ASX 200 falls another 158 points to 6708 as coronavirus fear grips the markets. Most of 2020 gains have now gone. Puff.  Dow futures up points. Another bloodbath as the index tested 6700 before some cautious bargain hunting emerged. Once again it was the high PE stocks that were being systematically picked off en masse now. WTC dropped 8.3% and XRO fell 3.3% whilst recent high-flyer PBH dropped 10.5% after its results. DTL down % and APX came in for some selling falling 10.3%. No place to hide in the ASX today. Banks down heavily with WBC down 1.7% and ANZ down 2%. Meanwhile in miners BHP fell 2.1% and FMG gave back 0.5% as iron ore came under pressure. Gold miners continue under pressure with NCM down 2.9% and NST falling 0.7%. Energy stocks too, WPL down 3% and STO down 3.2%. In corporate news, WOW dropped 2.7% after more underpayments were admitted too and result came in a little weaker than expected. HLS +15.2% bounced on better results as did SLK up 11.9% and IVC up 13.6% as they proved that at least death gives reliable earnings. NEC posted slightly better results rising 6.5%, though PNV dropped 20.5% after the emperor appeared to have taken his clothes off. AMA also on the slaughter list off 24.4%, after suspending dividends following a very ordinary set of numbers due to no one crashing during the dry weather. Nothing significant on the economic front except for construction work done which is now at a 19-year low. 10-year yields pretty stable at 0.93%. Hard to see them heading much lower. AUD below 66c at 10-year low against USD. Not so bad against GBP or EUR. Asian markets fared slightly better than us today with HK down 0.5%, China unchanged S Korea down 1.1% and Japan off 0.9%.

• ASX 200 drops another 158 points to 6708. Huge volume again.
• High 6839 Low 6690. Big range. Under pressure constantly.
• Broad deep losses (again). Big Bank Basket down to $162.32 from recent $172 plus high.
• No sector spared. Growth stocks targetted.
• 10-year bond yields steady at 0.93%. .
• AUD slips to 65.95c.
• Dow futures up 160 points
• Aussie gold drifts to $2490
• Bitcoin craters to US$9178
• Asian markets lower but better than local market. Hong Kong down 0.5 %, China unchanged and Japan down 0.9%.

STOCKS                                               

• HLS +15.22% results better than expected.
• SLK +11.86% shrugs off virus and tourist concerns.
• IVC +13.57% business is booming.
• AMA -24.36% dry weather hurts crash repairs.
• JIN -9.13% broker downgrades. Only lemons.
• PNV -20.53% results underwhelm.
• PBH -10.47% results not up to scratch.
• WTC -8.30% sell off continues.
• DTL -9.52% another one bites the dust.
• DEG +11.11% good drill results.
• TTT +22.09% Global defence manufacturer signs agreement worth $25.5m.
• PFP +3.99% enjoying IVC bounce.
• OTW +4.69% struggling to bounce.
• APX -10.35% broker downgrades.
• Speculative stock of the day: De Grey Mining (DEG) +11.11% featured here before, today’s announcement on a major extension of sulphide mineralistaion at Hemi has put them back in the winners’ circle.
• Biggest Risers: HLS, IVC, SLK, NEC, FCL, HUB and AUB
• Biggest Falls: AMA, PNV, ALK, MEZ, PBH, APX, REG, DTL and JIN

