Tuesday 16th February – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

The ASX 200 kept momentum moving ahead with a 48-point rise to 6917 (0.7%). Solid results and a bumper USD$1.01c dividend helping BHP move 2.7% higher. RIO rose 3.0% in sympathy, FMG took a dump after some cost overruns claimed scalps at Iron Bridge, falling 3%. Gold miners continue to be unloved with NCM down 1.4% and energy stocks pushing ahead as the Texas cold snap provides supply issues. WPL up 2.3% and STO up 1.7%. In the banks, CBA went ex div knocking 8 points off the index, it fell 0.5%. The other three did well with the Big Bank Basket steady at $159.45. Industrials were mixed, CSL rallied 2.0% on vaccine production hopes after AstraZeneca jab ok’d by TGA. TCL bounced back 4.7% as Victorian lockdown could be on track for a Wednesday opening. Some selling in the tech sector as APT came off 0.4% whilst Z1P off its highs after a ASX query, still up 10.0% . The company shrugged it’s shoulders. Went all ‘Schultz’. The All–Tech Index fell 0.48%. Corporate results the main game, NAB had a solid trading update, BHP was generous with its dividend but no buyback or collapse of dual listing. RBL burst dropping 18.1% on its cautious outlook and no dividend. ARB also saw some selling after its cautious outlook too, falling 3.3%. In economic news, RBA minutes out today, Consumer confidence dropped 1.3% over the weekend of 13–14 February but remains near its long-run average. Victoria’s snap lockdown weighing on confidence. The 10-year yield continues to push higher at 1.32%. AUD through 87c. Asian markets continue to be closed for Lunar New Year. Japan up 1.7% Dow futures pointing to a solid US opening, up 230 points.

Today’s Highlights

ASX 200 rallies 48 points to 6917. US back tonight and playing catch up tonight.
High 6917 Low 6879. Closes on highs.
Big Bank Basket steady at $159.45 despite CBA ex div.
All Tech Index down 0.48%.
Dow Futures up 236 points.
Gold weaker at AUD$2345.
10-year yield rises to 1.32%
AUD firms to 78.03c
Bitcoin having another go at $50000.
Asian markets mainly closed, Japan up 1.7%.

STOCKS

CBA -0.46% ex dividend.
RBL -18.13% cautious outlook – no dividend.
ADO -11.11% profit taking.
3DP -10.44% short term profit taking.
SWM +16.00% Google and FB deal perhaps?
APX +7.70% technical bottom, starting to push higher.
BEN +6.82% broker upgrades.
CRO +47.76% response to ASX query.
OPY +20.30% BNPL value play.
5GN +9.09% positive SA govt announcement.
BD1 +5.71% positive test results continue to attract buyers.
MLX +8.11% tin rally.
NOX -12.23% letter to shareholders.
WBT -6.39% 4DS -7.14% chips getting fried short term.
Z1P +9.95% ASX query and scratches its head for rise reason.
NWH +4.48% compulsory acquisition of Primero.
NEA +0.78% JCap attack a distant nightmare.
ING +2.58% change in substantial holding. Sumitomo sells down.
PME -2.91% $31m deal with major health system.
ARB -3.32% ‘bullbars’ turn into ‘bearbars’. For now.
GGG +15.62% clarification of political and environmental situation on Greenland.
FMG -2.99% costs overruns claim a few heads and bonuses.
Speculative Stock of the Day: Fatfish Group (FFG) +193.48% another day in the sun with huge volume. Singapore company ‘Smartfunding’ is rolling out a BNPL offering. FFG owns 78% of this company. It is due to hit the market 18^th February. First announced weeks ago.
Biggest Winners: SWM, Z1P, CDA, SPL, 360, APX and SGM
Biggest Losers: RBL, ADO, 3DP, CEN, GWA, REG and KGN.

