ASX 200 drops another 50 points to 6658 in skittish trade. Cautious start with results the focus turned sour as S.Korea kept rates unchanged and Trump addressed CV19 concerns. Dow futures dropped another 400 points. Broad based weakness again with a focus on results. Economic data did not help the mood, nor the Bank of Korea rate decision. Banks under pressure as CBA fell 1.1% and WBC dropped 1.3%. Other financials fell in step with MFG down another 2.6% and MQG down 1.3% despite a broker upgrade. Miners were mixed, RIO fell 1.6% after its result fails to ignite optimism, BHP down 1% though finally we saw some buying the gold sector despite bullion falls. Healthcare was a brighter spot led by CSL up 2.2% FPH unchanged. Consumer and travel stocks remain under pressure, WOW down 1.25% and WEB hit had down 8.5%. Tech stocks were mixed, APT rose 1.4% after results showed growth but no profits, WTC remained corona affected down 3.6% and XRO gave up some gains down 2.4%. The All Tech index dropped another 1.4%. Not a good week to begin life. Energy stocks running low on juice with WPL down 2% and STO down 2.5%. In corporate news, A2M was all cream rising 5% on a solid set of numbers, IFM up 16.8% on some knock the lights out results, though LNK fell in a heap down 13.5% after a profit downgrade with lacklustre numbers. Z1P also dropped 8% on its results and JHG under pressure down 6.2% on its result too. On the economic front, capital expenditure numbers came in well below economist’s forecasts, worryingly so and the AUD remained under pressure at 65.55c. 10-year yields it a record low of 0.84%. Asian market were mixed, China up 0.8% whilst S.Korea smacked 2.5% lower and Japan down 2.3% as it heads towards recession.
- ASX 200 drops another 50 points to 6658. Good volume again.
- High 6728 Low 6630. Big range. Skittish. Could have gone either way.
- 2020 gains gone the way of Holden.
- Capex numbers woeful.
- NZ Finance minister warns of CV19 impact.
- 10-year bond yields slip to record low 0.84%.
- Few escaped the sell off again. Healthcare and gold better.
- Odd pockets of resistance but most surrendered again.
- AUD slips to 65.47c.
- Dow futures down 383 points
- Aussie gold rallies to $2518
- Bitcoin craters to US$8626
- Asian markets mainly hurt with S.Korea down 2.5% though China up 0.8% and Japan down 2.3%.
- CGL -2.40% Falls below SPP price.
- ZNO +19.12% substantial shareholder notice.
- WZR -13.64% results fail to inspire.
- LNK -13.49% profit downgrade.
- WEB -8.50% travel stocks tumble again.
- CUV -7.30% emperor has very few clothing options.
- Z1P -7.90% results underwhelm.
- AFG -4.63% ceasing to be a substantial shareholder.
- ABC +6.25% broker upgrades.
- PNV +2.92% broker upgrades.
- LYC +5.00% new three-year licence.
- NAN +3.50% brokers turn positive.
- HM1 +2.93% good results.
- BOQ +4.38% new strategic direction revealed at investor day.
- EVN +3.47% NST +2.99% finally.
- WTC -3.64% JCapital goes for jugular.
- BGA – tough cheese results now Monday.
- GMG +1.24% bucking the trend.
- Speculative stock of the day: Nothing.
- Biggest Risers: IFM, ABC, APE, A2M, LYC, CGC, BOQ and DDR
- Biggest Falls: LNK, RMC, PRN, PGH, WEB, Z1P, CUV and ALG
- Afterpay (APT) +1.39% reports H1 NPAT ($31.6m) vs year-ago ($22.2m). Revenue $220.3m vs consensus $203.5m. EBITDA $6.8m ex-items vs year-ago $13.9m, reflecting increases in employment, marketing, and other operating expenses. Underlying sales for the first half rose 109% to $4.8bn, while the number of active customers rose 134% to 7.3 million.
- Bega Cheese (BGA) – delays release of H1 financial results till Monday March 2; reaffirms FY20 guidance.
- A.P. Eagers (APE) +6.12% reports FY pre-tax income $100.4m vs year-ago $103.5m. Revenue $5.48bn vs year-ago $3.69bn. EBITDA $163.2m vs year-ago $141.2m. Underlying NPAT $69.2m vs year-ago $71.4m. Final Dividend of 22.5cps, fully franked. Remains committed to the divestment of the Refrigerated Logistics business as soon as possible and at a reasonable price.
- Rio Tinto (RIO- 1.61% The good times continue to roll for RIO shareholders with another dividend bonanza in store. A record final dividend of US$3.7bn. A little bit below analysts forecasts.US$10.37bn in profit almost matching estimates of around US$10.9bn. Iron ore made up 90% of underlying earnings, not much diversification really. The company has the strongest balance sheet in over a decade, of net debt of only US$3.7bn and a profit of US$10.37bn, the highest in 8 years. The cash flow from operations was up 32% to US$15.8bn and free cash flow up 42%. Cash flows point to dividend yields. RIO has paid US$36bn in cash to shareholders since 2016. The company did warn that the coronavirus outbreak will cause ‘significant uncertainty’ for commodity markets.
