Mercado Libre reported 94% revenue growth in the quarter, well above the 66% Factset consensus estimate. This result was impressive considering it faced unfavorable currency movement (currency-neutral revenue rose 103%) and last year’s 61% growth at the beginning of the pandemic.
In its commerce business, the firm recorded gross merchandise value and items sold growth of 39% (46% currency-neutral) and 37%, respectively, above our full-year estimates of 35% growth for both. In fintech, total payment volume soared 72% against our 53% full-year forecast. Thus, while the comparisons will get more difficult in upcoming quarters, we now think the firm is likely to eclipse our 58% revenue forecast for the year.
Indeed, its operating expenses increased 79% from last year on ongoing investments in fulfillment and delivery speed, marketing, customer acquisition, and loyalty. Even so, MercadoLibre recorded a second-quarter operating margin of 9.8%, well above our full-year 3.6% estimate.
Company Profile
Founded in 1999, MercadoLibre’s commerce segment (representing 64% of net revenue in 2020) includes online marketplaces in more than a dozen Latin American countries, display and paid search advertising capabilities (MercadoClics), online store management services (MercadoShops), and third-party logistics solutions (MercadoEnvios). Its fintech segment includes an online/offline payment-processing platform (MercadoPago), mobile wallet platform, credit solutions for buyers/sellers, and asset management offerings (Mercado Fondo). The company derives more than 95% of its revenue from Brazil, Argentina, and Mexico.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
he fair value increase reflects the firm’s outperformance, an improved near-term outlook, and time value of money, partially offset by the implementation of a probability weighted change in the U.S. statutory tax rate in our model.
Jacobs’ net revenue was up 10.6% from the prior-year period. Critical mission solutions increased its revenue 0.6% year over year. People & places solutions net revenue grew 1.4%. Lastly, PA Consulting delivered stellar 36% year-over year revenue growth. The firm’s adjusted operating margin expanded by 170 basis points from the prior-year period, with improvement across all business lines.
Management increased its outlook for full-year fiscal 2021 and now expects adjusted EBITDA in the range of $1,210- $1,275 million (up from $1,200-$1,270 million) and adjusted EPS in the range of $6.15-$6.35 (up from $6.00-$6.30). Furthermore, management is optimistic that the company can deliver double-digit adjusted EBITDA growth over the medium term.
Company’s Future Outlook
We believe the company is poised to capitalize on multiple favorable secular drivers, including infrastructure modernization, space exploration, intelligence analytics, energy transition, supply chain investments (particularly in the semiconductor and life sciences end markets), and the 5G build out. We also think Jacobs is well-positioned to benefit from a likely infrastructure plan in the U.S., given the firm’s strong position in areas such as water and transportation infrastructure.
Company Profile
Jacobs Engineering Group Inc. (NYSE: J) is a global provider of engineering, design, procurement, construction, and maintenance services as well as cyber engineering and security solutions. The firm serves industrial, commercial, and government clients in a wide variety of sectors including water, transportation, healthcare, technology, and chemicals. Jacobs Engineering employs approximately 55,000 workers. The company generated $13.6 billion in revenue and $970 million in adjusted operating income in fiscal 2020.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
In the six months to June, the number of renters spending more than two-fifths (41%) of their income on rent had increased by 8 percentage points to 68 percent, with tenants in both capitals and regions failing to keep up with rising rents. A renter is considered to be in rental stress if they spend 30% or more of their income on rent the poll of 1500 families also indicated that more than three-quarters of Queensland renters (77%) and more than seven-tenths of NSW renters (72%) are now stressed.
Due to lower incomes, a greater proportion of women (75%) failed to make their rent payment, compared to only 60% of males. Women make only 86 percent of men’s typical salaries, according to the Australian Bureau of Statistics, and employed women aged 20 to 74 are nearly three times more likely than males to work part-time.
In the year to July, median rents for houses and apartments had risen by 7.5 percent across the country, the largest annual increase since 2008. Those who owned a home were less stressed than those who rented. Only two out of every five people (42%) spent more than 30% of their discretionary income on mortgage payments.
Mortgage stress has been reduced thanks to resurgence in economic activity, extremely low interest rates, and the delay of loan repayments by some homeowners. According to a new Core Logic analysis, repaying a mortgage is now cheaper than paying rent on 36.3 percent of Australian residences, up from 33.9 percent in February last year before COVID-19.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Management reaffirmed its full-year $12.9 billion to $13.3 billion adjusted EBITDA guidance, and our estimate remains at the high end of that range. This includes the $2.4 billion EBITDA benefit from the mid-February winter storm. Energy Transfer’s limited partner unit’s trade at a 50% discount to our fair value estimate as of Aug. 3, making it one of the cheapest companies in the energy sector.
Earnings growth in the natural gas liquids and refined products segment continues to lead the way, making that segment the largest earnings contributor on a run-rate basis. This is in line with our expectations as volumes ramp up from favorable market conditions and new projects online. Second-quarter earnings in Energy Transfer’s other segments rebounded from last year when energy market shit a bottom at the height of the COVID pandemic. Capital allocation remains a key variable after Energy Transfer achieved investment-grade credit ratings with $5.2 billion of debt reduction this year.
