The ASX 200 rallied 78 points to 7285 (+1.1%) on better sentiment from the US. It was once again all about results, as CSL and TWE set the scene as good numbers dropped with beats to guidance, CSL up 8.5% and TWE up 11.7% and talking raising prices for premium brands. Iron ore stocks continued to be in the doghouse as Dalian futures remained weak ahead of a crucial meeting tomorrow between authorities and the iron ore players in China. BHP fell 1.8% and FMG with results today fell 2.0% on a cut to dividends. RIO steady. Lithium had a revival after LTR announced a deal with Tesla rising 18.0% and a good lead-in from Albemarle. PLS up 3.7% and MIN bouncing back 1.8%. Gold miners slipped slightly with EVN numbers out today, rising 1.8%. Energy stocks under a smidge of pressure after oil falls, STO fell 2.8% on full-year results, WPL down 0.4%. In the banks, another positive day with CBA ex-dividend today accounting for 9 points.  NAB up 0.7% and ANZ bouncing 1.1%. MQG rallying 1.6% with wealth platforms being whacked hard, NWL down 9.8% and PPS down 11.1%. Industrials firmed ALL up 2.1% and BXB eased on denial of rumours of barbarians at the gate. Healthcare was better led by CSL with COH up 2.3%, RMD up 2.2% bouncing back. In corporate news, plenty around NEA rising 8.6% on good numbers. SGF up 14.1% on a record number, AVZ up 10.3% on a US$240m investment with CATH. GMA rose 6.4% as Ares Management took a near 15% stake. Nothing on the economic front with Chinese PPI easing the highlight. Asian markets firm with Japan up 1.7% and China up 0.7%.

End of Day Podcast – Wednesday, February 16

Major Movers:

  • Winners: LTR, SGF, IMU, TWE, VCX, AVZ, CXO, NEA
  • Losers: PPS, NWL, HUB, EHL, EML, PPM, STO
  • Positive sectors: Banks. Tech. Industrials, Healthcare. Lithium
  • Negative sectors: Iron ore. Energy. 
  • Dalian futures down again in Asian trade
  • High 7285 Low 7201
  • Big Bank Basket: Slips to 180.60 (0.1%) CBA ex-dividend 175c
  • All-Tech index: Up 1.0%
  • Gold: Slips to $2591
  • Bitcoin: Rises to US$44079
  • Aussie Dollar:  Rises to 71.52c
  • 10-Year Yield: Pushes ahead to 2.22%
  • Asian markets mixed, HK up 1.4%, Japan up 1.7% and China up 0.7%
  • US Futures: Dow down 38 Nasdaq down 50

Stocks on the Move

  • LTR +17.99% gets Tesla tick and offtake agreement.
  • SGF +14.11% good results.
  • TWE +11.67% another good result.
  • GMA +6.44% Ares Management takes 14.99% stake.
  • ORA +7.55% strong profit improvement.
  • AVZ +10.27% completion of US$240m cornerstone investment with CATH.
  • MAY +7.58% grant of petroleum exploration permit.
  • PGL +11.96% half yearly results.
  • NWL -9.76% disappointing numbers.
  • PPS -11.11% continues to struggle.
  • EML -3.97% off the bottom.
  • SDR -0.17% half yearly result.
  • LRK -20.88% CEO resigns suddenly – article in The Australian. Starting to look interesting. Crazy story.
  • Speculative stock of the Day: Itech Minerals (ITM) +30.34% Eyre Peninsula Kaolin-REE drilling advancing. ITM was spun out of AXE remember.

