Marcus Today End Of Day Report
VIEW MORE ARTICLES BY HENRY JENNINGS
- ASX 200 down 19 to 6254.
- High 6268 Low 6244.
- RBA keeps rates on hold.
- ASIC gets more money after Budget cut earlier this year.
- Diggers and Dealers continues in Kalgoorlie. Royal Commission continues.
- Energy stocks bid up on WTI price rise and sanctions.
- Big miners falter again. Banks mixed ahead of CBA tomorrow.
- TLS feels the competition heat.
- AUD better at 74.15c.
- Bitcoin weaker at US$6939.
- Aussie Gold drops to $1635.
- US futures up 53 pts.
- Asian markets firmer with Japan up 0.76% and China up 1.86%.
FUTURES AND HIGHS AND LOWS
- MARCUS CALL - Twenty stock market truths.
- TRADING IDEAS - Four trades left. No stop losses raised.
- SMALL COMPANIES - A 70% bounce in one stock, two new insights.
Movers and Shakers
- MAQ +12.88% update and guidance.
- NHC +10.97% buys coal business from WES.
- KDR -10.14% GXY -3.87% lithium price falls.
- STO +2.82% oil price helping.
- WTC +1.75% tech bounce.
- NVT +2.63% things can only get better.
- ECX -40.79% Graysonline hurting.
- QBE -1.74% Californian fires spreading.
- AMP -2.90% weakens ahead of results.
- AMC -5.82% fall out from Bemis deal.
- NEU -43.07% Investor update.
- BLA -12.50% profit-taking.
- RHC -4.17% smashed again.
- RZI -6.86% falls to half its size.
- RCR – still suspended as CEO steps down.
- BAL -4.5% ceasing to be a substantial shareholder.
- Z1P -2.21% doubles revenue, still not much.
- SHV -3.42% too soon?
- AGY -8.2% profit-taking.
- Speculative stock of the day: AuMake (AU8) +23.08% Supply agreement with Pure Nutrition to develop own brand A1 and A2 formula products.
- Biggest risers – NHC, SEA, BPT, FAR, NST and ASB.
- Biggest fallers – ECX, KDR, PPH, AMC, ASL and BAL.
- Amcor (AMC) –5.82% Subject to shareholder and regulatory approval, will acquire its US packaging rival, Bemis, for $7.1bn. Bemis shareholders will receive 5.1 AMC shares for each Bemis share at a 25% premium to Bemis’ close price last Thursday, valuing the shares at US$57.75. This will see Bemis shareholders end up with 29% of Amcor. Amcor said the deal would deliver a step change in the Americas region for them. The deal is expected to close in 1Q 2019.
- Eclipx (ECX) –40.79% Revised FY18 Guidance. Advised net profits between +13% to +17% on FY17, decidedly lower than the +27% to +30% previously announced. Ten-year lows in bank-initiated insolvencies and a thriving construction sector have resulted in reduced activity in their industrial and commercial online auction business ‘GraysOnline’.
- Reckon (RKN) +15.12% 1H results saw underlying EBITDA up 3% to $17.3m and underlying NPAT up 9% to 5.9m year on year. However, transaction costs impacted bottom line EBITDA which fell 10.9% to $16.4m and bottom line NPAT which fell 4% to 5.2m year on year. Debt has been reduced by $7m for the half and the company’s dividend policy reinstated with a 3c fully franked interim dividend to be paid on September 4.
- Wesfarmers (WES) +0.12% Is selling its 40% interest in the Bengalla Coal Mine joint venture to its JV partner, New Hope (NHC), for $860m. Wesfarmers are hoping to realise a pre-tax profit on the sale of between $67m-$680m.
- Shopping Centres Australia (SCP) –0.41%FY18 results. Statutory NPAT was down 45% to $175.2m due to smaller investment property value increases than a year ago. Funds From Operation (FFO) were up 5.4% to $114.3m or 15.3c per share, and a final dividend of 7.1c will take the full year distributions to 13.9c per share, up 6.1% on last year. SCP expect FFO per unit to be 15.6c in FY19 and the full year distribution to come to 14.3c per share.
