ASX 200 pulled up slightly after an early dive closing down 22 points at 7315 (-0.3%). Wage data beat estimates and maybe helps RBA a little. Banks were mixed with the Big Bank Basket down to $177.06 (-1.1%). CBA down 2.3% ex-dividend. Other financials eased with Fund Managers falling PPT off 1.1%, PNI down 3.1% and MFG falling another 2.1%. Industrials were mixed, staples better COL and WOW rising slightly, REITs cheered by SCG results, Tech mixed as WTC delivered yet again, ALU falling 2.1% and the AllTech Index unchanged. Healthcare steady with SHL unchanged and CSL slipping 0.9%. Resources once again a problem child. BHP solid and steady, unchanged. RIO fell 0.5% before the results (just out), FMG reversed recent gains down 1.8% and lithium stocks depressed again, PLS down 3.0% and MIN off 1.3%. Gold miners hurt again, NCM down 2.0% and NST off 3.3%. Oil and gas mixed, STO shot the lights out up 3.1% with WDS up 0.2%. Coal stocks moving higher again, WHC up 1.5%. In corporate news, ORG up 12.7% after another bid from Brookfield at 890c, results flooded the market, SCG good, DMP fell over as price increase turned customers off, falling hard down 23.8%. SBM continued the slide into irrelevance, good numbers from SDR with the stock up 6.0% and MMS doing well on its numbers rising 6.5%. In other news, SGH have attracted the attention of a turnaround specialist. EML plunged 9.4% on results board changes and impairments. SGR in a trading halt pending a capital raising perhaps. In economic news, wage growth came in lower than expected and could see the RBA become more dovish. Asian markets mixed, Japan down 1.3%, HK flat and China down 0.6%. Dow futures up 46 points. NASDAQ futures up 28 points.

HEADLINES

  • Winners: ORG, MMS, A2M, SDR, STX, OML, DTL, WTC
  • Losers: DMP, SBM, NWS, CGC, SGF, CRN, LLL, 360, INR
  • Positive sectors: Oil and gas. REITs.
  • Negative sectors: Iron ore. Gold miners. Lithium. ‘Old skool’ platform stocks.
  • High 7339 Low 7268. Wage data saves the day.
  • Big Bank Basket: Down to 177.06 down 1.1% CBA Ex Div.
  • All-Tech index: Unchanged.
  • Gold bounces to $2687
  • Bitcoin: Down to US$24192
  • Aussie Dollar: Lower at 68.29c
  • 10-Year Yield: Steady at 3.88%.
  • Asian markets: Mixed Japan down 1.3%, HK flat and China down 0.6%
  • US Futures: Dow up 46 Nasdaq up 28. Nvidia results tonight.

MAJOR MOVERS

  • ORG +12.70% Brookfield comes back at 890c.
  • MMS +6.48% results cheer.
  • SDR +5.97% HY results.
  • LYL +9.95% results better than expected.
  • A2M +6.25% bargain hunting.
  • WTC +4.34% winning.
  • SSM +9.24% results bring buyers back.
  • JHX -4.66% US housing woes.
  • CGC -8.24% downgrades.
  • JDO – 4.65% profit taking after bounce.
  • DMP -23.81% well and truly stuffed crust.
  • SBM -10.94% results presentation. Shouldn’t have bothered.
  • NWS -8.94% update on Move Inc. Deferrals of conversions too.
  • FLN -21.57% FY results.
  • MEI -11.11% falling back to earth.
  • EML -9.38% impairments and transformation.
  • SPECULATIVE STOCK OF THE DAY: Nothing up on any big volumes.
  • Above Average Volumes (this can be up or down): FYI, STP, HXL, MOB, UNI, MAN

