ASX 200 dropped 82 points to 7210 (-1.1%) in a nasty start to the week. Weak US leads and a collapse in commodity prices took their toll. Resources under serious pressure today with FMG ex-dividend and then some, weighing with the stock losing 7.3%. BHP capitulated down 3.0% and RIO off 2.9%. So much for ‘solid’. Lithium stocks also in the seller’s sights as PLS were ditched, down 7.3%, IGO off 4.0% and MIN falling 6.4%. Second liners also sold off heavily, LTR down 3.7% and CXO off 3.6%. LYC reported this morning and were sold down by 6.2% on worries about July 1 deadline. Base metals also smashed lower, S32 down 2.7%, SFR off 6.8% and ILU off 2.5%. Gold miners also in the house of dog, NCM down 0.2% and NST falling 2.3%. DEG down 2.6%. Oil and gas fared better, WDS results cheered, up 1.5% but STO fell 1.7% and KAR down 0.4%. Coal mixed, WHC off 1.0%. Industrials weaker across the board, WOW and COL slipped slightly, ALL fell 1.0% as some concerns on digital gaming emerged, REITs stumbled lower with GMG down 2.4% and SCG off 3.6%. Platform stocks eased, REA down 2.3% and SEK off 1.6%. Tech slipped slightly but CPU jumped 2.5% on the higher rates outlook. Higher rates are good for banks and the sector held firm today with NAB up 0.5% and the Big Bank Basket up to $178.94 (+0.2%). A green island in a sea of red. Insurers though slid with QBE down 1.2% and IAG off 1.5%. Fund managers were mixed, PTM up 2.5% and MFG down 1.7%. In corporate news, results season drawing to a close and saving the worst until last, DOW were pummelled 23.8% on disappointing results and guidance downgrades. TPG +5.9% after better-than-expected numbers. WDS profits soared as expected after BHP merger deal, MYX has sold its US retail generics portfolio, PPS posted record earnings, APX faltered another 14.2% as it pulled its guidance, SLX became ‘unenriched’ after the $120m placement took its toll, down 23%. IVC managed to prove that even with an increased death toll it still couldn’t make money, losing 10.9%. Nothing substantial on the economic front. Asian market mildly weaker and 10-year yields higher at 3.90%. Dow futures up 20 points. NASDAQ futures up 35 points.

HEADLINES

  • Winners: WBT, TPG, PNV, AX1, CPU, PTM
  • Losers: DOW, SLX, CUV, IVC, 29M, GRR, MCR, APM
  • Positive sectors: Banks.
  • Negative sectors: Everything else.
  • High 7282 Low 7193
  • Big Bank Basket: better at $178.94 (0.2%)
  • All-Tech index: Down 1.1%
  • Gold higher to $2696
  • Bitcoin: Lower at US$23609
  • Aussie Dollar: Lower at 67.09c
  • 10-Year Yield: Better at 3.90%.
  • Asian markets: Japan down 0.1%, China unchanged and HK tumbling 0.4%
  • US Futures: Dow up 20 Nasdaq up 35.

MAJOR MOVERS

  • WBT +10.3% US Roadshow.
  • PNV +4.5% AVH +16.77% skin trauma skins in demand
  • BFL +2.94% results cheer.
  • AX1 +3.14% nice bounce.
  • TPG +5.93% results.
  • CGS +19.49% all is forgiven great bounce back.
  • BET +10.81% bargain hunters.
  • KGN +2.34% results find buyers.
  • APX -14.18% launches new AI products.
  • FCL -11.76% broker downgrades.
  • DOW -23.74% big downgrade.
  • SLX -23.00% capital raising weighs.
  • IVC -10.85% two certainties in life but not profitable for the first.
  • 29M -10.12% down she goes again.
  • MCR -9.19% resources slide.
  • FMG -7.26% ex dividend and then some.
  • BUB-10.53% Non-cash impairment.
  • NIC -6.80% resource smash.
  • Speculative Stock of the Day: 4DS +33.33% good volume on renewed technical progress.
  • Above Average Volumes: TRM, DXN, WCG, 4DS, IRX, 3PL, IKE