- IOOF (IFL) –1.89% Record Underlying-Net-Profit-After-Tax (UNPAT) of $191.4m up 13%. A fully franked dividend of 27c. Net inflows of $5.8bn up 28%. Margin unchanged at 23bps.
- Transurban (TCL) +1.01% FY18 result. Statutory net profit more than doubled on the year, up 124% to $468m, revenue rose 21% to $3.3bn and proportional toll revenues, which is TCL’s preferred measure of performance as it links income to its relevant stake in toll roads, increased 8.7% on year to $2.34bn. A full year distribution of 56c per share was announced, and the company said that it would pay a 59c dividend next year regardless of if it is successful with its WestConnex bid.
- Yancoal (YAL) – The Austar operation will re-commence production, and all employees are being recalled after all NSW regulator prohibitions have been cancelled.
- Macquarie Telecom Group (MAQ) +12.88% Preliminary FY18 EBITDA is to be between $47-48m, exceeding guidance of $44-46m. Cash equivalents will finish the year at $30.2m and a 25c, fully franked, final dividend was declared. However, the company said it intends to stop paying dividends as of 1H FY19 during its next phase of capital-intensive growth investment.
- Navitas (NVT) +2.63% FY18 results. Reported a net loss of $55.8m, 168% worse than last year, EBIT down 99% to $1.1m and revenue down 2.5% to 931m. The company will pay a 70% franked final dividend of 8c per share taking the full year dividend to 17.4c per share, 10% lower than FY17’s 19.5c per share. The results were heavily impacted by the one-off $123.8m charge for the rationalisation of its Careers and Industry Division, the completion of which will be the main focus for the company in FY19.
BEST AND WORST
RBA keeps rates on hold for the 22nd consecutive month. Highlights:
- The global economic expansion is continuing.
- Financial conditions remain expansionary, although they are gradually becoming less so in some countries.
- The Bank's central forecast for the Australian economy remains unchanged. GDP growth is expected to average a bit above 3% in 2018 and 2019.
- The outlook for the labour market remains positive.
- The latest inflation data was in line with the Bank's expectations. Over the past year, the CPI increased by 2.1%, and in underlying terms, inflation was close to 2%.
- Housing credit growth has declined to an annual rate of 5.5%. This is largely due to reduced demand by investors as the dynamics of the housing market have changed.
- The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.
- ANZ Roy Morgan consumer confidence fell 0.8% to 118.9 points last week.
- The AiG construction index rose to 52.0 in July from 50.6 in June.
- Good news for abattoirs. Not so good for farmers hit by the drought. Australian meat production is at a three-year high, the bureau of statistics confirmed this morning. About 870,000 sheep were slaughtered in June, up 40% compared to the same period in 2017. Lamb slaughter is up 12% over the same period. The number of cows slaughtered is up 7.8% and calves up 10%, although veal production is down.
ASIAN MARKET NEWS
- SoftBank’s stock rose as much as 6% today after the Japanese technology group reported a 49% year-on-year rise in operating profit for the first quarter. IPO coming.
EUROPEAN AND US HEADLINES
- Commerzbank has reported revenue a touch ahead of forecasts for the second quarter and confirmed plans to return to paying a dividend as its restructuring continues to progress.
- The US reimposes sanctions on Iran.
- Fidelity launches a no-fee fund sending shudders through asset managers.
- The wealth management arm of the Swiss investment bank UBS said the East-West conflict has reached a “tipping point” and urged action by its clients. Trade tensions are likely to escalate, UBS said as it warned investors to move their money out of “cyclical stocks”.
- Fever Tree founders sell another tranche of shares to trouser GBP73m. Nice work.
- Huge lotto draw tonight. May not be in tomorrow.
Henry Jennings has been involved in financial markets for over 35 years as both a trader and a broker in London and Sydney.
Starting his career in London trading derivatives and moving to Australia in 1989, Henry eventually settled at Macquarie Group, rising to become a Divisional Director responsible for Equity Trading in Australia. For the last decade, Henry has been involved in private client broking and now writes exclusively for the renowned financial newsletter Marcus Today. Henry regularly appears on ABC TV and Sky Business as a market analyst, commentator and strategist and has presented at various conferences most recently for the AIA on the Gold Coast.
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