ASX 200 up 18 points to 7162.5 at a record despite a big retreat from intra day highs as results and jobs data dominate. Dow Futures up points. Super Thursday brought a raft of profit reports, some good some bad but most had something to say about Covid19 and its impacts. Broker upgrades and downgrades continue to flow into the market. High PE stocks under pressure. Banks were mixed with ANZ up 1% and CBA unchanged as the stock no longer includes the dividend incentive. Healthcare under some pressure with CSL leading the move down by 0.7% and COH down 3.7% giving back some of yesterday’s gains. In miners, nothing shaking but the trees as FMG put on 1.8% on its results but BHP and RIO failed to fire. Gold stocks were celebrating the seven year high in bullion prices and a lower dollar with NST up 1.6% and NCM up 0.1%. Not too much partying all things considered. Tech stocks continue to come under pressure led lower by WTC down another 11.8% as the emperor’s clothes seem to have left the building. ALU down % and even XRO down 1.7%. APT dropped 3.1% after a senate inquiry and comments from the company blaming regulations for an uncertain business outlook. In corporate news, too many to cover in a paragraph. QAN up 5.9% was a standout despite Covid -19 issues. SXL roared ahead by 13.9% and so did PPT up 11.1% on results plus CCL up 8.5% as the results put the fizz back. LLC too up 6.7% as were ship builder ASB up 6.6%. In the naughty corner though were WHC -5.5% with trouble at pit, MOC -16.2% after showing very little progress despite booming house market, similar to DHG down 6.3%. ORI fell 3.6% after a $500m placement and LTR rose 11.5% after some spectacular lithium hits. In economic news, the headline jobs number came in at 5.3% though the trend estimate that the RBA looks at, was unchanged. Much fuss about nothing really, but AUD fell to an 11-year low on the back of the number. 10-year yields fell to 0.98% and Asian markets were slightly better as the PBoC cut rates to stimulate. China up % and Japan up %.

  • ASX 200 rises 20 to 7164. Well off highs
  • High 7197 Low 7146. Missed it by that much.
  • Healthcare a little peaky.
  • Banks firm as defensives.
  • Miners firm. Tech wrecked.
  • Consumer staples higher. Bond proxies fall.
  • 10-year bond yields slip to 0.98%
  • AUD falls to 66.39c on jobs number. 11-year low.
  • Dow futures down points
  • Aussie gold pops to $2422
  • Bitcoin drops to US$9556
  • Asian markets positive with Japan up % and China up %

STOCKS                                               

  • MOE +9.77% broker upgrades.
  • AX1 +10.08% good results.
  • WTC -11.78% the emperor has no clothes.
  • AEF -8.73% profit taking.
  • CDA -6.49% disappointing results.
  • COH -3.66% profit taking after strong run yesterday.
  • AVH -5.42% question marks.
  • PVS +3.53% release of securities from escrow.
  • MOC -16.21% bad results. No loan book growth. Missed the boom.
  • LTR +11.54% spectacular new lithium hits.
  • ZNO +8.98% new distribution agreement.
  • SLC +8.75% broker upgrades. Singapore stimulus helps?
  • 4DS -3.28% Appendix 4E – Revenue up 185%.
  • APT -3.06% talks to Senate about regulatory risks.
  • MPL -2.01% pleads for reform.
  • EOF +1.85% launches US import business.
  • Speculative stock of the day: NSX Limited (NSX) +133.33% enters into an agreement with ISX (yes, really) for a JV called Clearpay.  It will develop a DVP platform to supersede its current settlement system. NSX will invest $3.2m for a 41%. ISX gets 13% of NSX. interest in ClearPay. Decent volume too.
  • Biggest Risers: SXL, PPT, AX1, MOE, CCX, SIQ, CCL and IDX
  • Biggest Falls: WTC, AEF, CDA, PAR, DHG, IRE, WHC, AEF and AVH

