AUB Group
Australia
Financials
AUB Group Limited provides financial services. The Company offers equity-based risk management, insurance broking, and specialist underwriting agencies, as well as focuses on risk solutions for clients and strengthening our partners risk advisory capabilities.
Charter Hall Group
Australia
Real Estate
Charter Hall Group invests in and develops real estate. The Company manages real estate investment funds and develops commercial, residential, and industrial properties.
EBOS Group Ltd
New Zealand
Health Care
EBOS Group Limited supplies and distributes medical consumable products and equipment to the hospital and primary care sectors of the New Zealand and Australian healthcare markets. The Company's products include diagnostic instruments, surgical instruments and prosthesis, feminine protection, anesthetic equipment, and other consumer products.
EQT HOLDINGS LTD
Australia
Financials
Equity Holdings Limited provides personal trust and financial services to customers in Australia. Services include will and estate planning, trustee for settlements, financial guardian, investment and property management and fund investments. Other services provided by the company include income tax services, short term share trading and mortgage loans and investments.
Hansen Technologies
Australia
Information Technology
Hansen Technologies Limited develops, supports and integrates billing systems software for the telecommunications and utilities sectors in Australia. The Company also provides IT outsourcing services such as facilities management and develops software and services for workforce management.
Healius Ltd
Australia
Health Care
Healius Limited provides health care services. The Company offers diagnostic imaging, pathology, acute and chronic disease treatment, dental and eye care, and in vitro fertilisation services. Healius serves patients in Australia.
NIB Holdings
Australia
Financials
NIB Holdings Ltd. offers health insurance products. Depending on the specific product, the Company covers ambulance costs; and reimburses for costs not covered by Medicare including dental, optical, physiotherapy and natural therapies; and some hospitalization costs.
Propel Funeral Partners Ltd
Australia
Consumer Discretionary
Propel Funeral Partners Limited provides funeral services. The Company owns and operates funeral homes, cemeteries, crematoria, and related assets, as well as offers funeral, cremation, burial, and mortuary services. Propel Funeral Partners serves individuals and families in Australia and New Zealand.
Technology One
Australia
Information Technology
Technology One Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.
Uniti Wireless Ltd
Australia
Communication Services
Uniti Group Limited provides broadband solutions. The Company offers internet access and other related services. Uniti Group serves customers in Australia.
COMMENTARY
Equity markets ended the year on a disappointing note with the ASX200 falling -8.8% in June (SP500 -8.3%) as central banks around the world pushed interest rates higher and concerns grew among investors that many Western economies will face a recession in late 2022 or 2023.
Over the year to June the ASX200 fell -6.5% as the decline in Industrials (down -9.2%) more than offset the small rise in Resources (+3.3%). Globally the S&P500 fell -10.6% over the financial year.
With inflation in Australia growing at its fastest pace in twenty years, the real risk that house prices could materially fall over the coming two years, and consumer confidence nose-diving to near record lows, we remain particularly wary of companies relying on a strong economy to grow earnings.
Our best performers in June included:
Hansen Technologies (+2%) as the market warms to the recurring nature of its earnings. Technology One (+2%) improved on the back of a better than expected profit result released in late May. IPH Limited (+3%) benefited from a falling $A as its revenue is denominated in $US. Ebos Group (+4%) and Propel Funeral Partners(+4%) were positively rerated for their defensive earning streams. Uniti Group (-1%) as the all cash takeover bid for the company underwrites the share price.
The key detractors for June were:
MA Financial Group (-27%), Aussie Broadband (-21%), and Charter Hall Group (-17%) slipped as rising interest rates saw analysts downgrade their valuations. Notwithstanding our broader concerns surrounding the economy, these companies have resilient earnings and now trade on very cheap valuations. Capitol Health (-18%) was impacted by restrictions imposed on elective surgery reducing demand for their radiology services and City Chic Collective (-23%) was hampered by a combination of earnings downgrades and concerns surrounding elevated inventory levels.
The uncertainties surrounding economic growth and the direction of interest rates has led to there being a larger degree of subjectivity than usual in attempting to forecast a company’s earnings prospects. In this environment our playbook is to be more defensive than usual until the haze passes; favouring companies with earning streams that are unlikely to be as buffeted by an economic downturn and seeking out companies with profit margins that are well protected from the damaging effects of inflation.