ASX 200 has another strong day up 78 at 6545 as RBA says lower for longer. Feels like shorts are being squeezed higher. Closaes on highs. US Futures up 39 points. Once again results dominated proceedings but bond proxies, industrials healthcare and industrials did well as the RBA revealed its minutes. CSL rose 2.1%, TWE +3.8%, TCL up 1% and WOW rose 2.2% to lead the charge. Banks were mixed though with CBA the stand outs up 1.1%. Miners though under pressure following slightly underwhelming BHP results. The big Aussie rose 0.1%, turning positive at the close and gold miners were pressured as bullion bears the brunt of the ‘risk back on’ settings. RIO picked up friends up 1% and interestingly BSL rose 7.7% after a broker rethink. Energy stocks also benefitting from higher oil prices led by WPL up 2.2%. In corporate news, SEK rose 4.8% on the results, HLS saw a large fund sell down at 300c, SHL radiated positively up 3% and SYD rose 0.8% on traffic numbers. Meanwhile the RBA released its minutes showing lower for longer. ANZ consumer confidence fell again and APRA released rules on related entities capital requirements.  In the bond markets, yields rose slightly the 10-year bonds to 0.95%. The AUD is becalmed with Asian markets slightly higher, Japan up % and China up %.

Todays Highlights

• ASX 200 rises another 78 points to 6545 FOMO rises.
• High 6545 Low 6470. Shorts covering as calm descends.
• Rally builds in industrials and bond proxies.
• BHP disappoints.
• SEK delivers.
• Energy stocks rise. REITs in demand.
• AUD steady at 67.87c. Very dull.
• Aussie gold weaker at $2205
• Bitcoin rallies to $10791
• US futures up 39
• HK CEO pledges better dialogue with protesters. Calm descends.
• Asian markets firm on HK news with Japan up 0.5 and China up 0.2%

STOCKS

• IFM +11.17% good results.
• Z1P +10.96% great international expansion acquisition.
• BSL +7.69% broker rethink.
• PNV +5.37% bulls back.
• LLC +5.13% broker upgrades
• FNP +5.68% thin but promising.
• NWL +6.39% broker upgrade.
• HLS -2.91% local insto sells out at 300c by UBS.
• SWM unchanged broker downgrades
• RRL -2.23% SAR -3.50% NST -1.77% gold stumbles.
• GGG +12.00% Trump bids for Greenland.
• AYS +7.20% bounces back.
• CLV +6.34% appendix 3Y
• KGN +7.63% good results.
• CGL -9.34% results disappoint.
• VRT -6.31% results disappoint.
• SXY +7.94% bringing the SXY back.
• Speculative stock of the day: AJ Lucas (AJL) +65.22% after fracturing resumes at Preston New Road. Low volume though.
• Biggest Risers: IFM, Z1P, IPH, BPT, EHE, BSL and REG.
• Biggest Falls: WPP, SGF, SLR, RMS, WGX, SAR and HLS

