Top 5 AU Stocks To Watch for H2 2021

The Australian stock market has had an impressive run in H1 and the S&P/ASX200 hit a fresh high in August, amidst the second earnings season of the year. The index contains some popular companies that have not only domestic appeal but are also interesting from a regional and a global perspective.

Below are 5 firms that drew our attention with their recent financial results and stock movement and will remain in our radar in the months ahead:

  • Telstra (TLS.au)
  • Afterpay (APT.au)
  • Sydney Airport (SYD.au)
  • Woolworths (WOW.au)
  • Rio Tinto (RIO.au)

TELSTRA (TLS.au)

  • Telstra is Australia's leading telecommunications and technology company, but also has international presence spanning over 20 countries, with a focus on the Asia-Pacific region.
  • It recently boosted its Telstra TV offering, with the addition of the popular and fast growing Disney+ streaming service.
  • It attracted A$2.8 billion by selling 49% of its Towers business, the largest mobile tower infrastructure provider in Australia, with approximately 8,200 towers.
  • After media speculation, Telstra confirmed on July 19th that it has been in discussions to acquire South Pacific region telecoms firm, Digicel Pacific, in partnership with the Australian Government.
  • In mid-August, it announced its Full Fiscal Year 2021 financial results with A$23.1 billion Total Income, down 11.6% year over year (y/y), while Net Profit After Tax (NPAT) rose 3.4% (y/y) to A$1.9 billion.
  • For the next year (Full FY 2022) the company projects Total Income between A$21.6 billion to A$23.6 billion, while Its CEO said that the firm is building financial momentum and expects the underlying business to return to full-year growth in FY22.
  • TLS.au registered a nearly 20% rise in the first half of the year and posted 4-year highs (4.05) in the aftermath of the August 12th financial results.


Past performance is not an indicator of future results

AFTERPAY (APT.au)

  • Afterpay is a fintech company that launched in Australia in 2015 and debuted on the country's stock market in 2016. It enables online shoppers to buy now and pay later (BNPL), in 4 installments. The service is available across various countries, including the US and UK (where it is called Clearpay).
  • It garnered global attention in early August, when Jack Dorsey's Square (SQ.us) announced plans to buy Afterpay for an implied value of A$39 billion, well above APT's then market capitalization. If approved, the deal is expected to close in the first quarter of calendar year 2022.
  • Just a few days ago, the BNPL firm reported full Fiscal Year 2021 financial results and saw its Underlying Sales almost doubling to A$21.1 billion, but its Loss after tax ballooned to AU$159.4 – a 597% (y/y) surge.
  • Over 620 employees were added during the reported period and marketing expenses more than doubled (y/y), as the company pushed to scale into new regions and drive brand awareness, with North American Underlying Sales overtaking those of Australia and New Zeeland.
  • APT.au had set new record in February (160.06), but had an underwhelming performance after that. The proposed acquisition by Square though, boosted the stock in August.


Past performance is not an indicator of future results

SYDNEY AIRPORT (SYD.au)

  • Sydney Airport is one of Australia's most important pieces of infrastructure, located 8 kilometers from the city center. It connects to more than 90 destinations around the world, while its first commercial passenger flight occurred in 1919.
  • On August 20th, It released weak financial results for the first half of 2021. Loss after income tax expense widened to A$97.4 million and Total Revenue declined to A$341.6 million. The airport also said it welcomed 6 million passengers during that period - a 36% y/y decline.
  • The company did not offer forward guidance and its CEO acknowledged that "it was a challenging six months", but also said that they are optimistic "as the vaccine program gains momentum and we see a sustained easing of restrictions".
  • Just a few days earlier, SYD had rejected an improved buyout proposal of A$8.45 cash per stapled security.
  • The airport is attracting high-end brands in an effort to revitalize its luxury retail precinct, as it plans to welcome 12 luxury brands - such as Prada and Louis Vuitton – in the second half of 2022.
  • SYD.au surged to 2021 highs in July (8.05) after the news of the original acquisition proposal, but has then faced headwinds.


Past performance is not an indicator of future results

WOOLWORTHS (WOW.au)

  • Woolworths is Australia's largest supermarket chain, operating 995 stores across Australia. The first store opened in 1924 in Sydney and it debuted on the country's stock exchange in 1993.
  • On August 26, it reported strong results for the full Fiscal Year 2021 with A$67.278 billion in Group Sales for the Full Fiscal Year 2021 and a 22.9% y/y rise in Net profit after tax, to A$1.972billion.
  • The company has been expanding its business and a couple of months back it said it will be building two new distribution centers in Sydney to support ongoing growth.
  • It also completed the acquisition of a 65% equity interest in PFD Food Services, one of Australia's leading foodservice suppliers, while the demerger of Endeavour Group was concluded in July.
  • On August 23, it announced that it will be providing same-hour grocery delivery in Australia, by partnering with Uber Eats, starting with a dozen locations.
  • WOW.au surged up to 42.73 earlier in August, but has since fallen below A$41.


Past performance is not an indicator of future results

RIO TINTO (RIO.au)

  • Rio Tinto is an Anglo-Australian multinational mining and metals company, operating in 35 countries around the world, with 47,500 employees.
  • The firm delivered solid Half Year 2021 financial results in late July, generating US$13.661 billion net cash from operating activities – a 143% y/y rise, mainly due to higher pricing for iron ore, aluminium and copper.
  • In a push to strengthen its portfolio, the firm recently committed US$2.4 billion in funding for a new mine in Serbia, to produce battery-grade lithium carbonate (subject to relevant permits and approvals).
  • Earlier in August, Rio Tinto said that it had commenced the process of restarting operations at Richards Bay Minerals (RBM) in South Africa, after having ceased operations in late June. The force majeure declared on customer contracts though, remained in place at the time.
  • RIO.au rose to all-time highs in July (137.54), after its advance during the second quarter of the year. However, August was a bad month as it plunged and registered 2021 lows (104.71).


Past performance is not an indicator of future results

Nikos Tzabouras

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and…

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