Happy Days!

ASX 200 kicks 18 points higher to 6502 on renewed optimism ahead of the central bank conference. US Futures down 30 points. Miners rallied despite falls in commodity prices, energy stocks higher too led by WPL up 0.6%. Banks were the winners bouncing back from yesterday. WBC up 0.8% and NAB up 0.9%. Results the dominant factor as ‘Super Thursday’ delivered a mixed bag. The Good: PME up 16.1%, VOC up 9.6% despite a pullback in profits, FLT defies the critics up 7.5% and CAT up 19.8%. The Bad: Z1P down 4.2%, BIN down 6.3% and S32 down 4.4%. The Ugly: IEL collapsed 10.4% and WEB down 8.3%. In other corporate news EPW rose 42.4% after a bid from Shell Energy. Nothing significant on the economic front. 10-year bonds Asian markets were better with Japan down 0.16 % and China down 0.12%. Ashes resumes today. No Steve Smith.

Todays Highlights

• ASX 200 up 18 to 6502.
• High 6521 Low 6485.
• Banks and miners tread higher. Results the focus.
• Industrials mixed.
• AUD steady at 67.65c. Very dull.
• Aussie gold steady at $2217
• Bitcoin falls to $9955
• US futures up 60
• Asian markets quiet with Japan down 0.16% and China up 0.12%

STOCKS

• CGC +7.67% running into results?
• NEC +8.03% still the one on broker upgrades.
• WTC +6.92% momentum continues.
• EML +6.10% broker upgrades.
• KMD +4.24% still strong following results.
• JIN +6.05% bargain hunters push it higher.
• SBM -7.37% gold stocks under pressure.
• FNP -4.11% thin selling.
• SDF +7.02% returns after capital raising.
• MND -3.19% broker downgrades following numbers.
• JBH -3.13% brokers downgrade.
• WZR -3.70% remains under a little pressure.
• CAT +19.83% off like a scolded one.
• M7T +7.50% new contract wins.
• EPW +42.44% takeover approach by Shell Energy
• LYC -1.63% gets licence. Malaysia says much still to do.
• Speculative stock of the day: New Float Opticomm (OPC) +54.00% great debut for the Melbourne-based company raised $42.3m from an initial public offering of 21.18 million shares at 200c.OPC is one of the largest privately-owned, builder-owner-operators of fibre-to-the-premises (FTTP) networks to new residential developments.
• Biggest Risers: PME, VOC, OML, NEC, CGC, FLT and SDF
• Biggest Falls: YAL, IEL, WEB, SBM, EVT, BIN and S32.

