Friday 23th August- Australian Market Wrap

ASX 200 kicks 21 points higher at 6523 as it finished the week in meandering style. Up 118 points for the week. Results dominate. Tired analysts. Dow futures gain 117 points. Mixed market today with banks slightly positive despite ASIC launching a case against NAB which fell 0.18%. The others held up with WBC the best of the bunch up 0.22%. Other financials firm, and insurers steady. Miners were patchy as BHP improved 0.63% and FMG showed a 2.85% gain, but gold stocks were under pressure as profit taking and lower bullion prices too their toll. NCM dropped 1.03% and GOR were smashed by 17.14% as Gold Fields sold out a 9.9% stake. Healthcare stocks lower led by CSL down 0.21% and SHL down 1.03%. TLS perked up by 1.36% and other industrials saw spotted gains and losses. CCL down 2.44% and COL up 2.37% on special dividend warmth. In corporate news, results once again came thick and fast, the Good, MYX up 10.53%, GMG up 4.38% and PET up 3.23%. The Bad, HSN down 4.2%, PLS down 7.23% and the downright Ugly with CGC down 16.36%. So much for yesterday’s rally. Nothing on the economic front of note as the markets wait for Powell’s Jackson Hole speech and the G7 kicks off this weekend. Bound to be fun. BoJO and Trump versus the rest. China doesn’t even rate an invite. In bond markets, 10-year yields were better at 0.97% and the AUD was yet again steady. Asian markets slightly firmed with Japan up 0.28% and China up 0.48%.

Todays Highlights

  • ASX 200 up 21 to 6523.
  • High 6529 Low 6495.Narrow range. Long week.
  • ASX 200 up 118 points for the week.
  • Mixed bag. Results dominate.
  • Banks steady. Miners steady.
  • NAB gets sued by ASIC.
  • Consumer stocks gain.
  • Healthcare under pressure.
  • AUD steady at 67.62c. Very dull.
  • Aussie gold steady at $2214
  • Bitcoin slightly higher to $10170
  • US futures up 79.
  • Asian markets firm with Japan up 0.37% and China up 0.66%

STOCKS

  • EVT +7.07% broker upgrades.
  • KGN-2.22% sell down by founders. Again.
  • Z1P +4.97% rethink.
  • BYE +6.98% SM71 brings optimism.
  • BIN +4.02% brokers warm to results.
  • PNV +3.85% skin in the game.
  • WGX +4.27% bid speculation.
  • AMI -1.94% maiden dividend.
  • CAT -4.83% profit taking.
  • GOR -17.14% Gold Fields sell down. Opportunity knocks.
  • S32 -6.46% broker downgrades.
  • EHL -4.90% long hill to climb back up.
  • IEL -4.96% broker downgrades
  • LYC -6.20% ironic WES pulls plug now getting towards bid price.
  • NCZ-3.08% buyers stepping back in.
  • RAP +% receives CE mark in EU.
  • ISD +25.81% rally continues on results.
  • IFN +8.49% bid speculation.
  • Speculative stock of the day: Nothing on volume.
  • Biggest Risers: MYX, SGM, AX1, IFN, AVH, EVT and Z1P.
  • Biggest Falls: GOR, CGC, WPPL, PLS, S32 and LYC