COMPANY NEWS

  • Rio Tinto (RIO) reported financial results for 2022, including underlying EBITDA of $26.3bn, a decrease of 41% and interim dividend of 267c down from 376c including special dividend. Payout ratio same as BHP at 60%. RIO has revised its estimated share of capital investment for 2023 to approximately $8.0bn, which is slightly lower than the previous forecast of $8.0 to $9.0bn. This figure includes growth capital of $2.0bn, but may vary depending on the increased spending at Simandou.
  • Domino’s Pizza Enterprises (DMP) Delivered a disappointing result, struggling with inflation and a decline in online sales. While management is confident in the ability to return to positive same-store sales growth, it warns that its full-year same-store sales growth will be below its medium-term target of 3% to 6% in FY 2023.
  • Origin Energy (ORG) The Brookfield consortium has revised its non-binding conditional proposal to 890c. This will apply for the first 100,000 shares and then $4.334 for every US$3.194 per share. The inclusion of the US$ consideration reflects the underlying exposure that ORG has to Integrated Gas Assets. The price payable will be reduced by any dividends paid including the 16.5c fully franked dividend announced last week.
  • Santos (STO) reported a surge in full-year net profit after tax by 221% to $US2.1bn and announced an unfranked dividend of US15.1¢ per share, up 78% thanks to strong global energy demand, higher oil and LNG prices, and greater interest in PNG LNG following the Oil Search merger.
  • St Barbara (SBM) reported an underlying loss after tax of $8.6m for H1, compared to a profit of $15.1m in the pcp, due to lower production from its Leonora and Atlantic operations and cost inflation, partly offset by higher average gold price.
  • Woolworths (WOW) Results saw earnings up by 12% to 71.9c per share in H2, with sales rising 4% to $33bn. WOW lifted its dividend by 18%. The company reported that inflation is impacting the way customers shop, but the effect on its business remains modest
  • EML Payments (EML) has reported a half-year accounting loss of $129.9m due to $121.3m of impairments. Despite a 2% increase in sales.
  • Worley (WOR) full-year earnings are expected to be in-line with consensus and the underlying EBITA margin will be similar to FY22. Declared an interim dividend of 25c.
  • Qualitas (QAL) reported earnings per share at 3.6c for its half-year results, with a net profit of $10.7m, up 117% YoY, and funds under management at $5.8bn. The company’s scalability and ability to transact at larger investment sizes has provided it with a competitive advantage in both debt and equity financing, according to Co-founder Andrew Schwartz.
  • Lovisa (LOV) reported a strong start to the year, with comparable store sales growth of 12.3% on FY22 and total sales up 24%. Net profit rose 31.9% to $47.7m in 1H FY2023. The company expects to continue its global rollout and increase momentum for physical and digital stores.
  • Scentre Group (SCG) has increased its 2023 distribution guidance, with a projected growth of 3.4 to 5.9 percent in funds from operations, which rose by 21 percent to 20.06¢ per security in the previous year.
  • Oz Mineral (OZL) – Reported revenue for H2 dropped to $1.9bn due to weak copper prices and lower sales. Net profit fell to $207m, and earnings per share were down to 62c. The company’s 2023 production and unit cost guidance remain unchanged, and it expects to reduce operating costs for West Musgrave by $170m over 10 years.
  • WiseTech Global (WTC) Reports NPAT rose 40%, with total revenue up 35% to $378.2m and EBITDA up 36%. WiseTech confirmed its FY23 guidance and updated its revenue growth expectations to between 26% and 30%. EBITDA growth, excluding M&A costs, is expected to be between 19% and 29%.
  • SiteMinder (SDR) has reduced its losses to $25.5m in H1, with revenues climbing 30%. The company expects to achieve cash flow neutrality by Q4 FY24 through revenue growth and cost-saving measures. CEO Sankar Narayan is optimistic about the travel environment, especially in Asian markets.
  • Spark New Zealand (SPK) intends to repurchase up to $NZ350m in shares, funded by the sale of its TowerCo business. The buy-back will take place on the NZX and ASX at market prices.
  • Pilbara Minerals (PLS) – The company has executed a $250m long term debt facility with the Australian government to support growth at Pilgangoora. It is a 10-year facility through Export Finance Australia. It has also taken the opportunity to refinance its existing USD debt facility.
  • Karoon (KAR) – Record first half FY23 with underlying NPAT up 275% to US$82.4m. Increased sales volume following successful Bauna intervention program. Unit production costs dropped to US$17.30/bbl. Cash of US$166.2m and US$180m in undrawn debt. Key metrics unchanged from quarterly report.
  • Flight Centre Travel Group Ltd (FLT) released their 1H23 results and delivered a higher-than-expected underlying EBITDA of $95m. The company achieved profitability in their corporate, leisure, and all geographic segments except for Asia. 1H total transaction value increased by 203% to $9.9bn, tracking at 80% of the record FY20 1H result.
  • AUB Group Ltd (AUB) reported 1H23 performance, with underlying NPAT and EPS increasing YoY, and dividend remaining consistent. The 1H23 results benefited from the inclusion of Tysers profit for the first time, with its revenue and profit surpassing expectations. AUB Group has upgraded its FY23 underlying NPAT guidance to $112.9m – $121.4m, including 9 months of Tysers profit from 1 October 2022.
  • Ebos Group Ltd (EBO) has announced record results for 1H23. Revenue growth up 17%, underlying EBITDA up 39.3%, and underlying NPAT up 29.6%. This is due to the strong performances from the Healthcare and Animal Care segments, including benefits of the investment in its pet food manufacturing facility.
  • Macmillan Shakespeare Ltd (MMS) reported revenue up 1% to $314.8m and EBITDA up 5.7% to $67.2m. The company is navigating market challenges and focusing on strategic priorities such as supporting EV demand and enhancing customer experience while exploring exit options for its UK operations. Interim dividend declared of 58cps.
  • PSC Insurance Group Ltd (PSI) 1H23 results. Underlying revenue up 15%, to $137.8m. NPAT up 27% to $35.2m, and its EBITDA up 19% to $48.6m. The company’s interim dividend up 16% to 5.2cps, franked to 60%, and upgraded its full-year guidance to an underlying EBITDA range of $104-108m and underlying NPATA range of $72-75m.
  • Reece Ltd (REH) has announced its HY23 results, with sales revenue up 23% to $4,427m, normalised EBITDA up 25% to $495m, and adjusted NPAT up 28% to $210m. The CEO stated that while the first half witnessed a softening in volumes, the company would maintain focus on its 2030 strategy, discipline on costs and investing through the cycle while delivering for customers.
  • Coronado Global Resources Inc (CRN) has reported FY22 revenue of $3.57bn, up 66% YoY, driven by the strong global demand for high-quality Met coal in steel generation, improved coal pricing, and tight supply. Despite lower sales volumes, the company reported a net income of $771.7m, up 307.4% YoY, and a record EBITDA of $1.22bn. Coronado announced a bi-annual dividend of $8.4m (US0.5c per CDI) and declared US$700m in cash dividends directly to shareholders. These strong financial results and high Met coal prices are expected to position the company for a strong 2023.

