaker 2: billion bucks for the half year to December.
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  Speaker 1: Which was better than market expectations.
• 1:30
  Speaker 2: So who do you think carried the load here? JUSI boy?
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  Speaker 1: Fair to say Bunnings went into beast mode with growth
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  Speaker 1: in every category in every region.
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  Speaker 2: And I believe some good news from its lithium operations too.
• 1:40
  Speaker 1: Yep. But interestingly it was the traditional retailers that underperformed.
• 1:44
  Speaker 2: That would be your targets, your office works.
• 1:46
  Speaker 1: Office works earnings film more than twenty one percent, fewer
• 1:49
  Speaker 1: home office upgrades, fewer color coded stationary hall But thankfully
• 1:53
  Speaker 1: for West Farmers, when one aisle slows down its earnings,
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  Speaker 1: another one picks up the slack.
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  Speaker 2: So what is The key learning here.
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  Speaker 1: Earning's diversification is when a company makes money from lots
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  Speaker 1: of different business units across different industries.
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  Speaker 2: West Farmers has hardware, retail, discount department stores, offer supplies,
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  Speaker 2: health and beauty, chemicals, lithium.
• 2:13
  Speaker 1: It's basically your fingers in every single shopping bag in Australia.
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  Speaker 2: And US Boy. Because each division responds differently to economic conditions,
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  Speaker 2: it reduces their risk of a total wipeout.
• 2:22
  Speaker 1: And Beman investors often place a premium on this kind
• 2:25
  Speaker 1: of earnings resilience.
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  Speaker 2: Particularly during periods of economic uncertainty.
• 2:28
  Speaker 1: Compare that to a company that's more concentrated, like Mayer Yep.
• 2:32
  Speaker 2: If consumers stop splurging on apparel, there's really no at
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  Speaker 2: hide and.
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  Speaker 1: Recently that's chewed up in a pretty brutal share price slide.
• 2:40
  Speaker 1: My share price has plummeted forty three percent in the
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  Speaker 1: last six months.
• 2:43
  Speaker 2: Meanwhile, Old Wessys has Bunnings on the tools and kmand
• 2:47
  Speaker 2: in the bargain bin and lithium in the ground.
• 2:50
  Speaker 1: For our second story, Zipco the buy now, pay later
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  Speaker 1: so it shares crash more than thirty three percent yesterday
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  Speaker 1: in one of the biggest sell offs in this reporting season.
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  Speaker 2: You can defer your purchases, but you can't defer expectations,
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  Speaker 2: Jessie boy, So tell me all okay.
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  Speaker 1: So. Zip was founded in Sydney in twenty thirteen and
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  Speaker 1: become one of Australia's early buy now, Pay later success stories.
• 3:08
  Speaker 1: It went toe to toe with after Pay during the
• 3:10
  Speaker 1: buy now, Pay later gold rush. Yeah, in fact be man.
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  Speaker 1: At its peak during the pandemic, Zip's market value jumped
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  Speaker 1: over ten billion dollars.
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  Speaker 2: But now it is plummeted to just over one point
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  Speaker 2: five bill including a thirty three percent drop yesterday.
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  Speaker 1: All right to statman, tell me what spooked the market?
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  Speaker 2: Well, Zip delivered growth, but not quite as strong as
• 3:27
  Speaker 2: analysts were hoping for.
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  Speaker 1: We'd been talking total transaction value rising thirty four percent,
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  Speaker 1: but still missed expectations by one percent.
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  Speaker 2: We're also talking cash EBERDA jumping more than eighty five percent,
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  Speaker 2: but five percent below what was forecasting.
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  Speaker 1: And finally, it's net bad debts climbs one point seven
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  Speaker 1: percent of their total transaction value, which most certainly sounded
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  Speaker 1: the alarm bells for investors.
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  Speaker 2: Put it all.
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  Speaker 1: Together on boom worst day since twenty fourteen, investors sold
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  Speaker 1: down the shares because the results didn't quite match their guidance.
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  Speaker 2: So what's the key learning here?
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  Speaker 1: In the share market, it's not just about whether a
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  Speaker 1: company grows, it's at whether it grows as much as
• 4:01
  Speaker 1: people were expecting.
• 4:02
  Speaker 2: Before results come out. Analysts make forecasts about revenue and
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  Speaker 2: profits and growth.
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  Speaker 1: And here's the key partb Man. The share price already
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  Speaker 1: factors in those expectations, so when the numbers are released,
• 4:11
  Speaker 1: they're judged against those expectations. So if revenue grow strongly
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  Speaker 1: but not quite as strongly as predicted, that's still considered
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  Speaker 1: a miss.