TODAY

  • Ardent Leisure Group (ALG) +0.42% reports FY NPAT from continuous operations (A$60.3M) vs year-ago (A$118.8M). Revenue $483.3m vs $488.1m expected. EBITDA $54.2m ex-items vs $46.9m. Revenue weaker than expected, although EBITDA grew and the loss from last year narrowed. The outlook is subdued; main event constant centre revenue increase of 1-2% for FY20.
  • Audinate Group (AD8) -5.81% reports FY NPAT $0.7m vs $0.0m expected. Revenue $28.3m vs A$27.8m expected. Adjusted EBITDA $2.8m vs $2.4m expected. The numbers are a beat and the outlook looks positive, although the company has made room for the impact of tariffs; AD8 anticipates that USD revenue growth trajectory of 26-31% per will continue, despite the potential for economic conditions and US tariffs to negatively impact the near-term results.
  • Australian Finance Group (AFG) -0.90% NPAT $28.6m. In line with recent guidance. Revenue from continuous ops $660.0m vs year-ago $619.3m. Final dividend 5.9c FY20 Outlook: AFG remains “optimistic about the residential lending market and the important role brokers play in the home lending market. AFG’s customer-first approach and agile operating model presents enormous opportunities for its business”.
  • Automotive Holdings Group (AHG) +0.31% report FY operating NPAT from continuous operations of $58.7m, down 22% from last year. Revenue rose slightly to $5.92bn, from $5.88bn a year ago, while operating EBITDA fell 1% to $170.3m. The company declared no dividend, in line with its strategy to reduce gearing. Keep in mind AP Eagers (APE) is still slated to take over the company.
  • AWC -0.92% Statutory net profit after tax of US$210.9m for the half-year to 30 June 2019. The Company declared an interim, fully franked dividend of US4.4c. EBITDA of US$949.9m, a decrease of US$258.1m. Margin for alumina refineries was US$157 per tonne, a decrease of US$43 per tonne. Net cash inflows of US$382.4m, a decrease of US$278.1m.
  • Boral (BLD) -0.4% is set to sell its Midland Brick business for $806m to a WA consortium. Completion of the sale is expected by the end of the calendar year.
  • Bravura Solutions (BVS) -1.92% report FY NPAT of $32.8m, slightly ahead of the $32.5m expected. Revenue similarly came in slightly ahead of expectations at $49.1m (vs $47.4m). A final dividend of 4.8c has been announced. The company said its balance sheet is well-positioned to support growth opportunities as they arise and they are exploring adjacent geographies as potential growth opportunities. FY20 NPAT growth in the mid-teens is expected.
  • BWX Limited (BWX) +28.76% reports FY underlying NPAT $11.0m vs $11.3m expected. Revenue $149.5m vs $145.5m expected. Underlying EBITDA $21.3m vs $21.3m expected. Final dividend 2.7 cps (fully franked); record 27-Sep; payable 25-Oct. Numbers appear largely in line and guidance is solid, with BWX expecting revenue growth of 20-25% and EBITDA growth of 25-35%, with the group to continue its investment in brand building, process improvement, capability and innovation.
  • Costa Group (CGC) -16.36% reports H1 NPAT (before SGARA) $40.9m vs $47.4m expected. Revenue $573m vs $596.1m expected. EBITDA (before SGARA) $82.4m vs $97.9m expected. Final dividend 3.5cps (fully franked); record 12-Sep; 3-Oct. Numbers missed expectations and the outlook cautious. The business stated that despite current trading challenges, the business fundamentals remain strong. The challenges and uncertainties remain in light of continued lower than expected pricing of mushrooms, raspberry crumble proving to be more significant and taking time to mitigate, and potential blueberry pricing pressure due to significantly higher than anticipated estimated NNSW blueberry industry crop, with some mitigation from Arana premium returns.
  • Goodman Group (GMG) +4.38% reports FY operating profit $942.3m vs $943.2m. NPAT $1.63bn vs $943.2m expected. Includes $872m valuation gains. OEPS 56c. FY DPS 30c, up 7% year-on-year. FY20 guidance for underlying NPAT A$1.04bn vs $1.1bn. OEPS 56.3c vs 57c expected, DPS 30c.
  • Gold Road (GOR) -17.14% Gold Fields has sold a 9.9% holding in the company in a bookbuild at 145c. Gold Fields said the sale is part of its broader debt reduction strategy. It has advised that it remains fully committed to its 50% interest in, and operatorship of, the Gruyere Joint Venture with GOR.
  • IRESS (IRE) +2.01% H1 NPAT $30.4m. Revenue $241.8m vs $241.7m in line with forecasts. Div 16c.EBITDA below forecast of $67.0m at $63.7m.
  • Kogan (KGN) -2.22% CEO Ruslan Kogan and CFO David Shafer have sold a combined 5.2m shares. The sale represents 5.6% of the shares on issue. The pair have said they have no intention to do any more selling before the release of the company’s FY20 results.
  • Mayne Pharma (MYX) +10.53% reports FY underlying NPAT $14.1m vs $28.8m expected. Net loss of (A$280.8M) driven by intangible asset impairments. Revenue $525.2m vs $525.2m expected. Underlying EBITDA $130.9m vs $133.2m expected. Reported gross profit $289.9m vs $291.2m expected. These numbers are a miss and there are impairments to boot. The outlook is mainly positive, with the company saying specialty Brands is expected to benefit from FY19 product launches while generic products performance will depend on many factors including timing of FDA approvals and competitor launches or withdrawals on key products. Operating expenses are expected to be lower in FY20 versus FY19 on a constant currency basis, through more controlled spending.
  • Phoslock Environmental Tech (PET) +3.23% Revenue up 9% to $10.2m. Net Profit after Tax $1.0m (loss $600k last half year) Net Operating Cash Flow $10.8m. Net Liquid Assets $22.7m. First ever dividend of 0.5c. No change to forecast is disappointing. Revenue forecast for FY2019 remains in the range $27-$30m, up ~ 55% on FY2018. Net Profit (before Tax) forecast is in the range $6-$8m, up ~100% on FY2018. The international pipeline is currently $130 million, involving some 30 projects in 18 countries.
  • Pilbara Minerals (PLS) –7.23% report FY NPAT of $28.9m, slightly short of the $29.3m expected. FY revenue of $42.8m fell well short of the estimated $58.3m. The company holds cash and cash equivalents of $63.6m.
  • Sims Metal Management (SGM) +9.35% reports underlying NPAT of $161.9m, slightly ahead of the $156.9m expected. Underlying EBITDA also came in ahead of expectations at $363.4m, while revenue fell just shy at $6.64bn (vs $6.66bn). A final dividend of 19c has been declared. The company believes the long-term growth outlook remains attractive, but macro conditions such as a trade war escalation run the risk of a further general decline in global activity. They do not expect their non-ferrous business to be materially impacted by the Category 6 quotas in China.
  • Vita Group (VTG) –1.61% report FY NPAT of $24.3, just short of the $24.7m expected. Revenue topped estimates at $753.7m (vs $722.1m), while EBITDA just missed at $45.8m (vs $46.1m). A fully franked final dividend of 4c has been announced. The company is planning to grow its clinic network to at least 25 clinics by the end of FY20 through acquisitions and greenfield development.
  • Wesfarmers (WES)+1.16% has officially walked away from its bid for Lynas (LYC).