TODAY

  • Iress (IRE) -5.74% reports FY NPAT $65.1m vs consensus $62.5m. FY operating revenue came in at $508.9m vs $510.6m expected. Final dividend 30cps, franked at 40%. Record 31-Dec, payable 20-Mar. Y20 Guidance: segment profit growth +3-8% ($156-164m). Growth will be weighted heavily towards the second half.
  • Bingo Industries (BIN) -0.94% reports H1 underlying NPAT $28.4m vs $33m consensus. First-half revenue came in at $271.2m vs $279m expected. Underlying EBITDA $82m vs $77.3m expected. Statutory NPAT $38.2m vs $13.4m a year ago. Interim dividend 22cps, fully franked. Record 5-Mar; payable 31-Mar. The numbers look a little soft with NPAT and revenue missing. Outlook is solid however, with BIN saying it expects to achieve solid year-on-year growth in FY20 underpinned by a full year contribution from the West Melbourne recycling facility, DADI operations and Patons Lane recycling facility now fully operational as at February 2020.
  • Santos (STO) –1.22% FY results. EBITDAX up 14% to a record US$2.5bn. Net profit up 7% to US$674m Record free cash flow up 13% to over US$1.1bn. Production costs down 8% to US$6.97/boe. Final dividend US5c. Guidance: Reaffirms production 79-87 mmboe. Repeats sales volumes 99-107 mmboe.
  • Caltex (CTX) -0.20% is heating up with the British group EG now entering the fray with an alternative offer for CTX which will allow investors to continue to have an exposure to Ampol going forward. It is quite possible that there may be other players watching from the sidelines. The latest bid from EG involves a mix of cash and shares and values the company at around $3.9bn. Alimentation Couche Tard is offering plain hard cash of 3525c. EG s offer does offer some uncertainty as it is hard to value the new Ampol business. The biggest issue may be FIRB. Caltex is an iconic brand. It does belong to someone else much like Holden did with GM. The question is would the FIRB allow a foreign company to take over an Aussie icon following so closely to Holden?
  • Tabcorp (TAH) -0.93% not the most exciting of stocks reported yesterday and media reports that the private equity players may be circling its underperforming gaming business. The division saw a 43% drop in business and is now under the ‘strategic review’. Its boss has been stood down. Lotteries are charging ahead but the gaming division is struggling. Integration is an issue but suspect some of the online players are having an effect. A weakened company always offers an opportunity for the PE players. Something may well happen. You can bet on it.
  • Iluka Resources (ILU) +6.36% reports FY underlying NPAT $278.7m vs consensus $297.9m. Intends to demerge its royalty business. Revenue $1.19bn vs consensus $1.19bn. Underlying EBITDA $616.0m vs consensus $611.9m. Total dividend payment of 13cps, fully franked (5cps interim dividend; 8cps final dividend)
  • Austal (ASB) +6.57% Good result. Revenue of $1.039bn (FY2019 H1: $851.3m), up 22%. NPAT of $40.8m (FY2019 H1: $23.7m), up 72%. Full year EBIT guidance is increased to a minimum of $110m (up ~5%) recognising that USA had a strong H1. Interim dividend of 3c. $4.3 billion order book.
  • Lendlease Group (LLC) +6.71% reports H1 core profit after tax $308.0m vs year-ago $355.0m. Revenue $7.41bn vs consensus $7.93bn. Core operating EBITDA $628.0m vs year-ago $645.0m. Interim dividend 30cps, unfranked. The near term outlook for the core business is supported by the expected conversion of both commercial and residential development opportunities across our major urbanisation projects.
  • Sandfire Resources (SFR) +1.36% reports H1 NPAT attributable to members $34.2m vs consensus $46.3m. Revenue $313.1m vs consensus $320.5m. Interim DPS 5c. FY20 guidance maintained. On track to make a decision to mine T3 development project by mid calendar year 2020.
  • Medibank Private (MPL) -2.01% reports H1 underlying NPAT $178.7m vs consensus $189.9m. Revenue $3.42bn vs consensus $3.43bn. Health Insurance Segment: premium revenue $3.32bn vs year-ago $3.24bn. Operating profit $224.2m vs year-ago $281.5m. Interim dividend 5.7c/share (fully franked). Confident that Health Insurance earnings will be higher in H2 of FY20. Expects dividend payout ratio to be at the top end or above the revised target range of 75 – 85% of underlying NPAT from total operations for FY20.
  • Super Retail Group (SUL) +5.38% reports H1 NPAT $74.1m vs consensus $73.9m. Revenue $1.44bn vs consensus $1.44bn. EBIT $115.4m vs guidance of $113-115m. Operating cash flow $239.1m. Interim dividend 21.5c/share, fully franked. Performance of BCF continues to reflect subdued demand in the camping and outdoors category following an unprecedented summer bushfire season. No expectation of a material impact from coronavirus on product availability in the short term given current inventory levels.
