ASX 200 rose 31 to 7145 defying some underwhelming numbers for tech stocks. Records fall. Champagne all round. S&P futures upo 6.3. CBA fell 2.7% as it went Ex-Dividend and knocked around 13 points off the index alone. The gains came from healthcare with broker upgrades helping CSL up 3% and COH up 11% as its arch-rival recalled a product line. Consumer stocks were mixed as WES reported and rose 2.9% and took the opportunity to sell another 4.99% of COL which fell 4.2%. TWE +5.7% popped some champagne corks up % after recent weakness. Banks spluttered following a report by WBC on credit quality which could point the way to earnings issue, WBC dropped 0.5% and insurers under pressure again, SUN down 2.7% and IAG slipping further down 0.3%.  In the miners, FMG knocked the lights out up 0.7% with a good set of numbers, giving Twiggy a $700m dividend. Gold miners were in demand too as AUD bullion knocks on the door of $2400. NCM up 3.2% and NST up 3%. Energy stocks were stronger on renewed growth hopes, WPL up % and STO +%. Tech stocks were in focus with a deluge of results, WTC crashed 27.3% on a profit downgrade and NEA fell 2.9% on results that were in line with the recent downgrade, Results continued to dominate with increased volatility adding to the tech story. In other corporate news CGL fell 18.6% after its placement to fund the UK acquisition and CTX received yet another bid, this time from UK EG Group including a share option. One other highlight was DMP which delivered pepperoni with the lot and rallied 9.6% on better results from Japan and short covering. Economic news showed tepid wage growth and the 10-year yield steady around 1.04%. AUD under a little pressure more from a rampant USD than local weakness. Asian markets back in the green on optimism that the coronavirus pandemic is slowing and stimulus attempts. China up 0.63% and Japan up 0.96%.

  • ASX 200 rises to 7140. Strong volume.
  • High 7140 Low 7103. Is that an all-time high? Yup.
  • CBA weighs ex div. Healthcare rallies.
  • BHP slips post results.
  • FMG delivers. CTX gets another bid.
  • Consumer stocks cheer.
  • WES sells 4.9% of COL.
  • 10-year bond yields slip to 1.04%
  • AUD stable at 66.95c.
  • Dow futures down points
  • Aussie gold pops to $2393
  • Bitcoin rallies t0 $10,126
  • Asian markets positive with Japan up 0.96% and China up 0.63%

STOCKS                                               

  • CWY +16.67% good results, acquisition paying off.
  • DMP +9.64% shorts get taken away.
  • COH +11.00% broker upgrades and rival product recall.
  • TWE +5.73% big bounce.
  • WTC -27.31% catches corona virus.
  • EML -13.51% good times over as reality bites.
  • DEG +21.62% buyers return.
  • NEA -2.92% results confirm
  • COL -4.24% WES sell down.
  • CGL -18.64% placement weighs.
  • ALU -4.99% downgrades.
  • ZNO -11.64% continued profit taking.
  • UNV -8.70% takeover update. TER has 51%.
  • SLC +6.67% broker upgrade.
  • BET +7.59% back in winners circle.
  • LTR +8.33% still looking good.
  • MQG +1.10% capital notes offer opens.
  • WBC -0.50% credit quality report. Risks reappear.
  • SUN -2.71% insurers under pressure.
  • MPL -1.65% APRA report on drop-outs.
  • Speculative stock of the day: Nothing on any volume.
  • Biggest Risers: CWY, COH, WEB, DMP, SVW, VOC, NWL and EHL
  • Biggest Falls: WTC, EML, MOE, TAH, VCX, ALU, SIG and COL

