The ASX drops 97 to 5960 with no sustained bargain hunting to speak of. Some spluttering buying but no follow through. Late buying saves some blushes. Big Banks wore some pain today following ANZ results seeing the stock down 2.4% with the basket down to $123.39. MQG too in the doghouse not surprisingly falling 2.8%, MFG too finding sellers down 1.0%. Insurers weaker across the board too, QBE down 1.7%. Big miners hit with BHP off 2.2% and RIO down 1.1% yet FMG rose after a production report up 0.8%. Gold miners hit hard despite barely a ripple in AUD bullion prices, NCM dropped 3.9% and NST down 5.0%. In tech stocks, SEK was found wanting by short seller Blue Orca and fell 5.9% after a trading halt on Chinese dodgy job ads. Other tech stocks lid, APT down 3.3% and XRO down 2.1% with the All Tech Index off 1.8%. Industrials in trouble, TCL down 1.6 %, ALL down 2.3% and A2M off 2.4%. Healthcare saw some relative strength with CSL only off 1.0% and FPH to the better by 1.9%. Energy stocks were on the nose again. STO down 5.0% and WPL off 2.2%. In corporate news, REA off 1.2%, to increase its interest in Elara Technologies to between 41-61%. HLO down 4.4%, Q1 total transaction value (TTV) $176.8m, down 90.6% vs year ago. Sees revenues of 10-15% of previous levels for the December quarter, increasing to 15%-20% in the March quarter 2021. JBH down 6.2%, September quarter comparable sales growth in Australia of 27.6% vs year-ago 3.7%. FMG record first-quarter iron ore shipments 44.3Mt vs year-ago 42.2Mt. FY21 guidance repeated. On the economic front, import prices fell 3.5% in the September quarter. Export prices fell 5.1% in the quarter.  10year bond yields rose to 0.81%. Asian markets mixed with Japan down 0.4% and China up 0.5%

Today’s Highlights

  • ASX 200 down 97 to 5960.
  • High 6034 Low 5940. Average volume.
  • Big Bank Basket falls to $123.39
  • All Tech Index down
  • 3 trading days until the US election. Trump on a roll.
  • Dow Futures up 270.
  • Gold steady at AUD$2664
  • 10-year bond yield rises to 0.81%
  • AUD falls to 70.63c.
  • Bitcoin slips to US$13261

STOCKS

  • JBH -6.18% business update disappoints.
  • SEK -5.91% whale attack.
  • CTD -5.43% CV19 spread.
  • URW -5.78% capital raise weighs and EU and US CV issues.
  • PLS +10.26% potential buyer of AJM.
  • HUB +8.35% placement correction.
  • CSX +5.26% still going strong on debut.
  • ZNO +13.38% positive CV19 results.
  • FLC +9.76% Ivory Coast project conditions.
  • AVA +12.93% buying continues.
  • XPL +187.88% scheme of arrangement with HUB.
  • 4DS +15.38% Annual report
  • E2M -14.29% profit taking
  • EML -3.33% EML Con day. Con being the word. Very professional though.
  • Speculative Stock of the Day: Aldoro Resources (ARN) +84.21% Shallow sulphide intersections up to 0.70% Ni; 0.84% Cu; 0.21g/t Pt and 5.16g/t Pd. Entire ultramafic portion of the largest layered igneous complex in Australia 100% owned by Aldoro.
  • Biggest Winners: PLS, HUB, OCL, CSX, PNI, WHC and EMC
  • Biggest Losers: PLL, WGX, JBH, SEK, URW, CTD and SAR