In the News

  • CSL (CSL) first-half profit down 3% to US$1.76bn although ahead of consensus of US$1.52bn. Revenue was up 5% to US$6.04bn vs consensus US$5.84bn. Interim dividend of 104c missed expectations of 113c but is in line with last year. Consensus numbers highlighted soft expectations with no growth implied. Guidance from CSL indicates a more than 5% drop in profit for the full year vs a year ago.
  • Corporate Travel Management (CTD) – first half numbers coming in flat. Expects client activity to “materially increase” in the fourth quarter. Added COVID cycle acquisitions led to a much larger business (~77% larger) on full recovery, targeting EBITDA of $265m. Travel stocks finding favour today. Australia to open its border on February 21 helping confidence. No dividend was declared.
  • Liontown (LTR) inked a lithium supply deal with Tesla this morning and has been up more than 17% on the news which was for an initial 5-year term expected to commence in 2024. Tesla said it would purchase 100K DMT in the first year, increasing to 150K DMT per year from the Kathleen Valley Lithium Project in Western Australia.
  • Fortescue (FMG) cuts dividend as profit slides. Dividend of 86c, 41% lower than the 147c dividend paid last year. Fortescue’s FY22 guidance included iron ore shipments of 180m to 185m tonnes, C1 costs of $US15 to $US15.50 per wet metric tonne, and capital expenditure (excluding FFI) of $US3bn to $US3.4bn. CEO Elizabeth Gaines said FMG is positioned well to achieve full-year guidance.
  • Pro Medicus (PME) declares a record 10c dividend on strong profit growth. Added despite the payout it still had cash in its ‘war chest’ for M&A activity. There were two key drivers behind the result: The first was the significant jump in transaction revenue from its US contracts which grew by 36.8%, which had been previously signposted. The second driver was the extension of the German government contract that it announced in 2015 to a fourth hospital which was a material sale. Margin expansion was another positive. EBIT margin of 65% was up from last year’s 59%. Management said even though its cost base increased (in line with projections), revenue growth has outstripped that.
  • Netwealth (NWL) announced a record dividend of 10c despite profit falling 1.8% to $27.1m. Australia’s fastest growing platform also ranked as the number one platform by research and analytics agency, Investment Trends. Notes if the RBA up rates to 50bps NWL’s margin would exceed 105bpd. FY22 funds under administration guidance sees flows exceeding $13.5bn. Expects to benefit from industry consolidation, added growth has continued to accelerate in the first half of this financial year.
  • Breville Group (BRG) first half profit of $77.7m up 25.1% vs year-ago. Revenue was up 23.6% to $878.7m vs year-ago $711m and ahead of consensus of $848m. Strong demand across all reigns and categories helped the result. Gross margins were well managed, dividend up 15.4% to 15c. Restrained promotional spending largely offset ongoing inflationary pressures in freight and freight and production costs.
  • Evolution (EVN) – looking at 5% spike in labour costs. Statutory net profit slumped 60% on the prior corresponding period to $90.8m. Fully franked interim dividend of 3c.
  • Treasury Wine Estates (TWE) – results and company looking at increasing prices for some of its luxury brands. Net sales revenue dropped 10.1% to $1.2bn. EBITS margin improved by 8bps to 20.7%. Interim dividend of 15c.
  • Lark Distillery (LRK) – sudden resignation of CEO Geoff Bainbridge. Extraordinary story of a set up and extortion over many years. Laura Mc Bain now CEO.
  • Jupiter Mines (JMS) – Appoints Ian Murray ex Gold Road (GOR) as new chairman.
  • INR – EcoGroup increases lithium offtake with volumes of 7000 tpa.

Economic News/Bond Markets

Winter Olympics

Asian Markerts

  • Chinese producer price index (PPI) increased 9.1% from a year ago, the data showed, down from the 9.5%. Consumer price index (CPI) inched up 0.9% last month from a year earlier. Economists in a Reuters poll had expected a 1% rise, after a 1.5% uptick in December.
  • South Korea adds most new jobs since March 2000.
  • President Xi tells HK to sort out CV19 by all means.
  • PBoC head vows to do whatever it takes. “We will keep our accommodative monetary policy flexible and appropriate, and increase support for key areas and weak links in the economy”.

US and European News

  • Airbnb says inflation may push more to become hosts.
  • US probe of ‘block trades’ accelerates as regulator looks at how big banks and hedge funds profit from large trades.
  • Russia remains in focus. 

And finally….