As we approach the end of reporting season, with ~80% of the ASX 200 having now reported (on a market capitalisation basis), the earnings picture has been mixed with a roughly even split of earnings upgrades and downgrades following results.
Results day volatility has remained elevated through reporting season, as even minor downgrades have been met with outsized share price declines, which has been most prominent across the Banking and Healthcare sectors.
The major themes that have emerged across the ASX 200 so far this reporting season have included:
- Banks: cracks appearing –
after a mixed set of results, evidence is emerging that earnings momentum has turned negative in parts of the sector, with NAB’s result featuring weaker-than-expected NIMs and credit quality, which has driven a sell-off across the sector. See below. - Healthcare: weakness driven by stock specifics –
large cap healthcare has underperformed this month after consensus earnings misses from CSL (weak vaccine sales) and COH (weak services revenues), tariff cost impacts for FPH (reports in May), and profit taking from RMD following its Q2 EPS beat. - Retail: upgrades already priced in –
trading updates from leading national retailers (WES, JBH) have shown strong sales momentum into 2H25, which has driven EPS upgrades. However, this hasn’t translated to outperformance due to already demanding valuations and high market expectations heading into reporting season. - Building Materials: macro remains tough –
JHX, RWC and REH all highlighted continued softness in both domestic and US repair & remodel activity, which is weighing on volumes. JHX’s internal strength (share gains, cost control) is providing an offset to the tough backdrop. - Insurance: premium tailwinds easing –
each of the ‘big 3’ ASX listed general insurers (IAG, SUN, QBE) showed that premium growth is slowing, with the focus shifting towards volumes to drive top-line growth, suggesting further margin upside will be limited from here.
This report explores some of the major updates from the last week, including the final ‘Big 4 Bank’ quarterly updates from NAB and ANZ, as well as noteworthy results and updates from key Focus Portfolio holdings: Goodman Group, Aristocrat, and HUB24.
The Focus Portfolio has experienced no thesis breaks this reporting season, albeit we have taken this opportunity to trim the portfolio's exposure to Aristocrat and HUB24 on valuation grounds, which has funded an increased position in Goodman Group.
| Company Name | Ticker | Focus Portfolio weight | Change | |
| Before | After | |||
| HUB24 | HUB | 3.0% | 2.0% | -1.0% |
| Aristocrat | ALL | 4.5% | 4.0% | -0.5% |
| Goodman Group | GMG | 2.5% | 4.0% | 1.5% |
Source: Refinitiv, Wilsons Advisory.
Goodman Group – Positioned for Data Centre Tailwinds
Focus Portfolio weighting: 4% (increased from 2.5%)
Goodman Group’s (GMG) 1H25 result was overshadowed by the announcement of a $4.4bn equity raising to fund data centre projects. This is GMG’s first capital raise in 12 years.
The key takeaway from the result itself was that GMG reiterated its FY25 operating EPS guidance of ~9% growth (vs FY24), albeit this would have increased to +10% were it not for the capital raise.
The capital raise was surprising, given GMG’s tendency to fund developments with recycled capital. Management’s decision to tap the equity market reflects the higher capital intensity of data centre projects and a higher proportion of originations on the balance sheet.
However, GMG expressed confidence in its ability to self-fund future data centre developments from a combination of existing liquidity ($6.6bn post raise), retained earnings, equity sell-downs to capital partners (GMG plans to keep equity interests of 30-50%), and a modest amount of leverage.
Greater visibility into data centre pipeline = greater conviction
After trimming our exposure in July 2024, we are taking this opportunity to increase the portfolio’s weighting in GMG following a period of underperformance (GMG is down 15% from its January high).
We previously neutralised our position in GMG, primarily due to a lack of visibility into the timing of its data centre developments and the market’s high expectations around near-term data centre earnings. However, GMG has since provided greater detail on its pipeline, which, in conjunction with a bolstered liquidity position, has given us greater conviction in its medium to long-term earnings growth outlook.
Specifically, GMG has now disclosed eight major projects representing 0.5 GW of power (10% of GMG’s power bank) that are set to commence by June 2026 (with some starting imminently in 2H25). These projects will have an end-value of $10bn and include a mix of:
- Powered shells (~30% split) – these are partially completed data centres where GMG will construct the building exterior and provide access to basic power utilities and fibre optic connectivity.