COMPANY NEWS

  • Woodside Energy Group Ltd (WDS) has reported full-year financial results. The company’s NPAT reached US$6,498m, up 228% YoY, while production totalled 157.7m barrels of oil equivalent (MMboe), and operating cash flow reached $8,811m. Woodside tripled its Australian tax and royalty payments to A$2.7bn, which are expected to increase again in 2023. Woodside has determined a final dividend of US144 cps, bringing the full-year fully-franked dividend to US 253 cps. The dividend is based on the underlying NPAT of $5,230m, and the full-year shareholder distribution is $4,804m.
  • Pilbara Minerals (PLS) has secured a KRW600bn (US$460m) debt facility from two Korean government-owned banks to fund the remaining capital costs for the development of the 43ktpa LHM chemical facility in Gwangyang, South Korea. The facility is non-recourse to Pilbara Minerals, and construction is underway with commissioning of the first 21,500tpa train scheduled from late CY2023.
  • Hutchison Telecommunications (HTA) – Reported a net loss of $398.4m for the year ended 31 December 2022, compared to a net loss of $21.7m in the same period last year. The increase in loss is primarily due to a non-cash impairment loss of S444.6m recognized for the group’s 25.05% interest in TPG Telecom Limited.
  • Healius (HLS) – Released its full results for H1 2023, reporting growth in the company’s base pathology revenue increased by 1% compared to the same period last year, and revenue from imaging grew by 10% in the hospital and community channels.
  • Dicker Data Ltd (DDR) reported positive revenue growth of 25% to $3.1bn for the full year. Despite increasing operating costs by 32.4%, the company continued to invest in servicing new customer and vendor relationships obtained through acquisitions. The company’s net operating profit before tax was $106.977m, and declared a final dividend of 2.5cps, bringing total dividends paid for FY22 to 41.5cps.
  • Downer Edi Ltd (DOW) financial results show a mixed performance. While revenue is up 2.9%, statutory EBIT and NPAT fell 22.5% and 20.6%, respectively, and the EBITA margin declined from 3% to 2.3%. The decline in profitability was due to several factors, including weak operating cash flow, productivity issues, and historical misreporting of revenues and work in progress in one of its maintenance contracts in the Australian Utilities business.
  • TPG Telecom Ltd (TPG) FY22 financial results show a return to growth, including a 1.5% increase in service revenue and a 23.6% increase in EBITDA, which was partially driven by an accounting gain from the sale of tower assets. Dividend declared of 9cps making FY22 total dividend 18cps up 9%. The outlook for FY23 is positive, with expected EBITDA between $1,850m and $1,950m.
  • Genesis Energy Ltd (GNE) reported results, with EBITDAF of $298m, a 42% increase from the pcp, driven by increased customer numbers and reduced carbon emissions. NPAT up 72% to $145.3m, EPS up 5.72cps to 13.84cps and final dividend per share up 0.10cps to 8.80cps. The company updated its FY23 EBITDAF guidance to around $515m.
  • Liberty Financial Group (LFG) reported an increase in financial assets to $13.2bn (+6%) for the 1H23, but also a decrease in both statutory NPAT to $104.0m (-11%) and underlying NPATA to $104.8m (-14%), which is adjusted for non-recurring items. The underlying return on equity is down to 17.1% from 21.6% in the same pcp, while the leverage ratio slightly improved to 12.5x from 12.7x.
  • APM Human Services International Ltd (APM) reported strong 1H23 results. Revenue up 39% to $853.7m, underlying NPAT up 11% to $85.4m, underlying EBITA up 21% to $167.4m, and declared a fully franks dividend of $0.05cps. 2H23 NPATA skew of 54% (FY22 54%) and underlying operating cash is down 30% on pcp to $99.3m.
  • Invocare Ltd (IVC) has reported higher operating revenue, operating EBITA, and statutory revenue up 12% to $588.5m, 9% to $136.1m and 11% to $592m respectively. Dividend declared of 11cps bringing FY22 full year dividend to 24.5cps up 17%. Global equity volatility caused unrealised mark-to-market loss on the revaluation of FUM to be booked, driving a loss of $1.8m.
  • Lynas Rare Earths Ltd (LYC) reported 1H23 financial results. Revenue is up but EBIT, EBITA, NPAT are all down on pcp. Lyna invested $240m in capital projects and closed with a cash balance of $934.2m.The company is building up inventory ahead of the July 1st Malaysian ban on cracking and leeching. The replacement plant in WA now has 123 days to be up and running. And counting.
  • Cromwell Property Group (CMW) has announced its half-year results, with a statutory loss of $129.5m due to a fall in property valuations. The company reported an operating profit of $87.1m and distributions of 2.75cps. Cromwell remains focused on balance sheet strength, selling down non-core assets, and reducing gearing.
  • Dalrymple Bay Infrastructure Ltd (DBI) has reported an increase in revenue of 24%, driven by the increase in Terminal Infrastructure Charge revenue. The company also maintained its investment-grade balance sheet and developed a transition strategy to guide its response to climate-related risks and opportunities. While NPAT fell by 47% to $69m, DBI’s commitment to distributing profits to shareholders is a positive indicator for the future
  • Silex (SLX) – Raising $120m at 405c with the proceeds to be used to accelerate the development of the uranium enrichment technology.
  • BWX – appointed former Coles executive Thinus Keeve as chief executive. Half-year net loss of $100.8m.
  • Adode Beauty (ABY) – posted a $90,000 loss for the first half, down 105% from a year earlier. Active customers fell by 9%.
  • City Chic (CCX) – statutory loss after tax of $27.2m. No dividend declared.
  • New Century (NCZ) – The board of NCZ has noted that control of the company has been passed to Sibanye-Stillwater. Sibanye has stated it now has a relevant interest in 69.3m New Century shares, representing 52.67%

