ASX 200 closes up 13 points to 7430 (0.2%) after caution crept in and results weighed. US CPI tonight the key. Resources turned negative as MIN fell 4.1%, AKE down 1.0% and BHP and RIO eased back. Gold miners steady but lithium under a little pressure. LYC unchanged on a Malaysian regulatory update. Oil and gas mixed, WDS down 1.1% but STO up 0.6% despite write-downs. Coal stocks eased back. In industrials some good gains for tech with WTC up 3.1% and XRO up 2.2%. TLS managed a 1.0% gain and other defensives better WOW up 0.6% and ALL up 1.0%. REITS also did well, GMG gaining 0.2% and leading GPT 1.6% higher along with the sector. Banks firm ahead of the CBA number tomorrow, expecting around $5.2bn cash profits, the Big Bank Basket up to $190.47 (0.2%). Insurers gave back some of the gains yesterday, MQG up 0.7% and other money managers better. Healthcare feeling slightly better as CSL delivered good results up 0.9% and RMD rallied 0.5% with SHL up 1.3%. In corporate news, plenty of results, JHX fell 4.3% on a downgrade to guidance, TPW crashed 26.9% on a miss on sales, ANN failed to bounce on disappointing results off 8.7% and BRG dropped 4.7% as air fryers were not enough to save the numbers. SGF did well up 9.1% and SGM put on 7.1% on its numbers, CGF also doing well on its results up 4.4%. In economic news, both Westpac and ANZ consumer surveys were soft, looks like in Japan they will have a new BoJ governor. Asian markets slightly firmer Japan up 0.7%, HK up 0.2% and China unchanged. 10-year yields 3.74% steady here. Dow Jones futures down 26 points and Nasdaq futures down 17 points. 

HEADLINES

  • Winners:  SGF, SGM, DHG, KMD, CRN, CGF, KAR, ABC
  • Losers: TPW, SGR, VSL, ANN, SYA, VUL, STX, BRG, SWM
  • Positive sectors: Banks. Tech. Healthcare. REITs. Gold miners. Telcos.
  • Negative sectors: Iron ore. Lithium. Insurers.
  • High 7477 Low 7426
  • Big Bank Basket: Up to $190.47 up 0.2%
  • All-Tech index: Up 1%
  • Gold falls to $2665
  • Bitcoin: Lower at US$21793
  • Aussie Dollar: Back up to 69.73c
  • 10-Year Yield: Steady around 3.74%.
  • Asian markets: Slightly firmer Japan up 0.7%, HK up 0.2% and China unchanged.
  • US Futures: Dow down 26 Nasdaq down 17.

MAJOR MOVERS

  • SGF +9.13% results cheer.
  • SGM +7.08% better than expected results.
  • DHG +5.46% interest returns.
  • KAR +4.04% oil price rise.
  • AIS +2.74% few interested punters.
  • SLX +3.56% keeps pushing higher.
  • VML +10.87% stirring.
  • CHL +6.77% good move very thin.
  • PMT -11.50% disappointing 22.6m @ 1.56% LiO2 testing CV13 Pegmatite.
  • MEI -11.54% falls back to earth.
  • TPW -26.87% growth slows. Pulls DIY pin.
  • ANN -8.72% no bounce here.
  • VUL -7.83% sell off continues.
  • BRG -4.70% air fryers fail to inspire.
  • SWM -4.44% results, meh!
  • SGR -13.47% chips are down with cap raising a possibility.
  • JHX -4.25% downgrades.
  • SPECULATIVE STOCK OF THE DAY (so far) – Falcon Metals (FAL) +61.90% reported multiple high-grade gold hits at Ironbark East, part of the flagship Pyramid Hill project in Victoria.
  • Above Average Volumes: KSM, MAT, FWD, DVR, FAL, IPT

The Portfolio Review continues. A look too at how reporting season has gone so far. Plenty of negative headlines and today will not be any different. CBA tomorrow will show the power of the franchise and a look at what Ford is doing with EV Battery tech in the US. READ MORE