TODAY

• Arq Group (ARQ) -3.39% reports H1 underlying NPAT $0.8m vs $2.5m expected. 1H revenue $90.9m vs $93.0m expected. Underlying EBITDA $9.6 vs $10.0m expected. Core underlying EBITDA of $3.6m vs guidance of $3.1m. It expects underlying EBITDA in the $27.5-30.5 range vs prior guidance $22.0-25.5m, and core underlying EBITDA $20.5-23.5m vs prior guidance of $15.5-18.5m.
• Bingo Industries (BIN) –6.28% reports FY underlying NPATA of $58.9m, well ahead of the expected $42.1m. Underlying EBITDA also beat expectations at $106.1m (vs $104.1m), however revenue missed at $402.2m (vs $407.1m). Statutory NPAT fell 41% to $22.3m and a fully franked final dividend of 2c has been announced. The company expects solid growth in FY20 despite the broader economic outlook remaining flat and headwinds expected to continue. The Banksmeadow divestment is expected in September 2019, removing annualized earnings contribution of approximately $10m in EBITDA
• Coca-Cola Amatil (CCL)+5.84% reports H1 ongoing NPAT $173.3m vs $172m expected. Revenue $2.43bn vs $2.41bn expected. Statutory EBIT $273.5M, up 4.7% year-on-year. Statutory NPAT $168m, up 6.3% y/y. Total unfranked dividend for the half of 25 cps comprising: interim div of 21 cps and special dividend of 4 cps, from the proceeds of the sale of SPC
• Coles (COL) +2.11% reports FY EBIT $1.33bn ex-items vs $1.46bn a year ago. Revenue $35.00bn ex-items vs $33.96bn a year ago. Coles made a number of statements relating to capex outlook, renewals, new stores and formats at the recent Investor Day in respect of FY20 and these remain unchanged. The Smarter Selling initiatives in FY20 are anticipated to deliver annualised benefits in excess of A$150m. In Express, growth in fuel volumes has been encouraging following more competitive fuel pricing and the introduction of the Little Shop 2 campaign.
• Catapult Group (CAT) +19.83% Full-year results; NPAT beat estimates at ($12.6m) vs consensus of ($14.1m). Revenue fell just short of expectations at $95.4m vs consensus of $95.6m. EBITDA came in ahead of expectations at $4.1m vs consensus of $3.5m. The board expects continued strong revenue growth and notes the emerging scalability will further reduce operating expense growth.
• Cooper Energy (COE) +2.65% concludes Parsons appraisal drilling campaign. Results from the campaign are largely in line with pre-drill expectations. The Parsons campaign was the first instalment in a program of up to 19 wells planned by the PEL 92 Joint Venture for the 2020 financial year. COE has a 25% interest in the PEL 92 joint venture with the balance held by the Operator, BPT.
• Downer EDI (DOW) +1.59% reports FY underlying NPATA of $340.1m, well ahead of the expected $293.3m. EBITDA also came in above expectations at $850.2m (vs $843.9m). Total revenue rose 7% to $13.45bn and a final 50% franked dividend of 14c has been announced. The company expects underlying NPAT of $365m in FY20.
• ERM Power (EPW) +42.44% FY2019 underlying EBITDAF1 of $90.5m for the year to 30 June 2019 and Statutory NPAT2 of $123.1m. Underlying NPAT3 was $26.0m while an additional $16.1m of NPAT was generated from the Large-scale Generation Certificate (LGC) strategy. Shell Energy Australia proposes to acquire 100% of the share capital of ERM Power for a cash price of 246.5c. Values ERM Power’s equity at approximately $617m. The Board has today (with the FY2019 full year results) declared a fully franked ordinary dividend of 4.5c per share (“Ordinary Dividend”), which will be paid on 9 October 2019. In addition, the Board currently intends to declare and pay a special dividend of up to 8.5c per share prior to implementation of the Scheme (“Special Dividend”) if the Scheme is approved by ERM Power shareholders and the Court. The amount paid will be reduced by the dividend and special dividend amount.
• Flight Centre (FLT) +7.53% reports FY underlying PBT of $343.1m, at the lower end of the guided range ($335-360m) and down from $384.7m a year ago. Statutory NPAT was slightly below last years’ number at $264.2m (vs $264.8m), and revenue of $3.06bn just missed estimates of $3.08bn. Total transaction volume (TTV) was up to $23.78bn from $21.82bn a year ago. A fully franked 98c final dividend has been announced
• iCar Asia (ICQ) – reports H1 pro forma NPAT of $5.6m, just shy of the $5.7m expected. Revenue fell short of expectations at $6.0m (vs $7.1m), as did pro forma EBITDAE of $2.8m (vs $4.9m).
• IDP Education (IEL) -10.42% FY adjusted NPAT $68.7m vs estimates $68.9m (A$19.57) Revenue $598.1m vs $603.1m. EBIT $97.1m vs forecasts $98.5m. FY19 final dividend 7.5c. Student Placement volumes increased by 25%. The significant growth of Student Placement and IELTS volumes in India contributed to overall record business performance. Balance sheet: $4.4m of net debt. No guidance given. Looking to FY20, the CEO said the company’s focus remains on growing the capabilities of its people and improving the IELTS customer experience.
• Integrated Research (IRI) +7.72% Profit after tax increase of 14% to $21.9 million over the previous financial year. The result is at the top end of the guidance provided on 15 July 2019. new licence sales increased by 19% to $62.8m and total revenue increased by 11% to $100.8m. Over 95% of the Company’s revenue was derived outside of Australia. The Company’s EBITDA margin (measured as EBITDA/revenue) has been at 40% for the last three years. The Company’s NPAT margin (measured as NPAT/revenue) was 22% compared to 21% for the previous year. No guidance.
• Life 360 (360) +3.38% Revenue of US$24.6m up 114% year-on-year. EBITDA loss of US$16.5m compared with a loss of US$7.4m for the six-month period ending 30 June 2018. Net loss of US$17.1m compared with a loss of US$7.5m in the prior period. Net cash inflow of US$52.6m including IPO proceeds. Cash balance of US$78.7m with no debt. Expects to meet our prospectus revenue forecasts of US$58.6m for CY19
• Medibank Private (MPL) +2.96% reports FY NPAT $458.7m vs $457.5m expected. Revenue $7.22bn vs $7.12bn expected. Health Insurance premium revenue $6.47bn vs year-ago A$6.32bn. Segment operating profit $564.6m vs year-ago A$553.0m. Final dividend of 7.4 cps (fully franked) + special dividend of 2.5 cps (fully franked). Record 5-Sep; Payable 26-Sep.