ECONOMIC & OTHER NEWS

Wage Growth Data came in better than expected helping turn the market around slightly.

Key statistics

In the December quarter of 2022 the seasonally adjusted WPI:

  • Rose 0.8% this quarter and 3.3% over the year.
  • The private sector rose 0.8% and the public sector rose 0.7%.
  • Reserve Bank NZ’s Monetary Policy Committee lifted the Official Cash Rate to 4.75% from 4.25%. The bank’s forecasts show the OCR peaking at 5.5% this year, unchanged from its previous projections.

ASIAN MARKETS

  • Japan’s benchmark yield climbed back above the central bank’s ceiling at 0.5%.
  • HK Budget today. Hands out more cash and vouchers to boost economy.

US AND EUROPEAN HEADLINES

  • McKinsey to cut up to 2,000 jobs in back-office restructuring.
  • Biden vows Putin will never prevail in Ukraine.
  • News Corp says deal to sell real estate asset has fallen apart
  • Amazon employees unhappy to ne ordered back into the office. They even started a petition urging Jassy and Amazon’s leadership team, known as the S-team, to drop the mandate. The group has since amassed 16,000 members, and about 5,000 employees have signed the petition as of Tuesday night.

And finally…

The pharmacist asked me my birth date again today. I’m pretty
sure she’s going to get me something

Money can’t buy happiness, but it keeps the kids in touch !

Clarence

XXXX

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