TODAY

• Altium (ALU) +6.50% reported after the close yesterday – FY NPAT $52.9m vs $53.1m expected. Revenue from ordinary activities of $172.8m, up 23.1%. Total Product Revenue $171.8m. EBIT $56.9m vs $58.2m expected. Final dividend of 18cps.
• ARB Corp (ARB) +3.88% reports FY NPAT $57.1m vs $57.1m expected. Revenue $446.6m vs $451.3m expected. Final DPS 21c.
• BHP Group (BHP) +0.1% FY underlying attributable profit (from continued operations) $9.46bn vs $9.62bn a year ago. Underlying EPS $1.761 vs $1.84 expected. Revenue $45.1bn vs company guidance $44.74bn. Underlying EBITDA $23.16bn vs company guidance $23.71bn. Dividend 78 cps. Record 6-Sep, payable 25-Sep
• Charter Hall Group (CHC) +3.16% reports FY OEPS post-tax 47c vs 47c. Revenue $378.5m vs $246.2m a year ago. Statutory profit $235.3m. Distributions 33.7cps. FUM $34.6bn
• Citadel Group (CGL) -9.34% Positive outlook. FY19 revenue of $99.2m and EBITDA of $23.3m were in line with the guidance provided in May 2019 of $97m-$104m and $22m-$24m respectively and a fully franked final dividend of 6.0c
• Estia Health (EHE) +8.37% Full-year results; NPAT missed estimates at $41.3m vs consensus of $42.2m. Revenue fell short of expectations at $575.5m vs $585m. Adjusted EBITDA beat estimates at $94m vs consensus of $92.3m. A final dividend of 7.8c per share was declared, a slight fall from last year’s 8c dividend. Capital investment in FY20 is expected to be around $120m-$150m. Target bank debt gearing ratio is anticipated to remain between 1.5x – 1.9x EBITDA and the dividend payout ratio is forecast to be around 70-100% of NPAT
• iSelect (ISU) -4.07% reports FY underlying NPAT $11.1m vs $6.7m a year ago. Underlying revenue $150.7m vs $178.5 a year ago. Underlying EBITDA $22.9m vs $15.7m a year ago
• Kogan (KGN) +7.63% Full-year results; NPAT just missed estimates at $17.2m vs consensus of $17.3m. Revenue missed expectations at $438.7m vs consensus of $451.1m. A final dividend of 8.2c per share was declared, up 10% on year. Active customer base lifted 15.9% to 1.609m over the year. KGN also reported a good start to FY20, July unaudited accounts showing year on year gross sales growth of 18.3% and gross profit growth of 32%.
• Monadelphous Group (MND) –0.61% Full-year results, underlying NPAT fell short of estimates at $57,4m vs consensus of $62.1m. Revenue including JVs just beat expectations at $1.61bn vs consensus of $1.60bn. EBITDA missed estimates at $106.8m vs consensus of $109.6m. MND expects favourable market conditions to return in FY20. LNG prospects expected to be positive in the years to come. Maintenance activity also expected to remain strong.
• Oil Search (OSH) +1.08% reports H1 NPAT $161.9m vs $167.8m expected. Revenue $776.9m vs $777m expected. EBITDAX $582.3m vs $363.7m a year ago. Interim dividend 5 cps. Record 4-Sep, payable 24-Sep
• Seek Limited (SEK) +4.81% reports FY underlying NPAT $229.0m vs $228.5m a year ago. NPAT $184.8m ex-items vs $199.2m a year ago. Total Sales Revenue $1.54bn vs $1.53bn a year ago. EBITDA $455.0m $453.6m expected. Final dividend 22 cps. Record 12-Sep; payable 3-Oct
• Seven West Media (SWM) – reports FY NPAT $129.3m ex-items vs $126.3m expected. Revenue $1.55bn vs $1.55bn expected. Underlying EBITDA $243.6m vs $242.7m expected. Underlying EBIT $212.1m vs $212.1m expected.
• Sonic Healthcare (SHL) +3.06% reports FY NPAT $549.7m vs $475.6m a year ago. Underlying Revenue $6.14bn vs year-ago A$6.14bn. Underlying EBITDA $1.06bn vs year-ago A$962.1m Final dividend 51cps (15.30c franked). Record 11-Sep, payable 25-Sep.
• Senex Energy (SXY) +7.94% Full-year results; underlying NPAT beat estimates at $7.2m vs consensus of $6.8m. Revenue missed at $94.1m vs consensus of $95.3m Underlying EBITDAX came in ahead of expectations at $39m vs $33.7m. FY20 to see around $150m in Surat Basin natural gas capital invested, paving the way for a sharp rise in production, cashflow and earnings from FY21.
• Tassal Group (TGR) – trading halt – reports FY operating NPAT $56.6m vs $59.4m expected. Revenue $560.8m vs $585.5m expected. Operating EBITDA $112.3m vs $117.1m expected. Final dividend 9 cps. Record 11-Sep; payable 30-Sep
• Western Areas (WSA) +0.81% reports FY NPAT $14.2m vs $14.5m expected. Revenue $268.7m vs $263.3m expected. Adjusted EBITDA $80.8m vs $82.3m expected. Final DPS 2c
• Zip Co (Z1P) +10.96% The company has signed an agreement to acquire 100% of the shares in global instalment technology platform, PartPay Limited (‘PartPay’), providing exposure to four key geographies – New Zealand, United Kingdom, United States and South Africa. Zip has also agreed to acquire a direct strategic equity interest in New York based “buy now, pay later” provider, QuadPay Inc. The PartPay acquisition involves total upfront consideration of NZ$50.8m with an earn-out of up to a further NZ$15.0m based on certain prescribed performance milestones being achieved during the FY20 and FY21. The total maximum consideration of NZ$65.8m will be paid by the issue of new fully paid ordinary shares in Z1P, priced at 276c.
• Ausdrill (ASL) -0.28% To change its name to Perenti Global.