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  Speaker 2: The bigger the gap between expectation and reality, the bigger
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  Speaker 2: the reaction.
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  Speaker 1: And Zipco missed on more than three of their key
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  Speaker 1: metrics from their guidance, so a few small disappointments are
• 4:27
  Speaker 1: really added up.
• 4:28
  Speaker 2: And jazz boy, we've already seen this happen this reporting season.
• 4:31
  Speaker 2: Hello Temple and Webster.
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  Speaker 1: They underlivered on their guidance. Next minute, share price whack
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  Speaker 1: thirty percent as well.
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  Speaker 2: So in a reporting season where investors are on edge
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  Speaker 2: about AI eating the world, any miss is a big miss.
• 4:43
  Speaker 1: For our third and final story, Telstra has seen its
• 4:46
  Speaker 1: profit job eight percent after hiking prices on its mobile
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  Speaker 1: plan and seeing the financial benefits of its major staff cutting, Big.
• 4:52
  Speaker 2: Tea enjoying a big win. Here, juzzy boy, what is
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  Speaker 2: the latest? So?
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  Speaker 1: Telstra is Australia's largest telco company.
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  Speaker 2: In fact, it serves twenty five five and a half
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  Speaker 2: million retail mobile services across Australia.
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  Speaker 1: That's nearly one Telstra mobile service per Australian, including children
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  Speaker 1: and jugubay.
• 5:08
  Speaker 2: Telstra's share price jump more than four percent after its
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  Speaker 2: profit figures wet the appetite of some investors.
• 5:14
  Speaker 1: Yeah, get this. It's revenue barely increased in this half,
• 5:16
  Speaker 1: but it's profit that was another story.
• 5:18
  Speaker 2: Yep, Telster's profit jump more than eight percent two or
• 5:21
  Speaker 2: one point two billion bucks.
• 5:22
  Speaker 1: And where did this extra margin come from? B man?
• 5:24
  Speaker 2: Well, juzzy boy. Firstly, labor costs aka staff that dropped
• 5:29
  Speaker 2: by nine percent because of its six hundred and fifty
• 5:32
  Speaker 2: job cuts.
• 5:32
  Speaker 1: And then it also hiked the price of its postpaid
• 5:35
  Speaker 1: mobile phone plans.
• 5:36
  Speaker 2: And despite this price lift, it didn't seem to affect
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  Speaker 2: their customer numbers.
• 5:39
  Speaker 1: Quite the opposite, actually, And that is what you call
• 5:42
  Speaker 1: strong pricing power, oh is it?
• 5:43
  Speaker 2: Juzzy boy? So what is the key learning here.
• 5:45
  Speaker 1: Pricing power is a company's ability to increase prices without
• 5:48
  Speaker 1: losing customers in large number.
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  Speaker 2: And Juze Boy is one of the most powerful competitive
• 5:52
  Speaker 2: advantages in business.
• 5:54
  Speaker 1: Investors love that Telster proved it still had pricing power
• 5:57
  Speaker 1: in its mobile divisions.
• 5:58
  Speaker 2: Did this, It's postpaid average view per user or r
• 6:01
  Speaker 2: PO increased nearly four point eight percent, and.
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  Speaker 1: It's still managed to grow its mobile customer base but
• 6:05
  Speaker 1: over five hundred and eighty thousand mobile services.
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  Speaker 2: And that tells investors something pretty important. Customers value Telstra's
• 6:12
  Speaker 2: network enough to tolerate higher prices.
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  Speaker 1: Yeah. So when revenue growth is limited, pricing power allows
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  Speaker 1: companies to protect their margins and even grow profits in
• 6:21
  Speaker 1: a flat market. And then, man, we've seen this play
• 6:23
  Speaker 1: out globally with Apple and the iPhone yep.
• 6:25
  Speaker 2: Apple has steadily increased the price of its phones, yet
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  Speaker 2: demand is still super strong.
• 6:29
  Speaker 1: So when customers feel locked into the product or service quality,
• 6:32
  Speaker 1: then they become a less sensitive to price. Doge coin,
• 6:35
  Speaker 1: sheiba enu hepe, Hadgi penguins, there are all some of
• 6:39
  Speaker 1: the mean coins that took off in twenty twenty one,
• 6:42
  Speaker 1: but how are they performing now? We do a deep
• 6:43
  Speaker 1: dive in the Flux app to tell you which ones
• 6:45
  Speaker 1: are still performing which ones are not, so make sure
• 6:48
  Speaker 1: to download the Flux app if you want to see
• 6:49
  Speaker 1: how your favorite mean coins are going.
• 6:51
  Speaker 2: Thanks for listening and we'll see you on Monday.