With financial announcements largely finishing up this week, it's the last chance for investors to pick up ASX shares with a bright outlook based on those numbers.
Morgans analyst Andrew Tang, who has been keeping an eye on all the action, named his last set of stocks to buy for the February reporting season:
Image source: Getty Images
Back in 2021 no one thought coal would become the new black
When Dalrymple Bay Infrastructure Ltd (ASX: DBI) listed on the ASX in December 2020, more than one pundit questioned how it would survive as a public company.
After all, it is the owner and operator of a coal export terminal.
But no one saw what was coming next — an energy crisis in 2022 sending any stock related to coal production soaring.
Now Dalrymple Bay shareholders are laughing, with the share price up in excess of 18.5% since the first day on the ASX, all while delivering an 8% dividend yield.
"The FY22 result delivered the substantial earnings growth we were expecting following finalisation of terminal infrastructure charge (TIC) negotiations in 2H22," Tang said on the Morgans blog.
"Dividend per share guidance had already been provided and was unchanged (albeit the growth outlook was not reaffirmed)."
The stock is a buy for Morgans, especially considering a "forward cash yield of mid-8% and circa 6% price growth potential".
Reporting season 'easily beat our expectations'
On the same theme, coal explorer and producer Stanmore Resources Ltd (ASX: SMR) is also a buy for Tang's team, based on a sensational report to the market.
"Key CY22 financials easily beat our expectations on higher PCI [pulverised coal injection] price realisations," said Tang.
"We now forecast Stanmore to reach a net cash position during 1H23."
The Stanmore share price has more than tripled over the past 12 months, but incredibly still represents excellent value for those willing to buy now.
"Stanmore looks too cheap trading on a +25% free cash flow yield, with +30% capital upside and upside to tight/buoyant hard coking coal pricing," said Tang.
"Stanmore enjoys clear M&A advantages in the Bowen Basin and we think positioning for possible acquisitions will far out-rank dividends through 2023."
'Growing profits gets much easier from here'
Captioning technology and services provider Ai-Media Technologies Ltd (ASX: AIM) has been on a hiding to nothing the last few years.
The stock price has sunk more than 73% over the past five years. Over the past 12 months, it has seen a 40.7% decline.
However, Tang feels like it has turned a corner after seeing its software-as-a-service (SaaS) arm contribute more than 50% of the total profit growth.
"Since it's nearly double the margin of legacy and growing much faster, this means Ai-Media has cleared the critical [inflection] point in its transition to a SaaS business," he said.
"Growing profits gets much easier from here."
The business' gross profit grew both on a year-on-year basis and half-on-half.
"The company booked revenue of $29.7 million for the year, in line with our $29.5 million forecast and 8% below consensus expectations."
13.8% dividend yield? Yes, please
Kina Securities Ltd (ASX: KSL) is not a name often heard when financial stocks are discussed.
The Papua New Guinean bank incredibly pays out a 13.8% dividend yield.
Tang said its February report was "broadly solid", with a lid kept on bad debts and "an impressive ~18% FY22 return on investment".
"Kina Securities' FY22 Underlying net profit after tax (PGK106 million) was +10% on the prior comparable period and in-line with Morgans' expectations."
One headwind that the bank faces is "the lingering Papua New Guinea corporate tax issue".
But the stock is still an add for Morgans analysts, with the low share price seemingly pricing in headwinds.
"Kina Securities continues to deliver solid underlying profit growth, and trading on ~6x FY23F earnings and a >10% dividend yield, we see the stock as too cheap."