Company’s Future Outlook
We expect little growth in these segments going forward due to unfavorable reconstructing prices and lack of organic investment potential. Management reaffirmed their plan for $500 million to $700 million annual growth investment in 2022 and 2023, in line with our estimate. We think Energy Transfer is inclined to make more acquisitions like its $7 billion Enable deal that should close by year-end. Management has discussed midstream consolidation and downstream investments. We believe unit buybacks would be the most value-accretive use of capital. The board maintained its $0.61 annualized distribution, as we expected.
Company Profile
Energy Transfer LP (NYSE: ET) owns a large platform of crude oil, natural gas, and natural gas liquid assets primarily in Texas and the U.S. midcontinent region. Its pipeline network transports about 22 trillion British thermal unit per day of natural gas and 4.3 million barrels per day of crude oil. It also has gathering and processing facilities, one of the largest fractionation facilities in the U.S., and fuel distribution. Energy Transfer also owns the Lake Charles gas liquefaction facility. It combined its publicly traded limited and general partnerships in October 2018.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Well-timed East Australian coal seam gas purchases and subsequent partial sell-downs bolstered the balance sheet and set the scene for liquid natural gas, or LNG, exports. Santos is now one of Australia’s largest coal seam gas producers and continues to prove additional reserves. It is the country’s largest domestic gas supplier.
Coal seam gas purchases increased reserves, and partial sell-downs generated cash profits, putting Santos on solid ground to improve performance. Group proven and probable, or 2P, reserves doubled to 1,400 mmboe, primarily East Australian coal seam gas. Coal seam gas has grown to represent more than 40% of group 2P reserves, despite partial equity sell-downs. A degree of confidence can be drawn from project partners. U.S. energy supermajor ExxonMobil, the world’s largest publicly traded oil and gas company, is 42% owner and the operator of the PNG LNG project.
The Gladstone LNG project was built and is operated by GLNG Operations, a joint venture of owners Santos (30%), Petronas (27.5%), Total (27.5%), and Kogas (15%). Petronas is Malaysia’s national oil and gas company and the world’s second-largest LNG exporter. The company increasingly enjoys export pricing on its gas. In addition to Santos’ Gladstone LNG, several other third-party east-coast LNG projects conspire to drive domestic gas prices higher. As the largest domestic gas supplier, Santos can expect significant bang for its buck, with limited additional capital or operating cost required to capture enhanced prices.
Financial Strength
Santos has moderate leverage (ND/ND+E) of 28% and maintenance of strong net operating cash flow is reassuring. Santos’ debt covenants have adequate headroom and are not under threat at current oil prices. The weighted average term to maturity is around 5.5 years. Capital expenditure of USD 4.0 billion, beginning 2022 on the Dorado oil project and the Barossa to Darwin LNG upgrade. But this is excellent near-term bang-for-buck expenditure, increasing group production by 65% to 125mmboe by 2026. Capital efficient development and fast up-front cash flows from Dorado’s oil should combine to ensure Santos’ leverage ratios continue to decline from current levels despite outgoings.
Bull’s Say
- Santos is a beneficiary of continued global economic growth and increased demand for energy. Aside from coal, gas has been the fastest-growing primary energy segment globally. The traded gas segment is expanding faster still.
- Santos is in a strong position, with 0.9 billion barrels of oil equivalent proven and probable reserves, predominantly gas, conveniently located on the doorstep of key Asian markets.
- Gas has about half the carbon intensity of coal, and stands to gain market share in the generation segment and elsewhere as carbon taxes are rolled out.
Company Profile
Santos was founded in 1954. The company’s name is an acronym for South Australia Northern Territory Oil Search. The first Cooper Basin gas discovery came in 1963, with initial supplies in 1969. Santos became a major enterprise, though over-reliance on the Cooper Basin, along with the Moomba field’s inexorable decline, saw it struggle to maintain relevance in the first decade of the 21st century. However, the stage has been set for a renaissance via conversion of coal seam gas into LNG in Queensland and conventional gas to LNG in PNG.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
The booming Australian housing market is one of the factors supporting the CBA share price (and those of its competitors).
“Record low mortgage rates and the likelihood of interest rates remaining low for an extended period of time are fueling demand,” says Tim Lawless, research director at CoreLogic.
The rise in home prices has resulted in a significant increase in the mortgage balances held by Australian banks.
According to BankingDay, “lenders’ mortgage balances increased by 0.7 percent in June, compared to the previous month – the greatest level of monthly growth since 2010.”
According to APRA’s most recent monthly ADI statistics, Commonwealth Bank, National Australia Bank Ltd. (ASX: NAB), and Westpac Banking Corp. (ASX: WBC) all outperformed the market in June, with mortgage balance growth of 0.9 percent.
In the long run, the lenders’ mortgage amount increased by 5.3 percent in the year to June 30, the quickest annual rate in three years.
The share price of CBA has likely risen in comparison to its major competitors over the last year, as CommBank has managed to grow its mortgage balance faster. The book of CommBank increased by 6.7 percent, compared to 1.6 percent for NAB and 2.3 percent for Westpac.
CBA’s stock price has risen 46 percent in the last year, greatly surpassing the S&P/ASX 200 Index’s increase of 26 percent (ASX: XJO). The CBA share price has continued to rise year to date, up 22 percent so far in 2021.
Company Profile
The Commonwealth Bank was founded under the Commonwealth Bank Act in 1911 and commenced operations in 1912, empowered to conduct both savings and general banking business. Today, we’ve grown to a business with more than 800,000 shareholders and 52,000 people working in the Commonwealth Bank Group. We offer a full range of financial services to help all Australians build and manage their finances.
(Source: Fact Set)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.