ASX 200 gave back 31 points today to close at 6418. (0.5%). Dow futures weaker down 239 points. After a series of back to back wins, the index gave up some ground today led lower by banks with the Big Bank Basket dropping to $133.35. Other financials also suffered with MQG down 0.7% , MFG down 2.3% and QBE down 1.9%. Big miners were on the nose despite higher commodity prices with BHP down 1.1% and FMG off 4.3%. Gold miners steadied but were unconvincing and weak in spots, BGL down 7.1%. Energy company trod water with STO down 1.5% and WPL off 0.6%. Elsewhere industrials were mixed, TLS has a stunning day as Penn took off the cardie and donned a T shirt to split the company into three pieces and potentially buy out NBN. The stock rose 3.0% on the back of hoped for capital management and release of value. In the tech space, APT up 3.3% and APX up 1.2% pushing the top heavy All Tech Index up 0.9%. In corporate news,XRO is up 0.6% on its half-year results, with profit of NZ$34.5m well ahead of consensus. WES is 2.5% higher on its trading update, Bunnings, Officeworks and Catch performing well in H1. TLS up 3.0% on its T22 strategy update, plans to restructure into three legal entities. Reconfirms FY21 guidance and upgrades return on invested capital (ROIC) target to ~8% by FY23. NEA down 3.2%, sees FY21 annual contract value (ACV) between $120m – $128m. GNC down 1.0%, declared a 7c dividend. NEC jumping 5.1% on its trading update. H1 EBITDA, before specific items, expected to grow 30% vs year-ago $250.8m. 10 -year yields backed off from 1% to be 0.91%. Nothing much on the economic front with the AUD steady and Asian markets mixed with Japan up 0.18% and China slipping 0.06%.

Today’s Highlights

  • ASX 200 down 31 to 6418.
  • High 6471 Low 6400. Range narrows. Volume drops.
  • Big Bank Basket see huge rise to $133.35
  • All Tech up 0.9%
  • Dow Futures down 239
  • Gold slips to AUD$2571
  • 10-year yields back off to 0.91%.
  • AUD slips to 72.75c
  • Bitcoin kicks to $15,653
  • Asian markets mixed with Japan up 0.18% and China slipping 0.06%.

STOCKS

  • MAQ +6.83% update on Macquarie Park. Low volume though as usual.
  • LYC +4.47% firing back up.
  • NEC +5.08% business update.
  • ABY +7.73% maybe a turn
  • DTL -7.30% AGM comments.
  • PDL -5.49% the rot continues.
  • BGL -7.14% gold miners sold off again.
  • URW -3.70% profit taking. European lockdown not helping.
  • SWM -unchanged- AGM comments.
  • IGL +15.66% on market buy back.
  • PAN +12.50% nickel going well.
  • CSX +8.62% business update.
  • TLS +3.01% Penn dons T-Shirt. Splits company into three.
  • NCM -0.58% corporate presentation.
  • WES +2.54% what a Catch, business update.
  • SHL +0.68% AGM address.
  • BSL -0.97% 2-year high at one stage.
  • CHC +0.94% upgrades guidance.
  • PET – still suspended and looking nasty on a number of fraudulent activities
  • RFG -1.19% CV19 hit to doughnut and pizza sales.
  • Speculative Stock of the Day: Hipages (HPG) +0.41% disappointing start to life for NWS backed tradie web site. Honourable mention to Crater Gold Mining (CGN) +345.45% on a response to ASX following high indium assays in drill core in polymetallic project.
  • Biggest Winners: ABY, MAQ, RBL, NEC, NTO, APE, NWS and LYC.
  • Biggest Losers: DTL, BGL, PDL, AVN, ALK, WHC, ECX and WAF.