TODAY

  • Fortescue Metals (FMG) +0.72% Underlying EBITDA of US$4.2 billion with an EBITDA margin of 65%. Fully franked interim dividend of 76c. Half year revenue of US$6.5bn at an average realised price of US$80/dmt for the half year, 73% higher than the prior comparable period. Net debt of US$0.7bn, inclusive of US$3.3bn cash, Investing US$700m in energy transmission infrastructure and solar-gas hybrid generation. C1 cost of US$12.73/wmt, 3% lower than 1H19. Dividend is a 65% payout ratio. These are strong numbers. The market will like the increased dividend. Guidance in upper end of range of 170-175mt and C1 costs in the range of US$12.75 – US$13.25/wmt.
  • Wesfarmers (WES) +2.87% sold down more of its stake in Coles (COL). Hot on the heels of the company results WES was attempting to sell 4.9% of the stock to institutional buyers at 1608c a 4% discount. The book build should have closed last night but obviously will place some pressure on the stock with some indigestion short term. WES Reports H1 NPAT from continuing operations (post AASB16) $1.13bn vs consensus $1.09bn. Revenue $15.25bn vs consensus $14.88bn. EBIT (post AASB 16) ex-items $1.73bn vs $1.70bn. Interim dividend 75c, fully franked. The coronavirus outbreak has not had a significant impact on the group’s businesses but the situation is being monitored closely. Adds it is well-positioned to deal with a range of economic conditions.
  • Nearmap (NEA) –2.92% Group annualised contract value (ACV) of $96.9m. Portfolio growth of 23%. Sta revenue of $46.3m up 31% on pcp. Global subscriptions rose 8% whilst churn rates also rose to 11.5% from 5.5% impacted by a small number of large company’s subscription churns as a result of a slow down in driverless cars mapping. No change to the guidance of $102m-$110m that the company revised last month and precipitated the recent fall.
  • Seven Group (SVW) +8.98% reports H1 underlying NPAT $254.7m vs year-ago $246.9m. Revenue $2.26bn vs consensus $2.16bn. Underlying EBIT $417.6m vs consensus $365.0m. Interim fully franked ordinary dividend of 21cps vs year-ago 21cps. Underlying EBIT expected to grow in the high single digits y/y in FY20 vs prior guided mid to high single digits.
  • Webjet (WEB) +10.82% reports H1 underlying NPAT $43.2m vs consensus $45.9m. Revenue $217.8m vs consensus $212.3m. Underlying EBITDA $86.3m vs consensus $80.9m. TTV $2.33bn vs year-ago $1.87bn. Interim dividend 9c per share. FY20 guidance: underlying EBITDA expected in the range of $147-165m. The company is seeing an impact on bookings and TTV across all business as a result of the current coronavirus outbreak which will impact H2 EBITDA.
  • Vocus (VOC) +8.36% Underlying NPAT A$54.4m vs year-ago A$54.6m. Adjusted EBITDA $179.3m vs forecasts of $169.3m. EBITDA growth of 11%. FY20 guidance of Group Underlying EBITDA in the range of $359m-379m (excluding significant items). Underlying EBITDA growth of $20m-30m in Vocus Network Services, offset by a similar decline in Retail. Capex in the range of $200m-210m – Cash conversion between 90-95%.
  • Lovisa (LOV) +2.91% Revenue increased by 22.2% to $162.8m. Gross Margin 79% with Gross Profit up 19.1% to $128.5m. 49 net new stores opened during the period, 439 at half-year. Fully franked interim dividend of 15.0c. Trading for the month of January was in line with that achieved in the first half with comparable-store sales at +2.1%. The coronavirus has had an impact on its foot traffic in Malaysia and Singapore the most affected, with second-half comparable-store sales now at -0.7% and YTD at +1.7%. The company is very reliant on the Chinese supply chain and delays in warehouse stocking will affect the Northern Hemisphere and South African markets. The company is at pains to stress it cannot estimate its full impact yet.
  • Medical Developments (MVP) +1.11% Revenue up 14.4% to $10.89m. EBIT up 58.1% to $215,000. Final dividend at 2c. Penthrox sales in Australia up 18% in UK up 42% EU sales up 35%. Progressing IND in USA.
  • Macmillan Shakespeare (MMS) –0.49% Revenue $270.4m. EBITDA up 1H20 UNPATA of $37.8m v forecasts of $39m. EBITDA $57.2m vs forecasts of $62.1m. FY20 UNPATA guidance of $83m-$87m unchanged. Risks remain around lender appetite and new car sales.
  • Domino’s Pizza (DMP) +9.64% Increased global food sales by $151.3m to $1.58b (+10.6% on the prior year, +4.1% on a Same Store Sales basis), and delivered Half Year EBITDA of $151.0m (+10.0%). On track to pass $3b in global food sales this Financial Year. Japan is showing some very good signs after so long. Sales +12.2% to ¥25.7b (+6.1% SSS), 42 new stores, EBITDA ¥2.8b (+10.6%). Australia/New Zealand – Sales +3.5% to $613.2m (+3.0% SSS), 6 new stores, EBITDA $71.4m (+1.7%). Europe – Sales +9.4% to €382.8m (+5.0% SSS), 37 new stores, EBITDA €29.4m (+15.6%). Good set of numbers finally from DMP. Plenty of shorts will be suffering today. Outlook positive too. SSS growth in the first trading weeks of H2 20 is +6.3%, and for the Financial Year to Date +4.6%. Network sales are +10.7% higher for the Financial Year to Date.
  • Citadel Group (CGL) -18.64% Back from its placement with $127m raised. High demand but yet the stock is now below the issue price.
  • Wisetech Global (WTC) -27.31% Total 1H20 revenue of $205.9m, up 31%. Net profit attributable to equity holders of $59.9m, up 160%. EBITDA $62.5m, up 29%. Misses forecasts. Looks like a corona casualty. guidance for full-year revenue of between $420m and $450m, an increase of 21% to 29% on 2019. It expects full year earnings (EBITDA) of between $114m to $132m, an increase of between 5% and 22% on last year. Previously, the firm guided to revenue of $440m to $460m and EBITDA in a range of $145m to $153m for the year. 1.7c dividend announced.
  • Caltex (CTX) +0.78% receives takeover proposal from EG Group for combination of $3.9bn in cash and securities to be issued in an entity to be listed on the ASX. EG has indicated that it is also prepared to consider acquiring up to 10% of Ampol for additional cash consideration. The proposal also provides for Caltex to pay a fully-franked special dividend to Caltex shareholders to distribute the balance of the company’s franking credits. The board is currently considering the proposal, including obtaining advice from its financial and legal advisers.
  • McPhersons (MCP) – 5.83% increase in Profit Before Tax (PBT) to $8.5m. FY20 PBT guidance maintained at approximately 10% above FY19. Interim dividend of 4c. fully franked. Total sales revenue of $106.0 million was in line with 1H19 ($106.5 million). Importantly, sales increased by 6% excluding the impact of recently terminated distribution agreements with Trilogy and Karen Murrell. McPherson’s generated strong growth in skincare, haircare and body care brands, with revenue increasing 90% over the half to $28.7m. Management is closely monitoring the status of supplier and customer impact due to coronavirus although it had built up beauty care stockpiles in China pre the Lunar New Year.