TODAY

  • ANZ (ANZ) -2.40% Full-year cash profit from continuing operations down 42% to $3.76bn vs year-ago $6.47bn. ROE 6.2% vs year-ago 10.9%. Declares a final dividend of 35c/share (fully franked) vs 80c last year. Net interest income fell 2% to $14.5bn, while other operating income fell 19% to 3.58bn. Management had this to say, “events of the last 12 months make it difficult to predict the course of the next year. While we are not managing the business expecting things to return to the way they were before the pandemic, nor are we sitting idle waiting for the next event to happen to us, ANZ is well placed to respond to the opportunities that are emerging as a result of accelerated structural shifts in the economy.”
  • Austal (ASB) -3.57% Expects full-year EBIT of $125m vs year-ago $130.4m. Sees revenue in FY21 of $1.8bn vs year-ago $2.09bn. Anticipates increased margins in its USA operations, and a significant improvement in margins in its Australasian operations, which will help offset a decline in revenue. Lower revenue on the back of reduced throughput and in part to the appreciation of AUD against USD.
  • Link Group (LNK) -1.24% Grants PEP/Carlyle consortium due diligence. The board notes there can be no certainty that a proposal will eventuate. Adds the revised 540c offer does not represent compelling value for shareholders. Will continue to examine the structural alternatives, including the separation and demerger of PEXA.
  • Newcrest Mining (NCM) -3.86% Q1 gold production 503Koz vs quarter-ago 573Koz. Copper production 34,763t vs quarter-ago 40,196t. Group AISC of US$980/oz, delivering a margin of 46% or US$847/oz. Cadia records lowest ever quarterly AISC at US$113 per ounce. Gold and copper production expected to increase in the December quarter. On track to meet FY21 production guidance, gold production of 1.95-2.15Moz, copper production of 135-155Kt.
  • The GPT Group (GPT)-1.70% Rent collection rates averaged 90% of Q3 billings, up from 67% in Q2. Office occupancy of 94.1%. Logistics occupancy of 99.8%. ~97% of the group’s retail stores (excluding Victorian assets) are currently open and trading. GPT has made steady progress with leasing transactions and developments in the Office and Logistics portfolios during Q3. Business conditions, however, remain relatively subdued particularly given mobility restrictions that were recently in place in Victoria and many businesses have only partially returned to offices. FY20 FFO and distribution guidance remains withdrawn.
  • IOOF Holdings (IFL) -1.67% Q1 funds under management, advice and administration up $529m to $202.8bn.Financial advice net inflows of $110m. Portfolio & estate administration net inflows $226m. Investment management $62m net outflow. Pensions & Investments (P&I) $411m net outflows.
  • REA Group (REA) -1.19% To increase its interest in Elara Technologies. REA currently holds a 13.5% interest and will move to a controlling interest in the company between 47-61%. Total consideration for the transaction is expected to be in the range of US$50m–US$70m, with US$34.5m payable out of existing cash reserves and the balance in newly issued REA shares. The transaction is anticipated to be completed in Q2 FY21, subject to due diligence.
  • Helloworld (HLO)-4.44%Q1 total transaction value (TTV) $176.8m, down 90.6% vs year ago. September TTV $74.4m vs both month of July & August ~$51m. Revenue $12.4, down 86.8% vs year ago. Underlying EBITDA -$4.1m, better than the forecast loss for the period of $6m. Net salary costs have reduced from an average $12m/month in February to an average $3m per month in September, net of Government allowances. Aggregate TTV from travel operations to remain ~10-15% of previous levels until early 2021. Sees revenues of 10-15% of previous levels for the December quarter, increasing to 15-20% in the March quarter 2021. HLO will continue to incur underlying EBITDA losses of $1.5-2m/month for the next six months, moving to a break-even or better position in Q4 FY21. Adds it has sufficient liquidity to maintain operations well into 2022 or longer based on current liquidity levels and cash burn rate.
  • JB Hi-Fi (JBH) -6.18% For the period between July 1 and September 30 observed strong comparable sales growth in Australia27.6% vs year-ago 3.7%.JB HI-FI New Zealand total sales growth fell 2.5% vs year-ago 3.8%. The Good Guys recorded total sales growth of 30.9% vs year-ago -0.5%. Whilst the group is pleased with its start to FY21, in view of the uncertainty arising from Covid-19, the group does not currently consider it appropriate to provide FY21 sales guidance.
  • Fortescue Metals (FMG) ).85% Record first-quarter iron ore shipments 44.3Mt vs year-ago 42.2Mt. Ore processed and railed also achieved record Q1 performance. C1 costs of US$12.74/wet metric tonne in Q1 was down 2% on the prior comparable period. Ongoing demand for Fortescue’s products delivered average revenue of US$106/dry metric tonne (dmt, representing 89% of the average Platts 62% CFR Index. FY21 guidance repeated, shipments expected between 175-180Mt. C1 costs of US$13.00 – 13.50/wmt. Total capital expenditure of $3.0-3.4bn.

ECONOMIC NEWS

  • Import price index fell 3.5% this quarter and 5.7% through the year.
  • Export price index fell 5.1% this quarter and 9.9% through the year.

Main contributors to the fall in imports were:

  • Telecommunications and sound recording equipment (-7.2%),
  • Office machines and ADP machines (-8.7%), and
  • Articles of apparel and clothing (-8.5%).

Main contributors to the fall in exports were:

  • Gas, natural and manufactured (-39.7%),
  • Coal, coke and briquettes (-20.6%), and
  • Meat and meat preparations (-6.9%).

COVID – 19 NEWS

  • India passed 8m total Covid-19 cases after counting an additional 49,881 infections in the past 24 hours.
  • Taiwan on Thursday marked 200 days since its last locally transmitted case April 12. Overall, the island of 23 million people has had 550 confirmed cases, with only seven deaths.
  • South Korea reported 125 new Covid-19 cases in the past 24 hours.
  • Dr Fauci says no vaccine until at least January 2021.

BONDS

ASIAN NEWS

  • Hong Kong dollar drops after Ant closes the IPO.
  • Samsung has warned earnings in the current quarter will decline, saying the strong growth in its mobile and memory business. net income rose a better-than-expected 52% to 9.27 trillion won (US$8.2bn) in the three months ended September, beating the 7.54 trillion won average of estimates.

EUROPEAN AND US HEADLINES

  • European markets opening little changed.
  • ECB decision later today.
  • Germany shutting bars and restaurants for a month.
  • Breakfast news, Tiffany’s has approved the sale to LMVH at a lower price.
  • The US has now allowed the sale of chips to Huawei as long as they are not 5G businesses.

And finally….

Why did the Irishman give up internet shopping?
The trolley kept falling off the computer.

Arguing with a lawyer is like mud wrestling with a pig: after a while you realize that the pig actually enjoys it.

A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings.
The wife quickly wraps herself in a towel and runs downstairs.
When she opens the door, there stands Bob, the next-door neighbor.
Before she says a word, Bob says, “I’ll give you $800 to drop that towel.”
After thinking for a moment, the woman drops her towel and stands naked in front of Bob.
After a few seconds, Bob hands her $800 and leaves.
The woman wraps back up in the towel and goes back upstairs.
When she gets to the bathroom, her husband asks, “Who was that?”
“It was Bob the next door neighbor,” she replies.
“Great,” the husband says, “did he say anything about the $800 he owes me?”

Moral of the story:
If you share critical information pertaining to credit and risk with your shareholders in time, you may be in a position to prevent avoidable exposure.

Clarence

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