Reporting season is a great time to look at All Ordinaries (ASX: XAO), or All Ords, ASX shares. It’s one of the main times of the year that we get a true insight into the performance of a business, thoughts from management, and plans for the future.
I also think it’s possible to find opportunities where the market may be underestimating companies’ future prospects.
Businesses achieving good progress could translate into long-term earnings growth and potentially produce good shareholder returns.
In my opinion, both of these All Ords ASX shares have attractive potential.
This business is a global fund manager that manages active share portfolios. It has clients including many large pension funds, sovereign funds, wealth management outfits, and other financial institutions. It offers a number of different strategies based on global shares, US shares, international shares ‘emerging market’ shares, and dividends.
GQG Partners is expected to hand in its half-year result on 11 August 2022.
The company continues to see strong inflows of funds. In the quarter for three months to June 2022, it experienced net flows of US$2.8 billion, despite the volatile market returns and industry outflows.
It said that it continues to see business momentum from multiple geographies and channels.
The largest shareholders of the business are the management team, making them highly aligned with regular shareholders.
I think GQG is an attractive fund manager because management fees make up the vast majority of its revenue. It also doesn’t charge (or generate) much in performance fees. That means results can be more consistent year to year.
The ASX All Ords share has also committed to a high dividend payout ratio which can lead to an attractive dividend yield in the coming years.
Morgans expects GQG to pay a dividend yield of 8.25% in FY22, this current financial year.
Sonic Healthcare Limited (ASX: SHL)
This ASX healthcare share is described as one of the world’s leading providers of medical diagnostics. This is spread across laboratory medicine, pathology, radiology, general practice medicine, and corporate medical services. It has more than 1,600 pathologists and radiologists.
Sonic Healthcare is scheduled to hand in its full-year result on 24 August 2022.
I think the business has the potential to surprise the market. It has benefited from COVID-19 testing over the past two years, but I believe that the ongoing level of PCR testing could mean a boost to cash flow in FY22 and FY23.
It is using its profit to progressively grow its dividend, as well as make acquisitions.
During the first six months of FY22, Sonic invested A$585 million in acquisitions and joint ventures that will “enhance the future growth” of the company. It bought Dallas-based ProPath, which has significantly strengthened Sonic’s anatomical pathology operations and management in the US. Buying Canberra Imaging Group has also “materially expanded” its revenue, footprint, and talent of Sonic’s radiology division, according to the company.
While those two acquisitions aren’t what I would call “transformative” for the ASX All Ords share, they add a good amount of scale to the business and improve its diversification.
It may not shoot the lights out from here, but I think Sonic can continue to deliver revenue and profit growth over time.
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