ECONOMIC NEWS

  • The ABS said that its seasonally adjusted wage price index rose  0.5% in the December quarter for a 2.2% annual increase. “The seasonally adjusted quarterly rise of 0.5% extended the period of moderate growth observed throughout 2019”. Both private and public sector wages rose 2.2% on an annual basis. Public sector wages recorded the lowest growth since December quarter 1997, of 0.4%. Private sector wages grew at 0.5%.

BOND MARKET

ASIAN NEWS

  • Second Hong Kong death from Coronavirus. China toll hits 2000.

  • KPMG says HK should give everyone HK$10,000 to kick start economy.
  • A growing number of China’s private companies have cut wages, delayed salary cheques or stopped paying staff completely, saying that the economic toll of the coronavirus has left them unable to cover their labour costs. Some examples include the Lionsgate Entertainment World theme park in Zhuhai which is closed, and the workers have been told to use up their paid holiday time and get ready for unpaid leave.
  • Japan on the brink of a recession. Not sure Abenomics has been that successful.

EUROPEAN AND US NEWS

  • Presidential debate ahead with Mike Bloomberg. Trumps approval rating at 47% all-time high.
  • Italian banks. Has the consolidations started?
  • Trump grants Michael Milken a pardon. Junk Bond king who started it all in the 80s now a free man. Only served 2 years out of 10 anyway.
  • Macy’s downgraded to junk by S&P.
  • HSBC cutting 35,000 jobs. Interim CEO has a cunning plan. Shrinking to greatness.

And finally..

Clarence

XXX

mt_tryforfree

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