TODAY

  • Sonic Healthcare (SHL) +0.68% October revenue up ~33% vs year ago. In Europe and the USA its base business is performing better than in the first waves, COVID testing at record levels. Australian base revenue in positive growth. COVID testing at ~50% of prior peak levels.
  • Xero (XRO) +0.64% First half profit NZ$34.5m vs year-ago NZ$1.3m andconsensus NZ$9.4m. Operating Revenue NZ$409.8m vs consensus NZ$407.8m. EBITDA NZ$120.8m vs year-ago NZ$64.9m and consensus NZ$92.2m. Annualised monthly recurring revenue NZ$877.6M, up 15% vs year ago. Total subscribers increased by 19% to 2.45m. Total subscriber lifetime value (LTV) grew by 15% (in both actual and CC) to NZ$6.2bn.
  • Telstra (TLS) +3.01% T22 strategy update; restructures into three legal entities within the Group, reconfirms FY21 guidance and upgrades return on invested capital (ROIC) target to around 8% by FY23. Restructure to be completed by Dec-21: InfraCo Fixed, which would own and operate Telstra’s passive or physical infrastructure assets. InfraCo Towers, which would own and operate Telstra’s passive or physical mobile tower assets, which Telstra will look to monetise over time given. ServeCo, which would own the active parts of the network, including the radio access network and spectrum assets. On track to deliver $2.5bn in net productivity by FY22, delivering $1.8bn from FY16 to FY20, with another $400m expected in FY21. Cost reductions in FY21 are expected to be achieved predominantly through indirect and direct labour, enabled by the ongoing shift of customers onto digital sales and service channels and a strong focus on vendor costs and workforce efficiency. Management comments, “If we are successful in getting into the bottom end of the $7.5-$8.5bn underlying EBITDA range by FY23, this would equate to an estimated ROIC of close to 8%. As a result, we have updated our ROIC target accordingly to be around 8% by FY23.
  • Nearmap (NEA) -3.23% FY21 annual contract value (ACV) expected between $120m – $128m. Continues to target 20-40% ACV growth in the medium to long term and to maintain underlying churn below 10%. FY20 ACV $106.4m.
  • Wesfarmers (WES)+2.54%Total sales growth by division (H1 to date to 31-Oct-20): Bunnings +25.2%, Kmart +3.7%, Target (2.2%), Catch (GTV) +111.4%, Officeworks +23.4%. In the year to date, the group’s retail businesses delivered total online sales growth of 166%, excluding Catch. Including Catch, total online sales across the group increased to $1.3bn. In Bunnings, strong sales growth has continued in both consumer and commercial segments. In Kmart and Target, continued growth in home, active and kids categories was partially offset by lower customer demand for apparel products. Work has progressed on the actions announced to address the performance of Target, with nine large-format stores converted to Kmart stores and six Target Country stores converted to K Hub stores during the year to date. The Group’s industrial divisions have also made a pleasing start to the year.
  • GrainCorp (GNC) -1.0% Full-year underlying profit from continuing operations -$16m vs consensus -$5.1m. Revenue $3.66bn vs consensus $3.21bn. Adjusted EBITDA $108m vs consensus $123.1m. Dividend 7c, fully-franked. Expects growth in earnings in FY21 due to the anticipated larger ECA winter crop and the ongoing benefits from recent operating initiatives. In Agribusiness, improved growing conditions and current grain receival year to date, indicate a very strong 2020/21 winter crop, similar in size to the FY17 harvest (subject to ongoing weather conditions and other variables). In Processing, the expected increased supply of Canola seed will continue to support strong oilseed crush margins, partially offset by reduced meal values. Expects trading conditions in the Foods sector to remain highly competitive.
  • Breville Group (BRG) -0.11% Sees FY21 EBIT in the range of $128m-$132m, in line with consensus.
  • Seven West Media (SWM) – Forward bookings suggest H1 advertising revenue could be down ~5% vs year ago.The market has improved since the August results but remains short and volatile. Cost savings year to date, ex JobKeeper, have more than offset this revenue decline. Focus on cash flow has reduced net debt to approximately $425m at the end of October.
  • Nine Entertainment (NEC)+5.08%December quarter now expected to show growth in Metro free-to-air (FTA) advertising revenue of around 15%. Metro TV ad revenues in H1 to be broadly flat vs prior period. 9Now revenues in H1 to be around +25% vs prior period. Expecting full-year FTA costs to be around (4%) vs year-ago, prior to any revenue-related costs. Stan: expect positive subscriber momentum to continue, albeit at a reduced rate.
  • Charter Hall (CHC) +0.94% Sees FY21 operating EPS at 53cpu vs prior guided 51cpu. Group funds under management now stand at $43.4bn. Distribution per security guidance remains unchanged at 6% growth over FY20.

ECONOMIC NEWS

Travel numbers released by the ABS today. September 2020 original estimates for short-term trips (less than 1 year):

  • Overseas visitor arrivals to Australia increased 22.6% since the previous month to 3,720 trips
  • Australian resident returns from overseas increased 1.1% since the previous month to 8,170 trips.
  • In September 2020 there were just over 80 international student arrivals to Australia. That is 80. No misprint. This was a decrease of 45,220 students (-99.8%) compared to the corresponding month of the previous year.

BONDS

  • Normal service has resumed.

COVID – 19 NEWS

  • Moderna said its vaccine trial has accumulated enough infections to allow for a preliminary analysis of the shot’s effectiveness to begin.
  • Global deaths are at record levels, with the U.K. becoming the first country in Europe to surpass 50,000 deaths. Texas became the first state US to surpass a million cases. Mexico has a total of 986,177 cases.
  • Brazil reported a total of 5,748,375 Covid-19 cases, of which 48,331 were in the last 24 hours. It has also reversed its decision to suspend trials of the Chinese vaccine by Sinovac Biotech.
  • The International Olympic Committee is “more and more confident” that there will be “reasonable amount of spectators” at the Tokyo Olympics next year.
  • Fauci predicts positive data from second vaccine trail.

ASIAN NEWS

  • Alibaba posted sales of US$75bn during the world’s largest shopping binge. China retail sales sank 7% this year as GDP growth rebounded.
  • During the first 111 minutes of sales on Nov. 1, Nike Inc. and Apple Inc. were among 100 brands that reported 100 million yuan ($15 million) in transactions. And Estee Lauder’s flagship store on Alibaba’s Tmall platform was the first to surpass 1 billion yuan in sales.
  • Another one bites the dust: Chinese IPO hopeful Jiangsu Netin has had its application to list in Shenzen denied.

EUROPEAN AND US HEADLINES

  • Biden chooses Ron Klain as Chief of Staff.
  • Georgia on my mind as 5m votes to be counted by hand.
  • Bernie and Warren set to be shunned in Biden cabinet.
  • Key Boris Johnson aide quits. Cummins could be going too.

And finally….

These sentences actually appeared in church bulletins or were announced at church services:The Fasting & Prayer Conference includes meals.

Scouts are saving aluminium cans, bottles and other items to be recycled Proceeds will be used to cripple children.

The sermon this morning: Jesus Walks on the Water.
The sermon tonight: ‘Searching for Jesus.’

Ladies, don’t forget the rummage sale. It’s a chance to get rid of those things not worth keeping around the house. Bring your husbands.

Don’t let worry kill you off – let the Church help.

Miss Charlene Mason sang ‘I will not pass this way again,’
giving obvious pleasure to the congregation.

For those of you who have children and don’t know it, we have a nursery downstairs.

Next Thursday there will be try-outs for the choir.
They need all the help they can get.

Irving Benson and Jessie Carter were married on October 24 in the church.
So ends a friendship that began in their school days.

Clarence

XXXX