• Mineral Resources (MIN) -1.11% reports FY normalized EBITDA $433m vs guidance $360-390m and $400.6m expectations. Revenue $1.51bn vs $1.44bn expected. Normalized NPAT $205m vs $175.5m expected. Fully franked final dividend of 31 cps.
• Mortgage Choice (MOC) –0.87% reports FY cash NPAT of $14.0m, down 40% from last year but in line with guidance. Revenue dropped 18.5% to $177.4m. The loan book sits at $54.3bn, down from $54.6bn last year. Funds under advice rose 30% for the year, up to $952.2m. A fully franked dividend of 3c has been announced. CEO Susan Mitchell labelled it a “solid performance in a considerably weaker property and home loan market”, while commenting there are signs of the market turning and settlement flows are expected to improve in FY20.
• Nine Entertainment Group (NEC) +8.03% reports FY NPAT of $187.1m, up 19% from last year. Revenue rose 40% to $1.85bn, while EBITDA jumped 36% to $349.9m. A fully franked dividend of 5c has been announced. The company expects to report pro forma Group EBITDA growth of around 10% on a continuing basis. Free to air (FTA) revenue is projected to be down around 4% in the current quarter, but conditions are expected to improve in Q2. Paul Koppelman has been appointed as CFO, effective September 3.
• Origin Energy (ORG) +2.36% reports FY NPAT of $1.03bn, just shy of the expected $1.02bn. Revenue missed expectations at $14.73bn (vs $15.03bn), while adjusted EBITDA also fell short at $3.23bn (vs $3.25bn). Statutory NPAT rose 332% from last year up to $1.21bn. A final dividend of 15c has been announced.
• ProMedicus (PME) +16.14% Revenue of $50.1m up 47.9%. After tax profit $19.1m up 91.9%. Final dividend of 4.5c. Cash up 28% to 32.3m. Outlook positive with a large number of tier-one hospitals in the UYS taking up the radiology software. Now one of the 5 providers at the top 20 US hospitals.
• Qantas (QAN) +1.38% reports FY Underlying PBT $1.30bn vs $1.57bn a year ago. Revenue $17.97bn vs $17.98bn expected. Statutory NPAT $891m vs $953m a year ago. Final dividend 13.0 cps.Group capacity is expected to increase by ~1% in H1 of FY20. Group International is expected to increase by ~1.5% while competitor capacity is expected to decline by ~1% in H1 of FY20.
• Qube Logistics (QUB) +4.26% Underlying NPAT attributable to Qube up 15.4% to $123.2m ($139.2m pre-amortisation). Underlying revenue growth of 4.7% to $1.73bn. Final ordinary dividend increased by 3.6% to 2.9 cents per share (fully franked) bringing it to 6.7c. Qube expects broadly similar overall economic and competitive conditions to FY19. In FY20, subject to no material adverse change in economic or market conditions, Qube expects to report another solid increase in underlying NPAT (pre-amortisation) and continued improvement in underlying earnings per share (pre-amortisation).
• Healthcare (REG) -1.39% reports FY normalised NPAT $47.2m vs guidance at lower end of $47-51m and $47.4m expected. Revenue $647.1m vs $644.7m expected. Normalised EBITDA $111.4m vs guidance of $113m and $113.2m expected. Net operating cashflow $220.1m vs $133.8m a year ago. Average occupancy of 92.7%. Final dividend 7.11 cps (fully franked).
• Santos (STO) +3.50% reports H1 underlying NPAT $411m vs $336m. Revenue $1.97bn vs $1.82bn. EBITDAX $1.26bn vs $883m a year ago. Interim dividend 6 cps vs 3.5 cps a year ago.
• Scentre Group (SCG) +1.30% reports H1 funds from operations (FFO) of 12.75c per security, just shy of the estimated 13c. Revenue also fell short of estimates at $1.30bn (vs $1.42bn). Profit after tax fell 49% on last year to $744m. An interim dividend of 11.3c has been announced.
• (S32) -4.36% reports FY underlying earnings $992 vs $1.0bn expectations. Reported NPAT $389m vs year-ago $1.33bn. Revenue $7.27bn vs $7.43bn expected. Underlying EBITDA $2.20bn vs $2.17bn expectations. Final dividend 2.8 cps (fully franked). Record 13-Sep; payable 10-Oct
• Southern Cross Media (SXL) +2.63 reports FY underlying NPAT $76.2m vs $76.7m expected. Revenue $661.0 vs $651.6m expected. Underlying EBITDA $159.9m vs $155.6m. Final dividend 4 cps (fully franked). Record 9-Sep; Payable 8-Oct.
• SG Fleet Group (SGF) –2.67% Full-year results; NPAT down 10.4% to $60.5m. Revenue came in ahead of estimates at $509.7m vs consensus of $502.6m. A final dividend of 9.52c per share was declared. Profit and dividend weaker, Chairman Andrew Reitzer pointed to decreased consumer sentiment and a mixed operating environment as some of the challenges faced throughout the year.
• Steadfast (SDF) +7.02% completes $100m placement at 338c vs bookbuild floor 328c.
• The Reject Shop (TRS) -8.53% Net Loss After Tax of $16.9m for the FY2019 year, including the impacts of a non-cash impairment charge of $15.4m (after tax). FY2019 sales down 0.8% on prior comparative period (pcp) to $793.7m. Total Sales Growth for first seven weeks of FY2020 +0.7%. CEO commentary: ‘extremely challenging year for The Reject Shop and the retail sector’.
• Vocus Group (VOC) +9.59% reports FY underlying NPAT of $105.5m, slightly above expectations of $104.3m. Revenue of $1.89bn fell short of the expected $1.96bn, while adjusted EBITDA of $360.1m beat estimates of $355.3m. Guidance was met across the board and reaffirmed for FY20.
• Viva Energy REIT (VVR) – First-half results; distributable earnings came in slightly ahead of estimates at $55.7m vs consensus of $55m. Revenue beat expectations at $87.7m vs consensus of $74.3m. A distribution of 7.18c per security was declared. VVR is on track to deliver FY19 earnings growth between 3-3.75% and is targeting a pay-out ratio of 100% of distributable earnings. Statutory profit was down 4.5% to $56.9m on the back of increased rental income being offset by costs of restructuring the interest rate swaps.
• Webjet (WEB) -8.30% reports FY NPAT of $60.3m, up 45% from last years’ number. Revenue grew 26% to $367.4m and a final dividend of 13.5c has been announced.
• Zip Co (Z1P) 4.17%- reports FY NPAT loss of $11.1m vs loss of 9m forecast. Reported cash EBTDA $9.2m vs year-ago loss of $8.8m. Transaction volume of $1.128.5bn, +108% y/y. 2.5m customers with an active Zip account. Annualised transaction volume $2.2bn.