TODAY

Ansell (ANN) +1.84% H1 EPS US$0.83 vs guidance $0.81-0.84. Reports H1: Revenue US$937.8m vs consensus US$952.8m. EBIT US$147.4m vs consensus US$147.9m. Net Profit after tax (NPAT) US$106.5m vs consensus US$106.9m. Interim Dividend of US$0.332 vs year-ago US$0.2175. Following a recent review of its capital management policy, the board has decided to move to a proportional dividend policy, targeting to payout 40-50% of Profit Attributable to Ansell’s shareholders. FY Guidance: Revising EPS guidance to US$1.60-1.70 vs prior “to exceed” F’21 EPS guidance range of US$1.35 – 1.45.
Reckon (RKN) +4.19% FY Net Profit after tax $9.7m vs consensus $9.3m. Reports FY: Revenue $75.6m vs year-ago $75.4m. EBITDA $32.6m vs year-ago $30.6m. Final dividend $0.02.
Gold Road Resources (GOR) +1.64% FY21 Gruyere gold production 260-300Koz. 2021 Annual Guidance: Gruyere gold production increasing to 260,000 – 300,000 oz (130,000 – 150,000 oz attributable). Gold Road All-in Sustaining Costs (AISC) between $1,225 – $1,350 per attributable ounce vs FY20 $1,273 per ounce. 3-Year production outlook shows a 35% to 50% increase in annual production and potential for significant free cash flow growth to sustain production of circa 350,000 ounces.
Chalice Mining (CHN) -0.21% Positive results from ongoing metallurgical testwork at Julimar.
National Australia Bank (NAB) +1.07% Unaudited Q1 cash Net Proft after tax $1.65bn, +1.0% y/y. Reports Q1 (unaudited): Credit impairment -$15m vs 2H20 quarterly average -$800m. Credit provisions to RWA assets 155bps, -1bp quarter on quarter. 90+ days past due & gross impaired assets / gross loans and acceptances 1.01% vs quarter ago 1.03%. Asset quality trends for customers exiting deferrals are worse than total portfolio but better than expected. Liquidity coverage ratio (quarterly average) 147%. Net stable funding ratio 127%.
BHP Group (BHP) +2.73% Underlying H1 EPS US$1.19 vs consensus US$1.19 Underlying EBIT by division (vs consensus): Petroleum -US$112m vs US$86M. Copper US$2.90bn vs US$2.45bn. Iron Ore US$9.32bn vs US$9.50bn. Coal -US$601m vs -US$253m.
SRG Global (SRG) +6.52% Awarded $150m five-year term contract with Fortescue Metals Group. The contract is a Master agreement for Maintenance and Shutdown Services, initially to provide rope access and electrical maintenance requirements across FMG mine, rail and port locations throughout Western Australia.
GWA Group (GWA) -8.09% H1 normalized Net Profit after tax (NPAT) $20.0m vs consensus $19.5m. Reports H1: Revenue $197.2m vs consensus $190.9m. Normalised EBIT $32.1m vs consensus $32.3m. Interim dividend 6cents per share, fully franked. FY21 outlook: Expect residential completions to increase but commercial and multi-residential segments to remain subdued in 2H FY21. Recent lead indicators in Australia and Federal and State Government incentives point to increased detached residential completions and Renovation and Replacement activity in Q4 FY21 / FY22. GWA’s Commercial order bank remains strong. However, Commercial and multi-residential completions are expected to remain subdued in 2H FY21. Growth expected in New Zealand, the United Kingdom and Asia. GWA has strong operational leverage to market upturn underpinned by ongoing operational discipline: achieve $4m of cost out in FY21 – brings total to $12m by end FY21. Deliver $3m in Methven synergies in FY21 – brings total to $6m across FY20 / FY21.
Redbubble (RBL) -18.13% First-half EBITDA $48.8m vs year-ago $4.3m.Revenue $417.6m vs year-ago $213.5m. Marketplace revenue $352.8m vs year-ago $180.2m. Operating cash inflow $80m vs year-ago $41m. Closing cash balance at 31-Dec-20 of $130m.
Sims (SGM) +7.42% First-half underlying profit $37.3m vs year-ago -$34.7m. Revenue $2.45bn vs consensus $2.84bn. Underlying EBIT $56.4m vs consensus $59.0m. Interim dividend 12c/share, fully franked. Outlook and trading update: Signs of positive ferrous intake volume growth; January intake higher than January 2019 and 2020. Retail non-ferrous intake volumes remain inconsistent; January intake lower than January 2020 but similar to 2019. Ferrous liquidity and price volatility risks likely to persist in 2H FY21 but, over the medium term, prices should remain resilient due to infrastructure stimulus. Global auto production is expected to return to normal and support zorba related prices. China commenced the importing of high quality recycled ferrous. Volumes are starting to increase from a low base and may tighten demand / supply over the medium term.
ELMO Software (ELO) +2.85% First-half EBITDA $0.8m vs consensus $4.2m. Revenue $30.6m, in line with preliminary announcement. Average recurring revenue (ARR) $74.2m, +42.8% vs year ago. Re-affirms FY21 guidance: ARR $81.5-88.5m. Revenue $65-71m. EBITDA -$2.4m to -$7.4m.
Breville Group (BRG) +2.75% First half profit $64.2m vs consensus $59.2m. Revenue $711m vs consensus $653.3m. EBITDA $112.4m vs consensus $96.4m. Interim dividend 13c/share (fully franked). The declared dividend level reflects a decision to reduce the target payout ratio from 70% of EPS to 40% on a full year basis to allow continued funding of numerous growth opportunities on a sustainable cash-neutral basis. H2 Outlook: The company expects continued constant currency Global Product segment growth in the second half of FY21, with momentum in all markets. The Distribution segment growth is expected to remain at subdued levels. Inventory levels remain tight across all geographies, and although the company is working to get ahead of demand and re-pipeline the channel, it is unclear whether it can achieve this by June 2021. With continued healthy demand we expect to keep investing in NPD, marketing, and IT to support medium-term growth momentum. FY21 Guidance Increased: EBIT $136m vs prior guidance $128-132m.
SG Fleet Group (SGF) +6.43% H1 underlying Net Profit after tax $25.4m vs guidance of $22-24m. Reports H1: Revenue $241.0m vs year-ago $250.2m. Operating EBITDA $47.4m vs year-ago $46.3m. Operating income $38.8m vs year-ago $38.1m. Interim dividend 7.192c/share, fully franked. Outlook: Current RV environment likely to continue through Q3 and Q4. Supply disruptions to have impact for some time. Strong pipeline in Corporate and Novated. Continued improvement in UK and NZ. Operational process improvements to yield cost benefits in future periods. Anticipate strong 2H subject to current trends continuing; Typical 1H/2H split unlikely given strong 1H performance.
Adairs (ADH) -3.81% H1 underlying Net Profit after tax (NPAT) $41.9m vs year-ago $15.3m. Reports H1: Statutory NPAT $43.9m. Revenue $243.0m vs year-ago $180.3m.Sales: LFL sales +32.4%. Group online sales +163.2% to $90.2m (37% of Group Sales). Underlying EBIT $60.2m ex-items vs year-ago $22.6m. EBIT (inc. JobKeeper) $66.3m. Interim dividend of 13.0 cents per share (fully franked) declared. Trading update For the first seven weeks of 2H FY21, sales have remained well ahead of the prior year period. Capital expenditure for FY21 is expected to be in the range of $13-15m.
Domain Holdings Australia (DHG) -3.02% First half profit $19.4m ex-items vs year-ago $12.9m. Revenue $137.0m vs consensus $135.7m. EBITDA $54.5m ex-items vs consensus $48.5m. Trading in January 2021 reflects an encouraging start to the calendar year. the board has deferred consideration of a dividend until the full-year results. For FY21, total costs (adjusted for divestments) are expected to increase in the mid-to-high single-digit range from the FY20 base of $177.2m.
ARB Corp. (ARB) -3.32% First half profit $54.0m vs consensus $48.9m. Revenue $283.9m, in line with previously announced unaudited H1 sales revenue $284m. Interim dividend 29c/share (fully franked). No Outlook Provided: The company’s H1 performance should not be used as an indicator for H2 given continued uncertainty around COVID-19 related restrictions and trading conditions more generally and the inclusion of non-recurring government benefits received during H1. The board also remains cautious of uncertainty in the current global economic environment and cannot provide guidance on the full-year outlook.

