![Sid Ruttala Investment Specialist](https://www.tamim.com.au/uploads/6/6/0/7/66077715/published/sid1-sq.jpg?1621468081)
Author: Sid Ruttala
Part 1: The Banks – CBA & WBC
Part 2: The Banks – NAB & ANZ
Part 3: BHP & Fortescue
Part 4: CSL & Wesfarmers
Woolworths Group (WOW.ASX)
Numbers wise, group sales were reported at $16.56bn AUD. More pleasingly, online sales growth continued its upward momentum with Q1 sales up 90.5% vs. the 69% reported in my notes six months ago. This is one area that remains a key metric for management given its omnichannel strategy. The big headache seems to be the NZ business, contracting -7.5%, with a -6.9% for transaction growth. However, even here online penetration continued to grow at 37.9%. What surprised on the upside however was the performance of Big W, seeing sales growth of 20%.
Overall, management continues to deliver on its outlined strategy and we remain convinced that it has a better investment thesis/case than Coles.
In addition, last-delivery remains an issue for the business with much being reliant on management turning existing stores into effective distribution centres (DCs).
My Expectations: In the right context, WOW remains a buy with management continuing to execute on its strategy. Their footprint across regional areas gives them a competitive advantage in comparison to pure-play online retailers. The company’s demerger of Endeavour is, in my view, a good move.
Dividend Yield: The current yield stands at 2.6%, assuming a share price of $43.50 AUD.
We remain convinced that this will stay at $1 AUD per share (give or take 0.2c) for the foreseeable future as the business continues to reinvest in order to keep up with competition and margin pressure.
Macquarie Group (MQG.ASX)
Of particular interest, CGM (Commodities & Global Markets) continued to deliver with operating income increasing by 22% to $4.7bn AUD. BFS (Banking and Financial Services) remained broadly flat however. Again, a strong AUD remains a problem for the institution, given that 69% of their revenues are derived globally, as mentioned in my notes six months ago. A 5% swing in the spot rate will result in a 3.5% swing in the NPAT (either way).
My Expectations: Remains a fair substitute for the Big Four with a well-diversified business and is arguably a greater risk-reward proposition. However, at a $149.540 AUD share price at the time of writing, it remains fairly valued.
Dividend Yield: The current dividend yield stands at an exceptional 3.15%, assuming a price of $149.540 AUD.