COMPANY NEWS

  • Charter Hall Social Infrastructure REIT (CQE) statutory profit of $40.6m and operating earnings of $29.6m, with a distribution of 8.6c per unit, a 2.4% increase from pcp. The company’s gross assets were $2.3bn. During the period, CQE made new acquisitions totalling $186.7m. The company’s property portfolio is up 0.8% and CQE was included in the S&P200 index in September.
  • James Hardie Industries (JHX) – Global net sales down 4% and adjusted net income down 16%, from pcp. Earnings guidance for FY23 has been cut to $US600m to $US620m, from $US650m to $US720m, a significant decrease. JHX has fallen ~40% since its peak in 2021 following the rise of interest rates and the global economy slowing. JHX has an almost perfect inverse relationship with bond yields.
  • Dexus (DXS) – reported a 7% decrease in its funds from operations (FFO) to $379m. Despite the fall, Dexus will still pay a dividend of 28cps, consistent with 1H22. Net tangible assets per security also dropped to $12.01, from $12.28. The decrease in the office property division’s FFO was due to divestments and non-recurring income from development properties in the prior half, while the industrial section saw growth thanks to a full period contribution from the recently completed and profitable Jandakot industrial precinct.
  • Ansell (ANN) – Sales were down 17.2% in 1H23 to $835.3m, caused by a decrease in the healthcare unit. The company’s earnings also fell 17.6%, due to its exit from Russia in 2022 and unfavourable FX changes. The company adjusted its FY23 EPS forecast from US115c – US135c to US110c – US120c. EPS fell 16.5%.
  • Challenger (CGF) – Reaffirms net profit guidance for FY23. In 1H23, pre-tax profit rose 5% to $250m and after tax, it fell 56% due to investment market movements. The life business saw a 13% rise in EBIT, with record interim sales up 11%. Funds management EBIT fell 32% due to lower average funds under management and net outflows of $1.8bn.
  • Breville (BRG) – Reported a 1% increase in revenue, while EBITDA rose 13.1% to $141.9m compared to the previous year. BRG projects 5-10% EBIT growth in 2023 provided there are no supply chain disruptions. BRG is currently trading well below its 52-week high and has dropped 4% on open this morning. BRG is currently trading on a PE of 27x with reasonable earnings growth predicted.
  • CSL (CSL) announced a 9% increase in interim dividend to $US107c and reaffirms its FY23 profit guidance of $US2.7bn to $US2.8bn. The company’s 1H23 NPAT was $US1.6bn, driven by strong sales in immunoglobulin and albumin, and record plasma collections. The underlying profit was $US377c per share. CSL has been performing well since the Vifor acquisition as the purchase outperformed brokers’ expectations and plasma collections exceed initial forecasts.
  • Temple & Webster (TPW) – Reported a sales drop of 7% in early 2023, targets 3-5% EBITDA margin for the year. First-half revenue was $207.1m, a 12% decline, with a 46.7% drop in net profit to $3.9m. No dividend is paid and inventory was $25.7m at the end of December.
  • Seven West Media (SWM) – experienced a 4.8% drop in their earnings. The company saw a slight decrease in revenue of 0.5% compared to the previous year. This downturn can be attributed to the weakened advertising market across the television industry. Seven West Media has decided to pay 7.4c per share, a decrease from the 7.8c paid in the first half of 2022. No further guidance has been given at this time.
  • Sims Limited (SGM), reported a 60% drop in profits due to challenging market conditions. The company faced margin compression caused by a decrease in steel prices and customer demand, as well as a tightening of scrap supply caused by factors such as lower recycled metal prices, higher fuel prices, and declining economic activity. The company outlook is uncertain in the short-term due to macro and geopolitical challenges affecting all segments, including inflation, labour shortages, and trade policy uncertainty.
  • SG Fleet Group Limited (SGF) reported revenue up 21.5%. Despite higher costs, net revenue grew 16%. Operating EBITDA rose 12.1% and operating income increased 9.9%. Interest on debt also rose but underlying NPAT up 7.3%. Underlying EPS up 3.9% and reported EPS up 34.9%. 57% of revenue was recurring, 10% from lease activation. Currently trading at 21.72% discount, SGF proving to be resilient in current marco environment.
  • Praemium Limited (PPS) subsidiary Powerwrap has signed a 6-year deal with Escala Partners. Escala, The agreement covers platform services, transactions, and portfolios. The partnership secures resources for Praemium and expands product offerings for Escala while improving Powerwrap’s platform. Praemium will issue 5.5m options to Escala and 1m options to Henslow as corporate advisors.

ECONOMIC & OTHER NEWS

  • The Westpac-Melbourne Institute Index of Consumer Sentiment in Australia fell 6.9% to 78.5 in February 2023, a three-month low, due to rising costs and interest rates. ABS figures showed inflation hit a 32-year high in December, and the recent interest rate increase by the RBA signals more increases to come, weighing on consumer confidence.

ANZ – Roy Morgan Consumer Confidence out too
• Consumer confidence dropped 5.5pts last week to 78.1 after a 3.2pt fall the week before. This is its lowest level since early April 2020. Confidence declined across all five mainland states for a second week in a row.
• ‘Weekly inflation expectations’ rose 0.1ppt to 5.5%. Its four-week moving average remained unchanged at 5.4%

ASIAN MARKETS

  • Japan reportedly announced its nomination of Kazuo Ueda as the new Bank of Japan governor.
  • Japan’s economy expanded by 0.6% on an annualised basis for the fourth quarter of 2022, lower than expectations to see a growth of 2% in a Reuters poll.
  • India’s inflation rose to 6.52% in January and higher than December 2022′s figure of 5.72%, according to official data.

US AND EUROPEAN HEADLINES

  • President Biden will name Lael Brainard as his top economic advisor.
  • US CPI due tonight. Consumer prices projected to rise 0.5%, core gauge up 0.4%. Used car prices could be the key. Wholesale prices climbing again.
  • US has no evidence that Alien activity is behind the unidentified flying objects it keeps shooting down. At least according to the White House. One US General hasn’t ruled it out.
  • Ford said it will collaborate with a Chinese supplier CATL on a new $3.5bn battery plant for EVs in Michigan. The plant is expected to open in 2026 and employ about 2,500 people.
  • Container shipping costs plunge as consumer spending declines.
  • Amazon chief vows to ‘go big’ on physical stores.
  • EU set to avoid recession following gas price falls, says Brussels.

Clarence

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