ECONOMIC NEWS

  • Nothing of note

BOND MARKET

  • 2 – year bond yields up 2bps to 0.74%
  • 3 – year bond yields up 3bps to 0.70%
  • 10 – year bond yields up 6bps to yield 0.97%

ASIAN NEWS

  • USA v China is not the only trade war at the moment. South Korea v Japan is heating up. South Korea said it would withdraw from an intelligence-sharing agreement with Japan. extending their feud over trade measures and historical grievances into security cooperation. G7 will be interesting.
  • Renminbi at an 11-year low. No one cares this week.
  • Japanese consumer inflation held at a two-year low in July. Never going to hit the target.

EUROPEAN AND US NEWS

  • Some of the early backers of Facebook’s Libra are stepping back as regulatory scrutiny ramps up.
  • Chile’s SQM forecast continued oversupply in the market for the battery raw material, which it said would weigh on prices for the remainder of the year.
  • The world’s lungs, the Amazon rainforest is burning. Brazil says ‘monetise’ it to save it.
  • Hasbro to buy Peppa Pig for GBP 3.5bn.
  • BoJo puts his feet up at Macron meeting but French push back on easy solution.
  • G7 Meeting and Jackson Hole to dominate markets with volatility possible.
  • Apple is readying a big upgrade to its suite of hardware including “Pro” iPhones, upgrades to iPads and its largest laptop in some years. Early September is the usual time for picking Apples. Three new iPhones, ’Pro Phones’ with a new camera system on the back with a third sensor for capturing ultra-wide-angle photos and videos
  • Tesla has agreed to buy batteries from South Korea’s LG to be used in electric vehicles produced out in China.
  • Cricket will be interesting. Good weather forecast.

And finally….

In the beginning, God created the heaven and the earth… After that, everything else was made in China.

So two Irishmen are travelling to Australia. Before they leave home, one of their dads gives them both a bit of advice: “You watch them Aussie cab drivers. They’ll rob you blind. Don’t you go paying them what they ask. You haggle.” At the Sydney airport, the Irishmen catch a cab to their hotel. When they reach their destination, the cabbie says, “That’ll be twenty dollars, lads.” “Oh no you don’t! My dad warned me about you. You’ll only be getting fifteen dollars from me,” says one of the men. “And you’ll only be getting fifteen from me too,” adds the other.

Two Irishmen friends are drinking together at one of their homes. One friend takes out a bottle of Irish whiskey and asks the other, “Will you pour this bottle out on my grave if I die first?” His friend replies, “Do you mind if I pass it through my kidneys first?”

Clarence

XXX

GO England!

mt_tryforfree

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