- Fully fitted (‘turnkey’) solutions (~70% split) – assets where GMG will provide and maintain the essential infrastructure required for customers to operate (i.e. power, cooling, security systems), while tenants are fully responsible for all other aspects of their computing infrastructure (i.e. servers, storage, networking equipment).
Remaining positive towards data centres (and Goodman’s strategy)
We remain attracted to the data centre sector, given the strong demand tailwinds supported by cloud migration and AI, the scarce supply of well-located assets, and the superior development yields on offer (low-double digit vs mid-single digit for logistical warehouses).
GMG has a significant competitive advantage, owing to its significant existing land bank and its 5 GW global power bank, which will underpin ~$100bn of developments over the next decade-plus at GMG’s current run-rate.
Valuation-wise, GMG now trades at a forward PE multiple of 26x, which represents attractive value in the context of sustained double-digit EPS growth over the next 5+ years. Key catalysts over the next 6-12 months will include 1) development starts (driving work-in-progress/development yield increases), 2) hyperscaler commitments, and 3) capital partnerships (sell-downs).
| Name | Location | Power | Description |
| LAX 01 | Los Angeles, USA | ~50 MW | Located in LA metro |
| TY0 05 & TY0 06 | Tokyo, Japan | 100 MW | First phase of a multi-building 1 GW campus. Flexible design for AI and cloud deployments |
| SYD 01 | Sydney, Aus | 90 MW | Located in Sydney North Availability Zone |
| MEL 01 | Melbourne, Aus | 35 MW | First phase of a multi-building campus, proviidng up to 100 MW. Flexible design for cloud and AI deployments |
| AMS 01 | Amsterdam, Netherlands | 40 MW | Located in highly power constrained and regulated tier 1 market. First phase of two building |
| PAR 02 | Paris, France | 80 MW | Located in Paris Central Availability Zone. First phase of two building 160 MW campus. |
| FRA 02 | Frankfurt, Germany | 50 MW | Located in Frankfurt South Availability Zone. First phase of two building 100 MW campus. |
| HK 10 | Hong Kong, SAR China | 50 MW | Located in Tsuen Wan / Kwai Chung Availability Zone. Redevelopment of existing industrial building. |
Source: Company filings, Wilsons Advisory.
HUB24 – Trimming after Strong Run
Focus Portfolio weighting: 2% (reduced from 3%)
HUB24’s (HUB) 1H25 result was a +6% beat to consensus EBITDA, driven by better-than-expected operating margin expansion (+424bps vs the pcp to 39.8% vs consensus of 39%). HUB also upgraded its FY26 FUA target to $123-135bn (previously $115-123bn).
Overall, HUB’s result was in line with our thesis. We have expected to see consensus upgrades driven by a continuation of positive inflow momentum, combined with operating leverage as investment spend is rationalised and efficiencies are extracted from the cost base.
While we remain attracted towards the quality of HUB and the strength of its medium/long-term earnings outlook, we are taking this opportunity to trim our exposure after a period of outperformance.
HUB’s forward PE multiple has re-rated materially since being added to the portfolio, with the business now trading at parity with Netwealth at a multiple of ~60x (albeit with stronger EPS growth), thus reducing expected returns over the near-term.
Aristocrat – Taking Some Money off the Table
Focus Portfolio weighting: 4% (reduced from 4.5%)
Aristocrat (ALL) held its AGM last week, where the business reaffirmed guidance for NPATA growth in FY25 and made positive outlook statements across its three key segments:
- Aristocrat Gaming (~60% revenues) – continued strong market share, revenue and profit growth
- Product Madness (~30% revenues) – disciplined execution with a focus on market share and investment efficiency (focused on the profitable operation of existing evergreen titles with no new game development)
- Aristocrat Interactive (~10% revenues) – accelerating performance toward its FY29 US$1bn revenue target
The business also announced a new A$750m share buy-back program, which will be modestly accretive to EPS over the medium-term. This follows the receipt of US$600m from the sale of Plarium, after a strategic review of the group’s casual and mid-core social gaming assets.
Overall, our positive view towards ALL remains unchanged. We remain attracted to its dominant land-based business and the long-term structural growth potential of the online real money gaming sector, both of which can continue to drive consensus upgrades over the medium-term, in our view.
