A soft start to the week but off its lows as China resumes trading with iron ore miners the stars. The ASX finished down a modest 11 points at 6061 after a closing rally. Banks weighed as profit taking again hurt the sector combined with the results from Bendigo and Adelaide (BEN). CSL fell in a hole as did TLS ahead of results later this week. Infrastructure stocks in demand but big miners were the stand out again. BHP, RIO and FMG leading the sector higher as Dalian iron ore opened limit up. Results from JBH, BEN, AZJ and PPS were mixed. AUD stable around 70.92c.
- ASX 200 starts the week with more profit taking knocking 11 points off to 6059.
- High 6085 Low 6029. Closing rally helps.
- Aged care commission starts up again.
- Results mixed but JBH cheers.
- Banks turn soggy after BEN results.
- Iron ore miners the bright spot as Dalian futures limit up.
- CSL wobbles with NAB.
- Gold producers back in demand.
- AUD steadies as China returns 70.92c.
- Bitcoin surges to US$3599
- Aussie Gold rises to $1847
- US futures down 24
- Asian markets back with China up 1.25% with Japan closed for a holiday.
STOCKS IN FOCUS
- REG +6.29% EHE +7.30% aged care rallies as RC starts.
- AAC -12.26% Queensland cattle update on floods.
- JMS +7.27% dividend announcement from Tshipi.
- SIG +5.36% profit update. API will need to bid more,
- FMG +3.48% iron ore price rises.
- LOV +4.68% short covering.
- SDA +2.73% bargain hunting.
- SKI -6.37% tax ruling goes against forcing less to distribute.
- CGC -3.92% drought related.
- REA -1.85% broker downgrades.
- PPS -15.71% dog gets no better.
- SPT -7.91% profit-taking continues.
- GXL -0.18% court approves scheme.
- COE +1.01% loss doubles. Production 1 15%. SOL the focus.
- KGN -4.76% ceasing to be a substantial shareholder.
- PET +3.95% buyers back.
- GRR +4.00% iron ore price rises.
- MIN +2.50% lithium and iron a heady combo.
- BID +3.80% buyers moving in post presentation.
- Speculative stock of the day: Fenix Resources +18.18% on big volume following high-grade iron ore extensions at Iron Ridge including 58.2m @66.6% Fe from 79m.
- Biggest Risers – EHE, JMS, REG, SIG, AWC, LOV and AX1
- Biggest Fallers – AAC, BEN, SKI, NWS, BOQ and NUF
- Sigma Healthcare (SIG) +5.36% has completed a review of operations. EBIT FY19 guidance of $75m confirmed. The outlook points to a 10% pa growth forecast for FY21-FY23. FY 20 EBITDA of $55m-60m.
- Bendigo and Adelaide (BEN) -6.82% Statutory NPAT $203.2M vs year-ago $231.7M EPS 45c, (up 3.6%) y/y . Net interest income $656.5M vs year-ago Net interest margin 2.35% vs year-ago 2.36% Common Equity Tier 1 ratio 8.76% vs year-ago 8.61%. Dividend is unchanged at 35c.
- JB Hifi (JBH) +1.51% The results included guidance of $237 million to $245m compared to consensus of $239 million. Return on equity of 24%, PE of 11.0x, yield of 8.5%, trading 30% below intrinsic value, Macquarie has a $29 target price (25% above the current share price), now de-risked for 3 to 6 months thanks to results, and is in uptrend and as the third most shorted stock in the market the shorts are being squeezed. It is still 19% below its year high.
- Amcor (AMC) +1.89% Packaging giant has reported first-half profit of $328.5m, ahead of forecasts of $320.2m. Revenue was a slight miss, coming in at $4.55bn vs $4.56bn expected. The dividend will be 21.5c, up from 21c a year ago. The company reiterated guidance which it stated in August; Rigid Plastics segment is expected to deliver solid underlying PBIT growth in the 2018/19 financial year.
- Aurizon Holdings (AZJ) +0.23% Half year results. Underlying NPAT came in above consensus at $227m, revenue and underlying EBIT fell just short of expectations at $1.46bn and $406m respectively. Full year guidance maintained.
- GPT Group (GPT) +0.16% GPT’s continued foray into the logistics sector appears to be paying dividends. Full-year net profit came in at $1.45bn, up from $1.27bn a year ago. Net tangible assets came in at $5.58 per security, up from $5.04 at 31-Dec-17. Guidance is for funds from operations growth, and distribution per security growth of 4% each.
- Australian Agricultural Co (AAC) -12.26% has notified the market that four properties have been severely impacted by Queensland floods. The impact on the company’s financial earnings for the 2019 financial year (ending March 2019) is expected to be material. Wondoola station has been most affected and its current herd of approximately 30,000 head of mainly composite cows and their calves is expected to sustain extreme losses. Current conditions remain challenging.
- Incitec Pivot (IPL) –2.07% An update on the extreme weather events in Queensland. The impact will be from the rail closure with an EBIT loss of around $10m a week from February 9th until the resumption of full production. The IPL Phosphate Hill facility is undamaged. The Townsville fertiliser and distribution facilities suffered minor damage.
- Westpac and Macquarie Bank are cutting rates for some new borrowers by up to 40bps to attract new business. At the same time rates are rising for other fixed rate loans. Getting complicated out there but competition is strong.
- 2-Year bond yields up 2bps to 1.68%
- 5-Year yields down 3bps to 1.72%
- 10-Year yields down 1bps to 2.09%
- Chinese New Year spending was the slowest in years.
- People in China spent 1.01 trillion yuan (US$149 billion) at restaurants, shopping malls and online outlets over the week-long holiday, according to the Ministry of Commerce. That was 8.5% higher than during last year’s festive period, but the slowest increase since at least 2011.
- Spending at tourist venues rose 8.2% to 513.9bn yuan. Domestic box office revenue was 1% higher than in 2018.
- Chinese growth expected to fall to 6% in the first quarter for the lowest rise ever.
EUROPEAN AND US HEADLINES
- Brexit minus 46 and counting.
- Ships are now leaving Asia with goods and have no idea what customs regime they are sending goods into. Chaos will ensue.
- US talks to prevent another shutdown are going nowhere.
- Russia bonds are now investment grade according to three of the major ratings agencies.
- In Hungary, a mother that has four children pays no tax. Ever. This is a move to stimulate population growth without immigration.
- Analysts have forecast that Germany could lose 100,000 jobs if there is no Brexit deal. Germany sold 770,000 vehicles to the UK in 2017.
I couldn’t help but over-hear two guys in their mid-twenties while sitting
at a bar.
One of the guys says to his buddy, “Man you look tired.”
His buddy says, “Dude I’m exhausted. My girlfriend and I have sex all the
time. I just don’t know what to do.”
A fellow about my age (73), sitting a couple of stools down had also
over-heard the conversation. He looked over at the two young men and with
the wisdom of years says,
“Marry her. That’ll put a stop to that shit!”
A blonde was on vacation in the depths of Louisiana.
She wanted a pair of genuine alligator shoes, but didn’t want to pay the high prices. After unsuccessfully haggling with of one of the shopkeepers, the blonde said, “Maybe I’ll just go out and catch my own alligator, so I can get a pair of shoes at a reasonable price.”
Later in the day, the shopkeeper spotted the young woman standing waist deep in the water, shotgun in hand. She took aim at an alligator, killed it and hauled it onto the swamp bank. Lying nearby were several more of the dead creatures. The shopkeeper watched in amazement as the blonde flipped the alligator on its back and shouted in frustration, “Damn, this one isn’t wearing any shoes either.”