WiseTech (WTC) is held in the Focus Portfolio.

WiseTech’s 1H25 result will give it the opportunity to reassure the market that its FY25 guidance downgrade in November 2024 was ‘one off’ in nature. 

The downgrade stemmed from product launch delays, due to distractions related to Richard White’s departure from the role of CEO. However, with a new organisational structure in place (and White now a product and business development consultant), we expect operational disruptions to now be a thing of the past. 

The looming launch of the Container Transport Optimisation (CTO) product is central to the WiseTech investment case, as it will add another leg to its growth outlook by expanding its foothold in the new adjacency of landside logistics. At its investor day, WiseTech suggested CTO is expected to deliver ~$150m in annualised revenues, which gives us confidence in the strength of customer demand and the likely uptake of this product once it is released commercially. 

The key factors we are looking for in WiseTech's 1H25 result include:

• No further operational disruptions or product launch delays. 
• Confirmation that CTO is on track to launch in 2H25 (vs 2Q25 pre-downgrade). 
• Reaffirmation of the latest (post downgrade) FY25 EBITDA guidance of +21-33% (vs FY24). 

If WiseTech can deliver on these items (our base case), we are confident the stock will perform well, as investor confidence should be restored in the strength of its long-term growth outlook (underpinned by freight forwarder contract wins/rollouts, new product development, and pricing).  As a high multiple growth stock, delivery against its latest guidance is particularly crucial for WiseTech. 

CAR Group (CAR) is held in the Focus Portfolio. 

This reporting season will be CAR Group’s first result since it was added to the Focus Portfolio in August 2024, following its strong FY24 result. Positively, earlier this month CAR reaffirmed its existing qualitative guidance for ‘good growth’ in revenue, EBITDA, and adjusted NPAT in FY25. 

We are confident in CAR’s medium-term outlook and see upside risks to consensus estimates for FY25e given: 

• US rate cut tailwinds – while we are relatively early into the US rate cutting cycle, we are looking for early evidence of (or management commentary around) improvements in US RV activity, following a period of subdued RV sales amidst cost-of-living pressures and elevated interest rates. Improving macro dynamics present upside risks for Trader Interactive, which is focussed on US RV sales - a more discretionary (and hence more macro sensitive) category than autos.
• Robust domestic inventories – Australian dealership and private inventories are elevated and rising, which should drive greater spend on advertising vehicles for sale. This dynamic is supportive of Carsales’ listing volumes and depth product usage (i.e. premium listings) from both private and dealer customers, which presents upside risks to consensus for CAR’s domestic earnings. 
• Price increases – while used car prices are falling, CAR has increased its prices in the mid-to-high single digits percentage range for domestic private listings in 1H25, which will support yield and hence revenue growth in FY25. Yield growth should also be supported by expanded depth penetration and increased usage of CAR’s Instant Offer product. 
• Currency tailwinds - Throughout the half, the AUD weakened relative to the USD and Korean Won, which should create a favourable translation benefit to CAR’s earnings in AUD terms.

Notwithstanding our positive stance towards the group, we are cautious around the near-term outlook for CAR’s South Korean business, Encar. The declaration of martial law and the aftermath in South Korea could impact year-end auto sales in South Korea. However, we are sanguine about this risk as the segment represents just ~11% of earnings and the political upheaval only occurred in December 2024. 

Wesfarmers (WES) is not held in the Focus Portfolio. 

While Wesfarmers is a high-quality business, it is not held in the Focus Portfolio on valuation grounds. 

Nevertheless, as a bellwether retailer, its interim result will provide a good read into the strength of the Australian consumer and the outlook for retail sector earnings, which we expect to improve over the medium-term - albeit this is generally priced into valuations already, in our view. 

To justify Wesfarmers’s elevated valuation multiple (forward PE of ~30x vs its 5/10-year average of ~25/18x), the market will be looking for upgrades to the currently modest consensus earnings forecasts for FY25/6, potentially supported by improving macro dynamics following last year’s tax cuts and expected RBA rate cuts this year. 

After solid trading at the start of the year, we expect Kmart Group to post another solid result in 1H25, as its value offering and its strong/improving product offering (led by the Anko brand) continues to resonate with customers. That said, we are conscious of the risk that basket sizes could continue to fall amidst cost-of-living pressures. 

Bunnings Warehouse should continue to deliver modest top-line growth supported by market-leading pricing and range expansion. 

However, there are downside risks from its exposure to continued weakness in residential construction activity and the negative read-through from Metcash’s (Mitre 10 owner) October 2024 profit downgrade. 

Meanwhile, WesCEF (part owner of the Kwinana lithium hydroxide refinery) is likely to experience continued earnings headwinds from depressed lithium prices over the medium-term.