ECONOMIC NEWS

Click here for the RBA meeting minutes:

The Board reaffirmed the existing policy settings, namely:

a target for the cash rate of 0.1%
an interest rate of zero on Exchange Settlement balances held by financial institutions at the Bank.
a target of around 0.1 per cent for the yield on the 3-year Australian Government bond
the expanded Term Funding Facility to support credit to businesses, particularly small and medium-sized businesses, with an interest rate on new drawings of 0.1%
the purchase of $100 billion of government bonds of maturities of around 5 to 10 years at a rate of $5 billion per week following the Board meeting on 3 November 2020.

The Board agreed to purchase an additional $100 billion of government bonds when the existing bond purchase program is completed in mid April 2021. These additional purchases will be at the same rate of $5 billion per week.

Weekly Payroll data

Between the week ending 14 March 2020 and the week ending 30 January 2021:

Payroll jobs decreased by 1.9%
Total wages decreased by 3.4%

Consumer confidence dropped 1.3% over the weekend of 13–14 February but remains near its long-run average. Victoria’s snap lockdown weighing on confidence.

CV19 NEWS

Vaccine Tracker: 176m doses in 78 countries.
54.6m doses in US 1.64m doses a day.

AstraZeneca vaccine gets TGA approval in Australia.

BOND MARKETS

ASIAN NEWS

Tesla to start building cars in India.

US AND EUROPEAN HEADLINES

Jaguar to go full electric in 15-years.
GOP Senators voting against Trump face backlash.
The cold weather blackouts hitting Texas are spreading now to 13 other states. Natural gas for physical delivery in the U.S. was trading for as much as $500 per million British thermal units as supply hits a wall.