Reduced Brambles Limited (BXB)
Since reporting its 1Q19 results in October, which delivered solid revenue growth and evidence of disciplined cost controls, Brambles share price has meaningfully outperformed the ASX 200. With Brambles trading on a prospective FY19 price earnings ratio of c.19.8 times, we feel it is appropriate to lock in some profits.
We continue to be positively disposed to Brambles given its strong market share in its key markets of America and Europe. Furthermore, we expect margin expansion supported by increased pricing and cost efficiencies across the business. We retain an overweight position in the portfolio.
Increased Commonwealth Bank of Australia (CBA)
We have used the proceeds of the Brambles sale to further top-up our position in Commonwealth Bank.
The Royal Commission into Australia’s financial services sector delivered “far-reaching reform but not revolution” thereby retaining the privileged industry position enjoyed by the major banks. In addition, CBA’s 1H19 result demonstrated its ‘unquestionably’ strong capital position and its ability to maintain a high dividend pay-out ratio. Please also refer to our January link examining the rationale for our initial purchase of CBA.