ECONOMIC NEWS

• The ANZ-Roy Morgan consumer confidence Index fell 2.3 per cent to 112.8, leaving it at the lowest level since late March.
• The CBA’s Business Sales Indicator (BSI), something that tracks the value of fees that are process by merchants using CBA systems, fell by 0.1% last month in trend terms after declining by a similar margin in June. Weakness in July from big falls in NSW and VIC with the value of sales declining 0.6% and 0.3% respectively from a month earlier in trend terms.
• The Australian Prudential Regulation Authority (APRA) today confirmed it will implement its previously announced proposal to reduce limits for Australian ADIs’ exposures to related entities, reducing limits from 50% of Level 1 Total capital to 25% of Level 1 Tier 1 capital.

RBA Minutes

Highlights:

• Domestically, growth had been lower than expected in the first half of 2019. Looking forward, growth was expected to strengthen gradually, to 2¾% over 2020 and to around 3% over 2021.
• The unemployment rate was expected to decline to around 5% over the following couple of years.
• Inflation was expected to increase gradually to be a little under 2% over 2020 and a little above 2% over 2021.
• Members judged it reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment.

For the full statement click on this link

BOND MARKETS

• 2-year bond yields up 2bps to 0.74%
• 3-year bond yields up 2bps to 0.69%
• 10-year bond yields up 2bps to 0.95%

ASIAN NEWS

• China has been highly critical of Taiwan’s offer to take protesters as political asylum seekers. Taiwan lacks a formal legal mechanism for assessing and granting asylum requests, although it has granted residency to several vocal opponents of the Chinese government.
• Baidu posted second-quarter revenue that beat expectations and swung back to a profit after its first loss in almost 15 years.

EUROPEAN AND US NEWS

• Trump gets serious about buying Greenland.

• Talking things Green, a Hong Kong group is set to buy UK’s brewer Greene King for GBP 4.6bn. Taking advantage of the low pound and getting money out of HK.
• G7 meeting kicks off in France this weekend. Sure to be some fireworks. Plenty of Tweets to come.
• BoJo has sent his four-page homework to Brussels explaining his plan for the Irish backstop. What could go wrong? EU pretty frosty so far.
• Vladimir Putin said citizens have “the right to peaceful protest” but that riots would not be tolerated in Moscow.
• The Russians have won the annual Tank race and biathlon. Big surprise.
• Apple is set to spend US$6bn on new content for its forthcoming streaming service. Apple launches in November with a US$9.99 deal after a free trial.

And finally…………..

The winning joke at the Edinburgh festival has been announced

“I keep randomly shouting out ‘Broccoli’ and ‘Cauliflower’ – I think I might have florets”. Olaf Falafel

 

Runners up…..

• “What’s driving Brexit? From here it looks like it’s probably the Duke of Edinburgh” – Milton Jones
• “A cowboy asked me if I could help him round up 18 cows. I said, ‘Yes, of course. – That’s 20 cows'” – Jake Lambert
• “A thesaurus is great. There’s no other word for it” – Ross Smith
• “Sleep is my favourite thing in the world. It’s the reason I get up in the morning” – Ross Smith
• “I accidentally booked myself onto an escapology course; I’m really struggling to get out of it” – Adele Cliff

Clarence

XXX