ECONOMIC NEWS

• ASIC will ban the issue and distribution of binary options and heavily restrict the sale of CFDs to retail clients, describing them as “highly speculative products”. Interesting move but welcome.
• Australia Post’s overall profits fell 69.8% over the past year to $40.6m. No plans to drop letters despite revenue from letters falling almost 9% to $2.22bn.

BOND MARKET

• 2 – year bond yields up 1bps to 0.73%
• 3 – year bond yields up 1bps to 0.68%
• 10 – year bond yields down 1bps to 0.92%

ASIAN NEWS

• Japan’s manufacturing sector shrank for a fourth consecutive month in August while services activity picked up.
• China’s yuan dropped to its weakest since March 2008 at 7.0740c to the USD.

EUROPEAN AND US NEWS

• Trump says ‘he is the chosen one’.
• BoJo heads to meet the French. Never ends well. President Macron has decided to abandon the tradition of a joint final communiqué at the G7 summit at the weekend. Easier than papering over the cracks.
• Norway’s US$1tn oil fund held a record amount of equities at the end of June. Did they pay the top?
• Its August Bank Holiday weekend in UK. So, Ryanair pilots have gone on strike. Bless.

And finally..

“Crime in multi-storey car parks. That is wrong on so many different levels.” Tim Vine (2011).

“When I was younger I felt like a man trapped inside a woman’s body. Then I was born.” Yianni (2015)

“I was very naive sexually. My first boyfriend asked me to do missionary and I buggered off to Africa for six months.” Hayley Ellis (2012)

“Is it possible to mistake schizophrenia for telepathy? I hear you ask.” Jordan Brookes (2016).

“Most of my life is spent avoiding conflict. I hardly ever visit Syria.” Alex Horne (2014)

“You can’t lose a homing pigeon. If your homing pigeon doesn’t come back, then what you’ve lost is a pigeon.” Sara Pascoe (2014).

“My Dad said, always leave them wanting more. Ironically, that’s how he lost his job in disaster relief.” Mark Watson (2014)

I thank you!!

Clarence

XXX