ASX 200 slips 20 to 5785 on poor results, ex dividends and resource selling weighed. Industrials results dominate in mixed trading. Asian markets barely changed with Japan down 0.01% and China down 0.27%. AUD falls on business figures then bounces back to 76.89c and US futures down 2.

STOCKS AND SECTORS

  • Miners in the dog house with BHP -2.67% and RIO -5.45% after going ex-dividend and Fortescue Metals (FMG) -2.58%. Base metals were also weaker led by South32 (S32) -3.85% and Oz Minerals (OZL) -3.31%. Lynas Corp (LYC) +14.29% amongst the few winners.
  • Gold stocks were mixed with Westgold (WGX) +3.69%, Newcrest (NCM) +1.43% and Perseus (PRU) +4.62% though St Barbara (SBM) -2.80%.
  • Energy stocks mixed with Woodside Petroleum (WPL) +0.89%, Caltex (CTX) -1.12% and Santos (STO) -2.22% and Origin Energy (ORG) -2.44%
  • Banks and financials a bright spot. ANZ Bank (ANZ) +1.17% as others showed minimal losses. The Big Bank Basket rose to $180.91. Insurers improved with Insurance Australia (IAG) +3.55%, Steadfast Group (SDF) +4.41% and wealth manager Perpetual (PPT) +5.57%
  • Industrials a bag of Allsorts with results the feature. There were good bad and ugly. Brambles (BXB) +1.38% continued to recover Smart Group (SIQ) +3.92%, Collection House (CLH) +4.76% and McMillan Shakespeare (MMS) +3.19%. Food stocks improved A2Milk (A2M) +2.75%, Costa Group (CGC) +2.57% and Tassal Group (TGR) +4.77%. Blackmores (BKL) -1.51% continued to fall after results yesterday and broker downgrades. Bellamy’s (BAL) -4.49% joined the selloff.
  • Healthcare led lower by Ramsay Healthcare (RHC) -3.22%, Nanosonics (NAN) -5.62% and Neuren Pharmaceuticals (NEU) -4.17%. Better news for aged care providers Estia Health (EHE) +14.04% and Regis Healthcare (REG) +3.11% together with Japara Healthcare (JHC) +1.75%
  • IT and Telcos another mixed bag of sweets. Altium limited (ALU) -4.10%, Isentia (ISD) -7.52%, Mitula Group (MUA) -1.14% and Aconex (ACX) -2.65% continuing to bounce around. In telcos Vocus (VOC) -4.37% back on the nose though Telstra (TLS) -0.62% despite news the company had sold its remaining 6% stake in Autohome. Speedcast (SDA) -2.56% with Sky Network (SKT) -12.35% as the NZ commerce commission blocked the proposed merger with Vodafone NZ.
  • Speculative stock of the day: Touchcorp (TCH) +25.71% Afterpay (AFY) -4.88% and Touchcorp intend to pursue a merger under a scheme of arrangement. NewCo will be 64% owned by Afterpay and 36% by Touchcorp on a fully diluted basis. NewCo will be ASX listed.

