Today’s Headlines

• ASX 200 takes some profits, down 15 at 6210
• High 6251 Low 6205. Modest volumes.
• Banks pause and reverse as CBA demerges wealth division.
• Resources strengthen on oil price rise.
• Iron ore futures boosted in Asia.
• Healthcare comes under pressure.
• AUD stronger at 74.24c
• Bitcoin lower at US$6161
• AUD Gold slightly lower to $1267.
• US futures down 160
• Asian markets weaker with Nikkei down 0.79% and China CSI 300 down 0.62%.

STOCK STUFF

Movers and Shakers

• KMD +14.22% impressive profit update.
• ORG +1.75% becoming a substantial shareholder.
• CUV +12.61% completes its SCENESSE FDA application.
• DCN +3.53% Investor presentation.
• TLS -0.75% tries to rally but fails.
• WES -0.67% profit-taking.
• MHJ -2.08% Citi cuts target.
• CCP +6.53% recovery after short seller report.
• INA +4.32% potential bid target after GTY
• GTY +2.59% Hometown goes again.
• CLQ -11.74% Sunrise DFS competed.
• HSN -4.42% broker downgrades.
• AHY -3.45% feeling flushed.
• RHC -2.66% sell-off continues.
• MOC -5.93% CBA moves on Mortgage Broking.
• KRC +6.74% high grade vanadium pentoxide route.
• OEL +4.55% Alaskan oil prospect.
• Speculative stock of the day: Neurotech International (NTI) +50.00% clinical trials accepted by medical journal shows significant outcomes for Mente Autism.
• Biggest risers – KMD, CUV, HT1, API, CCP and NST
• Biggest fallers – CLQ, WPP, IRI, HSN. GSC and PMC

TODAY

• Commonwealth Bank (CBA) –2.30% intends to demerge its mortgage broking and wealth management businesses into a new group called CFS and also undertake a strategic review of its insurance business with its sale a possibility. This is to focus on its core AUS and NZ banking business. The demerged business will include Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses. CBA said CFS will have a solid earnings base and a ‘strong capacity’ to pay fully franked dividends. The previously announced IPO of CFSGAM has been canceled.
• ANZ (ANZ) -1.05% PNG Kina Bank is to acquire ANZ’s PNG retail and commercial/SME businesses. ANZ is the second largest bank in PNG and Kina Bank will purchase ANZ’s 15 branches, 72 ATMs and 1,800 EFTPOS terminals. The transaction will be all cash for $10m which equates to the value of goodwill attributes to the ANZ PNG business.
• APA Group (APA) +0.20% Sings ‘Landmark agreement’ with Incitec Pivot (IPL) for the usage of its East Coast Grid pipeline to supply IPL’s Gibson Island fertiliser plant in QLD from Mareenie fields in Northern Territory. The deal’s initial term is till 1 January 2020 with options to extend. IPL Will source the gas from Central Petroleum (CTP). IPL has said these new deals will increase manufacturing costs by $50m in FY19 as forecast and is continuing to assess options for gas supply in 2020-2021.
• Metcash (MTS) +2.15% FY18 result. NLAT of $149.5m was disappointing and driven by increased competition from other supermarket chains Woolworths and Aldi. MTS suffered from impairment charges totaling $345.5m that they forecast previously. The company will pay a final dividend of 7c and in an attempt to return value to shareholders conduct a share buy-back up to $125m.
• Kathmandu (KMD) +14.22% FY18 earnings update after accounting for the Oboz acquisition. EBIT to be $72-$77m, it was $57m last year and NPAT to be $48-$52m, it was $38 last year. The accompanying trading update showed same-store sales in Australia were up 7.7% since last year end or 1.9% this half; while NZ saw a decrease of 1.5% since last year’s end or -6.3% this half. This resulted in an overall change of +4.8% since last year’s end but -0.8% this half.
• Vocus (VOC) -3.29% Signs new increased debt facility to provide financial flexibility and funding to future developments. The new debt facility is for $1,270m and NZ$150m. The old facility of $1095 and NZ$160 has been canceled and paid for. Guidance for FY18 net debt has been reiterated for between $1.03-$1.06bn.
• HT&E (HT1) +8.13% entered into a binding agreement for the sale of its Adshell business to Ooh! Media (OML) for $570m subject to ACCC approval. With the sale proceeds, HT&E will pay down debts, conduct capital management of $275m by the way of a special fully franked dividend to the value of $220m with the remainder to fund a share buyback.