ECONOMIC & OTHER NEWS

  • Interbank futures are now pricing the RBA cash rate to top 4.4% by September, and expect it to stay above 4% until mid-2024, compared with 3.35% now.

Business Indicators, Australia

Quarterly estimates of private sector sales, wages, profits and inventories

Current price estimates for the December quarter 2022:

  • Company gross operating profits rose 10.6% seasonally adjusted .
  • Wages and salaries rose 2.6% seasonally adjusted.
  • Inventories fell 0.2% seasonally adjusted.

ASIAN MARKETS

  • A spike in ‘flu cases’ is fueling a shortage of antivirals at Chinese pharmacies, with empty shelves reminiscent of the drug frenzy triggered by the CV19 outbreak. The rate of positive flu cases jumped by more than 10%, to 14.3%, in the week ending Feb. 19.
  • Hong Kong might scrap its mask mandate as soon as early March. A laboratory leak was the most likely origin of the Covid-19 pandemic, according to findings by the US Energy Department.
  • Adani stock market losses hit US$145bn one month after the short-seller attack.
  • China’s central government has sent a working group to probe illegal mining in the country’s lithium hub Yichun. The local government announced on Friday that it was cracking down on criminal activity in the lithium battery industry and could shut down the region for up to a month which could affect 10% of global production or around 10,000 tons and 12,000 tons of lithium carbonate per month

US AND EUROPEAN HEADLINES

  • UK and EU aim to seal the Brexit deal today.
  • The Federal Reserve is unlikely to be able to bring down inflation without having to raise interest rates considerably higher, causing a recession, according to a research paper released last week. The paper was presented Friday morning during a monetary policy forum presented by the University of Chicago Booth School of Business. The paper suggests that there’s probably ‘a ways to go’ with rate rises.

And finally…..

Clarence

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