CORPORATE NEWS

  • Adelaide Brighton (ABC) +3.42% profits fell 10.4% to $186.3m. The company will pay a 11.5c final dividend and a special dividend of 4c.
  • Ardent Leisure (AAD) -21.76% said core earnings dropped to $12.8m in the six months to December from $30.5m a year earlier. Revenue fell 5% to $317.2m. The company reported a “statutory loss of $49.4 m primarily impacted by a $95.2m property, plant and equipment write‐down, goodwill impairment and incident costs associated with the Dreamworld tragedy.”
  • Asaleo (AHY) +7.29% net profit fell 22% to $58.96m due to challenging environments and FX movements.
  • Australia Post has announced a bumper half-year profit of $131m. Ahmed Fahour has resigned from his $5.6m job as head postie.
  • Crown Resorts (CWN) +7.90% reported a 9.1%fall in “normalised” net profit to $191.3 m, pulled down by a 45.3 % drop in Australian VIP revenue. Crown will pay a special dividend of 83¢ following the sale of part of its stake in Macau-focused Melco Entertainment. Market loves a special dividend. The company has also scrapped plans for its hotel IPO.
  • Estia health (EHE) +14.04% after confirming full year guidance of between $86m – $90m. Net refundable accommodation deposits, increased to $38.7m from $33.8m.
  • Flight Centre (FLT) -1.52% net profit for the December half fell 36.2% to $74.4m. Revenue fell 0.6% to $1.25bn. It will pay an interim dividend of 45c a share, fully franked. Guidance though was downgraded to between $300m-$330m.
  • Freelancer (FLN) +5.70% loss of $1.17m from a $2.8m loss last year. No dividend.
  • Iluka Resources (ILU)-1.83% net loss of $224m due to impairment charges. Underlying EBITDA fell 48.7% to $150.5m. No dividend was declared.
  • Invocare (IVC) +8.35% after profits rose 29.4% to $70.9m. It will pay a final dividend of 25.5c a share, fully franked, taking the total payout for the year to 42.5c, up 11.8%on a year ago. The company is forecasting a sweet spot for more deaths from 2025 onwards. Death rates are expected to accelerate between 2025 and 2030 annualised at 2.8%
  • Kogan (KGN) +0.32%, interim profits fell 12.8% to $1.46m from $1.674m in the year-earlier period. Revenue 37.3% to $143.86m from the year-earlier $104.75m.
  • Macquarie Atlas Road (MQA) unchanged as the company hits investors for a capital raise to buy the remaining 50% of Dulles Greenway the company does not already won for US$445m. $185 placement and $15m SPP.
  • McGrath (MEA) -4.69% has reported a 72% fall in half-year pro-forma profit to $2.4m, blaming challenging market conditions and low listings and sales, consistent with a warning issued last month. Fully franked dividend of 1c/ Hard to understand how to so this badly in a housing boom.
  • Mortgage Choice (MOC) +2.49% after reporting half-year profit rose 6.4% to $11.4m from $10.7m in the six months to December 31 with a corresponding increase in the fully franked dividend to 8.5c from 8c.
  • Nine Entertainment (NEC) +7.25% has posted a $236.9m interim loss due to massive write-downs against its goodwill and a settlement to exit a contract to buy US dramas and comedies from Warner Bros. Revenues were down 4% to $662.7m. Group EBITDA before one-off items fell 6.4% to $119.7m.
  • Oz Minerals (OZL) -3.31% profit after tax fell 17.2% to $107.8m and revenue dipped 6.4% to $822.9m. Fully franked dividend of 14c.
  • Perpetual (PPT) +5.57% Net profit increased to $66m and Perpetual will pay an interim fully-franked dividend of 130c on March 24, up from 125c. The average level of funds under management during the half was $30.7bn, up 2% year-on-year, $22.5bn of which was in Australian equities.
  • Qantas (QAN) +5.35% reported a 7.5% decline in first-half earnings. Net profit dropped 25% to $515m from the year-earlier $688m was due to the gain on the sale of a terminal at Sydney airport in the prior year. It declared an interim dividend of 7c.
  • Ramsay Healthcare (RHC) -3.22% after CEO Chris Rex has announced his retirement. The company also reported net profit climbed 13.8% to $255.9m and an upgrade to 2017 guidance of around 2%. Now 12% -14% growth.
  • Southern Cross (SXL) -5.65% profits rose 11.8% to $48.5m with a 3.75c dividend. EBITDA forecast to be at lower end of guidance of $177m-$183m.

BOND CORNER

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ECONOMIC NEWS

Full-time and part-time workers in retail will have their Sunday penalty rates dropped from 200% to 150%, while casuals will go from 200 % to 175 %.

capesss

Fourth-quarter business investment fell 2.5%, or more than the expected 0.5%. That’s after a 4% fall in the third quarter. The first estimate of capital expenditure for 2017-18 is $80.62bn, which is 3.9% lower than the first estimate for 2016-17, and also significantly lower than the $84.8bn predicted by economists.

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ASIAN NEWS

  • The Bank of Korea said it is unlikely to be named as a currency manipulator.

EUROPE AND US

  • Brazil’s central bank cuts benchmark rate to 12.25%. Second successive 75bps reduction made as recession seems to be bottoming
  • The EU’s plot to seize euro derivative clearing from London and forcibly move the business into the eurozone could “be a road to the splintering of this global infrastructure”, according to Sir Jon Cunliffe, the Bank of England’s deputy governor.
  • Greece will need a fourth bailout as its debts remain utterly unsustainable despite years of austerity and attempted reforms, according to George Papaconstantinou, a former Greek finance minister. According to the report the Greek people are still in denial on the causes of the problem.
  • Noted economist and bond guru Mohamed El-Erian rates the chance of a Fed hike in March as 50-60% whilst the market has a 30% For El-Erian, the February jobs report, to be released March 10, will be significant.

And finally…..

 

The Irish Bic Lighter
Mick and Paddy were fishing on  the Irish shoreline when Mick pulled out a cigar.

Finding he had No matches, he asked Paddy for a light.

‘Ya, sure, I tink I haff a lighter,’ Paddy replied and then reaching into his tackle
box, he pulled out a Bic lighter 10 inches long.

bic

‘My God, man!’ exclaimed Mick, taking the huge Bic lighter in his hands.

‘Where’d yew git dat monster?’

‘Well,’ replied Paddy, ‘I got it from my Genie.’

‘You haff a fecking Genie?’ Mick asked.

‘Ya, sure. It’s right here in my tackle box,’ says Paddy.

‘Could I see him?’

Paddy opens his tackle box and sure enough, out pops the Genie.

Addressing the Genie, Mick says, ‘Hey dere! I’m a good pal of your master.
Will you grant me one wish?’

‘Yes, I will,’ says the Genie.

So Mick asks the Genie for a million bucks. The Genie disappears back into

the tackle box leaving Mick sitting there waiting for his million bucks.

Shortly, the Irish sky darkens and is filled with the sound of a million ducks

flying directly overhead.

Over the roar of the one million ducks Mick yells at Paddy, ‘What the hell?

I asked for a million bucks, not a million ducks!’

Paddy answers, ‘Ya, I forgot to tell yew dat da Genie is hard of hearing.

Do yew really tink I asked for a 10 inch Bic?’

 

Clarence

XXXX

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NT Markets

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