  • Qantas (QAN) +5.87% reports H1 underlying PBT $771m vs consensus $746.5m. Revenue A$9.46bn vs consensus $9.30bn. Underlying EBIT $900m vs year-ago $916m. Interim dividend 13.5c/share (fully franked). Given capacity cuts and the anticipated benefit from recent material falls in fuel costs, the group expects the net negative impact of coronavirus to be between ($100M) and ($150M) EBIT in H2 of FY20.
  • Origin Energy (ORG) +1.79% reports H1 underlying NPAT $528m vs consensus $510.8m. Revenue $6.73bn vs consensus $7.30bn. Underlying EBITDA $1.59bn vs year-ago $1.73bn. Interim dividend 15cps, fully franked vs year-ago 10cps. Production at Australia Pacific LNG is expected to be at the upper end of the previously guided 690-710 PJ (100% share) range. On track to achieve the targeted $100m in savings in the retail business by FY2021.
  • Mortgage Choice (MOC) -16.21% NPAT on a cash basis of $5.5m; NPAT on a cash adjusted basis of $6.1m $5.0bn settled home loans, up 22% on 2H19. Financial planning Funds Under Advice up 30% from 1H19 to $1.1bn. Interim fully franked dividend of 3c. Mortgage Choice will continue its focus on attracting high-quality brokers and advisors to its franchise network, while investing further in its IT systems and brand. Not sure it is making the most of the current housing boom with its total loan book of $54.3bn, holding steady on 2H19.
  • Smart Group (SIQ) +9.52% Revenue grew by 3% to $249.8m. EBITDA, grew 3% to $118.2m. NPATA was up 4% to $81.0m. Conservatively geared with net corporate debt of $21.0m. net Corporate debt / EBITDA of c.0.2x. Final fully franked dividend of 21.5c. No guidance but company seem to be handling headwinds reasonably well. Has been beaten down and this result will cheer and bring upgrades.
  • Sydney Airport (SYD) –1.66% EBITDA of $1.336.3bn, up 4.0%. overall passenger traffic increased by 0.1% to 44.4m. Car parking and ground transport declined by 0.1%, reflecting lower domestic passengers. Retail: up 5.0% following the escalation in the Duty Free and other retail contract. Aeronautical up 2.4%4, reflecting international passenger growth. Not much commentary on bushfire implications or Covid-19 really. “Sydney Airport is a resilient business with a proven ability to recover quickly from one-off disruptions and economic shocks, delivering stable growth over the long-term.” Maybe more to come in conference call.
  • Star Entertainment (SGR) +4.59% H1 normalised EBITDA $307.4m vs guidance of $300-310m. Normalised NPAT $126.4m vs FactSet $128.9m. Interim dividend 10.5c fully franked. Coronavirus has affected international and domestic visitation, particularly in Sydney. Initial substantial impact on domestic visitation and revenue. Recent signs of return to normal domestic visitation patterns. Good performance to date in VIP. Impact on VIP will depend on length of border closures and resumption of normal travel patterns. Some relief in store perhaps.
  • Integrated Research (IRI) -0.34% Net profit after tax up 1% to $11.8m on total revenue up 6% to $53.2m. Interim dividend of 3.5c. No debt and $7.6m in cash. 95% of earnings outside of Australia.
  • Domain Holdings (DHG) -6.33% reports H1 underlying NPAT $12.9m vs expectations of $16.1m. Revenue missed, coming in at $147m against expectations of $157.5m. Underlying EBITDA $47m vs $48.9m. Statutory NPAT A$19.4m. Interim dividend of 2 cps, 100% franked. The results are soft and DHG has said trading in January 2020 reflects a soft start to the year in a seasonally small month for listings. That said, there have been early signs of improving property market activity since the Australia Day weekend. FY20 H2 operating costs are expected to be flat to slightly up on FY19 H2’s base of $92.5m as the company cycles the substantial reduction in the cost base achieved in that period.
  • Whitehaven Coal (WHC) -5.51% Revenue fell 30% to $885.1m. EBITDA slid 68 per cent to $177.3m. NPAT down to $27.4m from $305.8m down 95% as coal prices tumble. Interim dividend of 1.5c down from 20c. Maybe could have been worse. Outlook: Spot LNG pricing has recovered from lows experienced in early 2019. Whitehaven continues to see strong end user and trader demand for its high-quality thermal coal. The recent Phase 1 trade deal between the USA and China is expected to provide a boost to global trade. During February 2020 the loss of demand in China has been offset by the loss of domestic supply leading to a strengthening of China domestic prices and seaborne coal prices. Some positives at least then. Not many though.
  • Carbon Revolution (CBR) +0.49% Revenue up 243% to $20.079m. Loss increased top $98.626m down 873%. This loss was significantly increased by the costs of IPO plus a loss on revaluation of financial instruments. Wheel sales volume increased by 171% to 6,761 wheels from the previous corresponding period. One off capital raising, and IPO-related costs are $85.5m. Outlook for wheel sales of approximately 23,000 in FY2020 and revenue of approximately $62m in FY2020. All looks in line with the prospectus forecasts.