- A2 Milk (A2M) +5.00% A2 has done it again with very strong results, with all numbers ahead of expectations and the company saying that revenue in the first two months of H2 are above expectations as well. The stock is up 6.5% in New Zealand. H1 NPAT NZ$184.9m, beating expectations of NZ$179.1m. Revenue NZ$806.7m against consensus of NZ$795.8m and beyond the top end of the guidance range of NZ$780-800m.EBITDA NZ$263.2m vs expectations of NZ$253.3m. EBITDA margin 32.6% vs guidance 31-32%.
- Costa Group (CGC) +4.90% reports FY NPAT (pre-AASB16) $28.4m vs consensus $29.8m. Revenue $1.05bn vs consensus $999.7m. EBITDA (pre-AASB16) $98.3m vs consensus $108.2m. Final dividend 2.0c/share, fully franked. Business fundamentals remain strong and initial trading into CY20 has been positive. Subject to any impacts from the Coronavirus, the balance of the portfolio is expected to perform in line with previous guidance for CY20.
- Ramsay Health Care (RHC) -1.54% reports H1 core NPAT (pre-AASB16) $300.6m vs year-ago $290.8m. Revenue $6.34bn vs consensus $6.20bn. Core EBITDA (pre-AASB16) $832.4m vs year-ago $728.6m. Interim dividend 62.5c/share (fully franked). FY20 guidance reaffirmed, expects core EPS growth on a like-for-like basis of 2-4% and core EBITDAR growth between 8-10%.
- Flight Centre (FLT) -2.00% reports H1 Underlying PBT $102.7m vs guidance $90-110m and consensus $101.6m Revenue $1.55bn vs $1.59bn. Total transaction value $12.40bn vs year-ago $11.16bn. underlying NPAT $81.5m vs consensus $74.3m. Interim dividend 40cps, fully franked. Lowers full-year underlying PBT guidance to $240-300m vs prior $310-350m on the back of coronavirus.
- Link Group (LNK) -13.49% reports H1 Operating NPATA $81.1m vs $106.4m a year ago. NPAT $28.7m vs $184.9m a year ago. Revenue $624.3m vs expectations of $629m. Operating EBITDA $163m vs $205m a year ago. Interim dividend 6.5cps, fully franked. Record 5-Mar, payable 9-Apr. Soft results and a soft outlook; FY20 Operating EBITDA for the continuing business is expected to be (10%) y/y. Lower earnings for the continuing business (excluding CPCS) reflects the full year impact of PYS, previously announced client losses, subdued capital markets activity, weaker new business pipeline in Europe and remediation efforts in LFS.
- Bank of Queensland (BOQ) +4.38% FY20 cash earnings is now expected to be 4-6% lower than FY19. Continuing its capital investment of approximately $100m per annum before reducing to ~$80m per annum in FY23 and ~$60m in FY24. Targeting sustainable growth in EPS and dividends from FY21 onwards.
- ECONOMIC NEWS
- Australia Private Capital Expenditure (Capex/business investment). December quarter 2019: -2.8%/qtr (consensus: +0.5%/qtr). Capex was also down by 5.8 per cent over the year in seasonally adjusted terms.
- This is a concern. The Worlds credit markets are seizing up. The US$2.6 trillion international bond market which is used by companies to fund stuff has come to a coronavirus inspired standstill. New York has seen its third straight day without an issue. Bond issuance in Asia, where the virus first emerged, has slowed to a trickle.
- Credit investors are being cautious as companies warn of the hit to profits from the pandemic.
- The volume of shipping leaving Australia dropped by over half in the first week of February, due to the virus and bad weather, and has only just recovered. JP Morgan predicts that goods exports, which are around 75% of total exports, will finish the quarter down 2 to 3% which will take around 0.2 off GDP in the March Q.
- Ratings agency Fitch has warned that the economic disruption caused by the COVID-19 outbreak has seen some Chinese corporate borrowers become ‘high risk’.
- South Korea defies the stimulus play book and keeps rates unchanged.
- The Thai market is officially in bear country. The benchmark gauge’s 14% decline this year, the most among the world’s key equity indexes, has also plunged it into a bear market from a recent high.
EUROPEAN AND US NEWS
- US Trump reassures Americans that Pence has got it. One case in California is worrying as no contact with China or any other infection source.
- Microsoft latest to warn on CV19 threat.
- Mexico has cut 2020 growth forecasts.
- Insurance group Direct Line is to cut 800 jobs from a number of sites across the UK.
- Russia will hold a poll on constitutional reforms. My money is on Putin.
- Will the Olympics get canned? Certainly not out of the question. Maybe I can stop training.
A SHORT LOVE STORY
A man and a woman who had never met before, but who were both married to other people, found themselves assigned to the same sleeping room on a transcontinental train.
Though initially embarrassed and uneasy over sharing a room,
they were both very tired and fell asleep quickly, he in the upper berth and she in the lower.
At 1:00 AM, the man leaned down and gently woke the woman saying,………..’Ma’am,
I’m sorry to bother you, but would you be willing to reach into the cupboard to get me a second blanket?
I’m awfully cold’
‘I have a better idea,’ she replied ‘Just for tonight……let’s pretend that we’re married’
‘Wow!…………………..That’s a great idea!’ he exclaimed..
‘Good,’ she replied…………….’Get your own #&*% blanket.’
After a moment of silence, …………………….he farted.