Increase in provisioning is clearly disappointing, although given cost escalation (great for the builders), probably not overly surprising. Also with a new CFO in place (perhaps for a reason?) he was always going to be conservative as well. Unfortunately todays announcement is going to create uncertainty and share prices don't like uncertainty ... however, looking at the positives:
1. TWR still committed to capital management initiatives, implying continued confidence in solvency and regulatory burdens.
2. The earnings update is hugely impressive. Underlying NPAT of $17-18m for 1H15. This is 30-40% up on 1H14. And typically the seasonality in TWR's earnings is weighted 40% in 1H and 60% in 2H. If this seasonality is replicated in FY15, TWR is on track to deliver Underlying NPAT of ~$40m for FY15 which compares to broker forecasts of ~$30m (as per Morningstar). Massive earnings upgrades on the way?
Could well be the old broker adage ... accumulate on weakness.
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