Insider Trades: The ASX 200 CEOs and CFOs buying their own stock in August

Welcome back to the Insider Trades Series – A weekly summary of on-market ASX 200 director transactions valued at more than $10,000. This week, we're focusing on trades by CEOs and CFOs following the August reporting season. All trades occurred between 23 and 28 August, with directors having up to 5 business days to notify the ASX.

ASX 200 CEOs Buying

Johns Lyng: reporting season blowup

• Share price reaction: -27% (27 Aug)

• FY24 results summary: FY24 result slightly surpass guidance at the underlying EBITDA level, primarily driven by higher-than-expected catastrophe segment performance. However, the company's core business earnings fell short of expectations and operating cash flow was notably weak despite management's adjustments. The near-term outlook was a negative surprise due to lower catastrophe earnings and weaker-than-expected margins.

• Analyst takeaways: Analysts viewed the quality of earnings as lower due to the weaker-than-expected core performance, partially offset by a beat in catastrophes. The average price target across 9 brokers was cut by 5.3% after the result.

• Other: JLG shares are down 40% year-to-date and trading at levels not seen since March 2021. While there is still some confidence in the medium-term growth outlook, the near-term is weighed down by margin pressures, weaker BaU performance and a challenging catastrophe environment.

Insignia: an expensive transformation

• Share price reaction: -15.7% (22-Aug)

• FY24 results summary: FY24 underlying net profit up 13.6% to $216.6 million and 2% ahead of consensus (but supported by a $15 million one-off). Despite the solid result, there were several negative drivers, including a) significant cash outlays including up to $167 million in expenditure in FY25 for its optimisation program and $214 million over two years for its remediation program; b) given free cash flow pressures, the Board has paused dividends compared to 2H24 expectations of 10.5 cents per share; c) all divisions reported weaker-than-expected FY24 numbers, offset by the $15 million one-off.

• Analyst takeaways: Citi and Morgan Stanley both view IFL as cheap, trading at around 7x FY25 net profit. However, the analysts do not expect any underlying earnings growth between FY24-26 amid client outflows and lower margins. The key upside risks to IFL is if it can achieve faster or larger efficiencies with less upfront investment.

• Other: The nil final dividend was a big surprise compared to expectations of 10.5 cents. Morgan Stanley now expects no dividends over the next two years, which may drive some selling pressure to the stock from income oriented investors/funds.

ASX 200 CEOs Selling

JB Hi-Fi: Seasonal Selling?

• Share price reaction: +8.3% (12-Aug)

• FY24 results summary: FY24 net profit after tax fell 16% year-on-year but still above market expectations. The better-than-feared result was underpinned by solid sales and higher gross margins, drive by effective promotions and strategic supplier support. JB Hi-Fi's full-year ordinary dividend beat Citi's expectations by 6% (261 cents per share vs. 246 cents per share). The company surprised the market by declaring a special dividend of 80 cents per share (bringing its total dividend to 341 cents or 38% ahead of Citi estimates).

• Analyst takeaways: The average price target across 14 brokers rose 6.4% after the result. Overall, sentiment towards JB Hi-FI was mixed. Some analysts were bullish on the company's ability to sustain its growth and margins. While others were cautious on valuation, increased competition and macroeconomic headwinds.

• JB's CEO and CFO tend to sell in August: Despite the potential alarm raised by significant share sales from both the CEO and CFO, it's worth noting that this pattern typically follows the August results, with both executives often opting to offload a lump sum during this period. In late August 2023, Mr Wells sold $931,368 and Mr Smart sold $896,060 at around $44.50 a piece. Likewise in 2022, they sold a collective $2.8 million on-market at around $41.70 a piece.