TODAY

• Michael Hill International (MHJ) -1.75% reports H1 statutory NPAT $21.4m vs year-ago $17.9m. Revenue $329.5m vs consensus $320.8m. Underlying EBIT $31.6m pre-AASB16 vs consensus $30.8m. Group same-store sales +6.3% y/y. Group gross margin 61.7% vs year-ago 64.2%. An interim dividend of 1.5cps, unfranked.
• Adelaide Brighton (ABC) -4.95% reports FY underlying NPAT $123.0m vs guidance $120-130m and consensus $121.5m. Revenue $1.52bn vs consensus $1.51bn. Underlying EBIT $186.4m vs consensus $172.3m. Final fully franked dividend of 5.0 cps. Expects conditions to remain challenging in construction materials markets, particularly with the impact of bushfires and extreme weather. FY20 NPAT, excluding property, expected to be 10% lower than underlying profit in FY19.
• InvoCare (IVC) +13.57% reports FY NPAT $63.8m vs consensus $59.8m. Revenue $494.1m vs consensus $516.0m. Underlying EBITDA $144.4m vs consensus $144.3m. final dividend. 23.5 cps fully franked vs year-ago 19.5cps. Forecast impact on FY20 operating EBITDA of AASB15 unwind is ~$14m.
• Nanosonics (NAN) -1.20% reports H1 NPAT $5.7m vs expectations of $6.0m. H1 revenue $48.5m against consensus of $47.8m. Operating income before income tax $6.7m vs $11m a year ago. Cash and equivalents $82m vs $72.2m a year ago. NAN provided FY20 outlook saying that profit will be more balanced between H1 and H2 as a result of timing of consumables sales in H1 and the phasing of operating expenses between each half. With regard to coronavirus, NAN said there are no material impacts to the business operations due to the outbreak, however the situation continues to be closely monitored. The results seem largely in line and the market should take some confidence from the coronavirus comments, but it might not matter on a day like today.
• Australian Ethical (AEF) –3.16% First half profit up 40% to $4.4m. Revenues of $23.3m (up 18%). Operating expenses of $17.0m (up 13%). Interim dividend 2.5c fully franked. Funds under management reached $3.87bn. First half net inflows up 100% to $295.8m. Outlook statement: “The positive momentum that underpinned the first half results has continued into the second half with Australian Ethical seeing record net inflows and new member signups in January 2020”. No guidance. Suspect the market may be concerned about the rise in expenses. No reason to get excited.
• Woolworths Group (WOW) -2.68% reports H1 NPAT from cont ops $979.0m vs year-ago $902.0m. Revenue $32.41bn vs consensus $32.33bn. EBIT $1.89bn vs year-ago $1.42bn. Interim dividend 46c/share, fully franked. Pleased with trading performance in the half, continues to navigate an uncertain consumer and natural environment and expects this to continue, with a slower start to trading in Q3. Despite this, remains confident in plans for H2. Food inflation in Australia is likely to continue given the ongoing impact of the drought. The ongoing annual cost of adjusting team members’ salaries following the salaried store team member review is expected to be $35-45m across the group with the largest impact in the Australian Food arm.
• National Storage (NSR) -0.84% reports H1 underlying earnings $34.5m vs estimates of $36m. Revenue $87.4m vs consensus $91.5m. NPAT $150.7m vs $27.1m a year ago. Interim distribution confirmed as 4.7cp/unit. Record 31-Dec; payable 28-Feb. NSR continues to target EPS growth of 4% and underlying earnings of $78m, assuming no material changes in market conditions. It is noted that the current takeover discussions may impact the timing of revenue related to new developments, joint venture arrangements and acquisitions.
• BUBS (BUB) -2.76% Gross revenue of $28.75m, up 37% on the same period last year. Net revenue3 of $27.1m, up 39% on 1H 2019 ($19.5m). Sales generated from goat milk powder (non-infant) grew 30% on same period last year, representing 38% of 1H group gross revenue. China direct sales were up 19% pcp, representing 19% of 1H group gross revenue. Gross margin of 24% for the group, up from 19% over the same period last year. $39.1m in cash reserves. The company has said that it is too early to quantify any future impact, BUB has seen no diminution of demand and minimal disruption to the business due to the Coronavirus outbreak. The overall disruption to logistics of delivering finished goods to end consumers remains challenging, particularly in relation to international flights and last-mile deliveries between provinces.
• Nine Entertainment (NEC) +6.5% reports H1 Group NPAT $105.1m vs consensus $110.2m. Revenue $1.18bn vs consensus $1.17bn. Group EBITDA $250.8m vs consensus $246.2m. Interim fully franked dividend of 5cps. Expects to report Group EBITDA at a similar level to the FY19 Pro Forma result.
• Regis Healthcare (REG) -10.31% reports H1 underlying NPAT $13.0m vs consensus $15.0m. Revenue $361.5m vs consensus $343.6m. Underlying EBITDA (pre-AASB 16) $44.4m vs year-ago $56.7m. Underlying net operating cash flow $74.0m vs year-ago $109.1m. Interim dividend 4.02c/share (50% franked). FY20 Guidance Reaffirmed. In H2, expects an improvement in occupancy in the steady-state and ramp up homes along with optimising business systems and processes.

ECONOMIC NEWS

• Total construction work done in Australia fell by 3.0% quarter-on-quarter in the three months to December, missing market consensus of a 1% drop. The release marked the sixth straight quarter of weakness in construction output. It is the worse in 19 years.

BOND MARKET

ASIAN NEWS

• The number of virus cases worldwide has climbed to 80,817, after 406 new cases were confirmed in China. Coronavirus cases in South Korea have now reached 1,146, after the country reported 169 more cases.
• Hong Kong Budget Day – Announces fresh stimulus package worth HK120bn. HK$10,000 hand out part of the package. 2020 GDP growth between -1.5% and +0.5%
• Cathay Pacific will make 25,000 staff take unpaid leave. That will hurt the economy.
• South Korea continues to cause worries on coronavirus spread as US soldiers test positive.
• S Korea also has the world’s lowest fertility rate.

Economists have slashed this year’s growth forecasts for China to around 5.5% compared with 6.1% last year.

EUROPEAN AND US NEWS

• Disney chief Bob Iger has left the company after 15 years. Another Bob will take the helm. Bob Chapek from Parks and Recreation.
• Uber Eats boos gone. Salesforce co -CEO leaves too.
• Virgin Galactic shares have fallen back to earth following its results. Losses widened in the fourth quarter. Must be a bull market thing. Space investing.
• Federal Reserve vice-chair Richard Clarida said the central bank was monitoring the latest developments in the coronavirus outbreak.
• Bernie took a bashing in the latest TV Debate but survived.
• In a week when Mike Milken was pardoned by POTUS, wouldn’t it be ironic if junk bonds became an issue again?

And finally….

 

Clarence

XXX