TODAY

• Commonwealth Bank (CBA) –% intends to demerge its mortgage broking and wealth management businesses into a new group called CFS and also undertake a strategic review of its insurance business with its sale a possibility. This is to focus on its core AUS and NZ banking business. The demerged business will include Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses. CBA said CFS will have a solid earnings base and a ‘strong capacity’ to pay fully franked dividends. The previously announced IPO of CFSGAM has been canceled.
• ANZ (ANZ) -% PNG Kina Bank is to acquire ANZ’s PNG retail and commercial/SME businesses. ANZ is the second largest bank in PNG and Kina Bank will purchase ANZ’s 15 branches, 72 ATMs and 1,800 EFTPOS terminals. The transaction will be all cash for $10m which equates to the value of goodwill attributes to the ANZ PNG business.
• APA Group (APA) –% Sings ‘Landmark agreement’ with Incitec Pivot (IPL) for the usage of its East Coast Grid pipeline to supply IPL’s Gibson Island fertiliser plant in QLD from Mareenie fields in Northern Territory. The deal’s initial term is till 1 January 2020 with options to extend. IPL Will source the gas from Central Petroleum (CTP). IPL has said these new deals will increase manufacturing costs by $50m in FY19 as forecast and is continuing to assess options for gas supply in 2020-2021.
• Metcash (MTS) +% FY18 result. NLAT of $149.5m was disappointing and driven by increased competition from other supermarket chains Woolworths and Aldi. MTS suffered from impairment charges totaling $345.5m that they forecast previously. The company will pay a final dividend of 7c and in an attempt to return value to shareholders conduct a share buy-back up to $125m.
• Kathmandu (KMD) +% FY18 earnings update after accounting for the Oboz acquisition. EBIT to be $72-$77m, it was $57m last year and NPAT to be $48-$52m, it was $38 last year. The accompanying trading update showed same-store sales in Australia were up 7.7% since last year end or 1.9% this half; while NZ saw a decrease of 1.5% since last year’s end or -6.3% this half. This resulted in an overall change of +4.8% since last year’s end but -0.8% this half.
• Vocus (VOC) +% Signs new increased debt facility to provide financial flexibility and funding to future developments. The new debt facility is for $1,270m and NZ$150m. The old facility of $1095 and NZ$160 has been canceled and paid for. Guidance for FY18 net debt has been reiterated for between $1.03-$1.06bn.
• HT&E (HT1) –% entered into a binding agreement for the sale of its Adshell business to Ooh! Media (OML) for $570m subject to ACCC approval. With the sale proceeds, HT&E will pay down debts, conduct capital management of $275m by the way of a special fully franked dividend to the value of $220m with the remainder to fund a share buyback.

ECONOMIC NEWS

• Rowena Orr was front and centre of the Banking Royal Commission circus as it rolled into BrisVegas today for the week. Lending to framers is the agenda item for the week with ANZ admitting fault in first day Mea Culpa.

BOND MARKETS

ASIAN MARKETS NEWS

• Chinese food delivery and online services company Meituan-Dianping has filed a draft prospectus to the Hong Kong stock exchange with a valuation of US$60bn in the IPO.
• China has cut its bank reserves by US$100bn to help it cushion the economy against the Trump tariffs.

EUROPE AND US MORNING HEADLINES

• Turkish President Erdogan claimed victory in elections. Hardly a surprise.
• The US Securities and Exchange Commission has completed its investigation into Toshiba’s accounting practices. No penalty alike the World Cup.
• The Bank of Interntational Settlements (BIS) is afraid of a snapback crunch as rising rates meets rising record global debt.

• The US looks like it is planning to scale back on allowing Chinese investment due to security risks.
• Hans Solo Blaster Gun sells for US$550,000 in New York.

 

And finally…………….

A little boy asks his dad: ‘Where does poo come from?’

His dad explains that food passes down the oesophagus to the stomach, where digestive enzymes induce a probiotic reaction in the alimentary canal; this reaction extracts protein before waste products descend via the colon and rectum to emerge as ‘poo’.

Blimey, says the little boy –

‘And what about Tigger?’

 

Have a great evening!

Clarence 

XXX