However, we are taking this opportunity to trim our exposure after a strong run of outperformance, which has driven ALL’s forward PE multiple to one standard deviation above its five-year average. There is still scope for ALL to move higher over the medium-term, with continued positive consensus earnings momentum, but a relatively full valuation has reduced our expected returns over the near-term.
Banks – Cracks Starting to Appear
Now that each of the major banks have provided updates, there are signs that earnings momentum is starting to turn. While CBA earned modest upgrades, elsewhere in the sector the earnings picture has been more mixed, with NAB being the major disappointment as it reported weaker-than-expected margins and credit quality.
With ASX 200 Banks trading on a forward PE of ~19x (vs 5yr avg of ~15x), (driven by CBA) and offering only low-single digit EPS growth, the sector has been vulnerable to a correction if earnings disappoint relative to consensus. The Focus Portfolio is ~9% underweight the Big 4 Banks (vs ASX 300), with ANZ and Westpac (WBC) being our preferred exposures.
NAB – Weaker Margins, Credit Quality and Balance Sheet
Focus Portfolio weighting: not held (unchanged)
NAB posted a weak 1Q25 update, with cash earnings (-2% vs 2H24 quarterly average) of $1.74bn tracking below (pre-result) 1H25 consensus forecasts of $3.53bn, which has resulted in low single-digit consensus EPS downgrades.
The key drivers of the result were:
- Deteriorating credit quality – in line with NAB’s recent trend, credit impairment charges increased +8% from 4Q24, which appears worse than expected by consensus, while mortgage arrears also appear worse than the other banks.
- Lower NIM – NAB reported a ‘small decline’ in its NIM (net interest margin) due to lending and deposit competition, as well as higher funding costs, which continues its negative trend.
- Softer capital position – the CET1 ratio declined more than expected (-80bps vs 2H24 to 11.6%), driven by an increase in credit risk-weighted assets.
- Costs – 1Q25 OPEX increased +2% (vs 2H24 quarterly average), driven by increased staff costs and increased investment spend (aimed to defending its incumbency in business banking).
NAB's update has reaffirmed our cautious view towards NAB, leaving us comfortable maintaining zero exposure to the bank. With NAB’s ROE superiority vs peers (ex CBA) declining as OPEX and bad debts rise, we continue to see its valuation premium as unwarranted. NAB trades on a forward PE of ~16x (vs ANZ/WBC at ~13/15x) while offering low single-digit EPS medium-term growth in line with peers.
ANZ – Still Our Preferred Bank Exposure
Focus Portfolio weighting: 8% (unchanged)
ANZ’s 1Q25 update contained limited new information. The highlight was lower-than-expected credit loss ratio (CLR) of 2bps (vs consensus of 7cps), which demonstrates resilient credit quality and provides a buffer against consensus for ANZ’s 1H25 EPS.
ANZ remains our preferred bank exposure, given 1) its attractive relative valuation and capital returns profile, 2) expected synergies from the integration of Suncorp Bank, 3) above-system growth in the mortgage market, and 4) expected efficiencies from the rollout of its new tech stack (i.e. ANZ Plus, Transactive).
ANZ trades at a forward PE of ~13x, which represents attractive value compared to peers. Like the other banks, ANZ offers low single-digit consensus EPS growth over the medium-term.
| Company Name | Ticker | Portfolio weight | Date | Period |
| Focus Portfolio holdings | ||||
| Worley | WOR | 3% | Wed-26-Feb | 1H25 |
| WiseTech | WTC | 2% | Wed-26-Feb | 1H25 |
| Steadfast | SDF | 2% | Wed-26-Feb | 1H25 |
| Other key stocks (not held) | ||||
| Woolworths | WOW | - | Wed-26-Feb | 1H25 |
| Coles | COL | - | Thu-27-Feb | 1H25 |
Source: Company filings, Wilsons Advisory.
Written by
Greg Burke, Equity Strategist
Greg is an Equity Strategist in the Investment Strategy team at Wilsons Advisory. He is the lead portfolio manager of the Wilsons Advisory Australian Equity Focus Portfolio and is responsible for the ongoing management of the Global Equity Opportunities List.
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