ECONOMIC NEWS

ABS jobs numbers

  • In seasonal terms: The unemployment rate for January has risen from 5.1% to 5.3% despite an increase in the number of jobs added for the month.
  • A total of 13,500 new jobs were created during the month, with 46,200 full time new jobs offsetting a 32,700 fall in the number of part-time jobs.
  • Trend unemployment rate remained steady at 5.2%. In January 2020, trend monthly employment increased by around 20,000 people. Full-time employment increased by around 15,000 and part-time employment increased by around 5,000 people.

  • The trend monthly underemployment rate remained steady at 8.5%. Participation rate remained steady at 66.0%.

  • Great chart from ANZ shows the effect of the drop in tourist numbers due to China shutdown.

BOND MARKET

ASIAN NEWS

  • PBoC drops key benchmark lending rates to boost economy. The one-year loan prime rate was lowered to 4.05% from 4.15%, according to a statement from the central bank. The five-year tenor was set at 4.75%, down from 4.8%.
  • Gold hits seven year high. Each way bet?
  • Slight spread of Covid-19 to South Korea but what about Indonesia? No cases? Really?

EUROPEAN AND US NEWS

  • Every Democrat at debate goes after Bloomberg. Struggles. Don’t waste your money Mike, its over.
  • UBS names Ralph Hamers as new CEO.
  • Federal Reserve policymakers discussed maintaining the Fed’s policy rate at 1.5 to 1.75% “for a time” at their meeting at the end of January.
  • Analysts at Goldman Sachs have cautioned the risk of a correction in equity markets is “high” as the impact of the coronavirus on earnings is being underestimated by investors.
  • Michael Milken has been pardoned by Donald Trump. Who is he? Think Gordon Geecko. Milken invented Junk Bonds in the 80s.

And finally…

A man takes his wife to the stock show. They start heading down the alley that had the bulls.

They come up to the first bull and his sign stated: “This bull mated 50 times last year.” The wife turns to her husband and says, “He mated 50 times in a year, you could learn from him.”

They proceed to the next bull and his sign stated: “This bull mated 65 times last year.” The wife turns to her husband and says, “This one mated 65 times last year. That is over 5 times a month. You can learn from this one, also.”

They proceeded to the last bull and his sign said: “This bull mated 365 times last year.” The wife’s mouth drops open and says, “WOW! He mated 365 times last year. That is ONCE A DAY! You could really learn from this one.”

The man turns to his wife and says, “Go up and see if it was 365 times with the same cow.”

 

I want to die peacefully in my sleep, like my grandfather. Not screaming and yelling like the passengers in his car.

Clarence

XXX

mt_tryforfree

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