Marcus Today End Of Report

Today’s Headlines

ASX 200 up 11 to 6119 rally fades again.
High 6145 Low 6115.
Banks mixed as resources and energy lead the way.
BHP 42-month high.
AMP Strike One.
TLS slips on US sanctions against XTE.
Bond proxy infrastructure weakens.
AUD lower at 74.65c.
Bitcoin firmer at US$9308.
US futures up 41.
Asian markets better with Japan up 0.27% and China CSI 300 just down 0.05%.

FUTURES AND HIGHS AND LOWS

MT STUFF

MARCUS CALL – The blunt truth about the problems in the financial advice industry. A look at the value in the fund management stocks.
SMALL STOCK PORTFOLIO – We add some oil exposure in the small end of town plus we look at a couple of small retailers that may be of interest.
INSIDERS – A couple of good insights today one on the lithium industry and KDR and the other a Mark 1 eyeball insight on the growth of APT.
TRADING PORTFOLIO – No new trades, 4 stop losses raised.
INSIDERS CONNECT WITH US – We invite you to send us your own stock ideas. We also have the facility for you to email us any questions.

STOCK STUFF

Movers and Shakers

AMP -2.94% AGM woes and trading update. Strike one. Directors out.
WPL +5.10% oil price winner.
QAN -2.37% oil price loser.
JHG +2.61% positive FUM.
PDL +6.41% record profit result.
LNK -8.35% budget changes
LYC -4.59% Malaysian elections.
CLQ +3.21% positive media article.
GXL -6.94% a dog. Broker downgrades.
JMS -5.41% CEO illness.
CWY +0.29% court approves the scheme of arrangement.
AAC -3.86% rallies sours.
WTC +3.93% broker upgrade.
BLA +18.33% short covering.
BBN +10.71% positive broker upgrade.
MQG +0.99% keeps on trucking.
TWE -2.39% broker upgrade looks a bridge too far.
Speculative stock of the day: Mitula Group (MUA) +64.44% after a takeover approach from Japanese LIFULL worth 85c a share. Board has grasped the deal with both hands. Cash and share deal.
Biggest risers –PDL, SXY, WPL, OSH and BKL.
Biggest fallers –LNK, GXL, JMS, GSC, BGA and LYC.

POINTS

TODAY

AMP (AMP) –2.94% Has been served with two class actions, one in the Supreme Court and NSW and one in the Federal Court of Australia for shareholders who bought in between 10/5/2012-15/4/2018 and 6/5/2013-13/4/2018 respectively over Royal Commission matters. The company also provided a 1Q trading update. AWM assets under management down 2% QoQ due to weaker investment markets, AWM net cash outflow unchanged YoY due to super non-concessional cash contribution changes in 2017. AMP Capital total loan book up 2% to $19.8m QoQ. Further customer remediation costs expected following the Royal Commission findings.
Telstra (TLS) –2.46% has appointed experienced US telecom executive Roy H. Chestnutt to the board as a non-executive director. Roy used to be an executive director at Verizon Communications and will contribute a perspective on US and global markets and international best practice. TLS also suspended sales of XTE products due to US sanctions.
Xero (XRO) –3.37% FY18 results. NLAT improved 60% YoY to -NZ$27.9m, the company posted it’s first positive EBITDA of NZ$26m vs -NZ$28.6m pcp and first positive cash flows of NZ$41.2m vs -NZ$4.4m in FY17. Operating revenue was up 37% to NZ$406.6m and net subscribers grew by 351,000 in FY 18 to 1.386m total. Management has flagged that cash outflow for FY19 is to be reduced from FY18.
Downer EDI (DOW) –0.71% At its investor day reaffirmed FY18 guidance for underlying NPATA of $295m.
Carnarvon Petroleum (CVN) an oil and gas junior is seeking to raise up to $16m. The company’s shares went into a trading halt on Thursday morning as its broker, Euroz Securities started seeking support for an equity raising.
Lynas (LYC) – 4.59%The company announced an option exercise of 3.8m shares at 50c bringing the company nearly $2m in cash. Malaysian election results add to some uncertainty.
Pendal (PDL) +6.41% The artist formerly known as BT Investment- Group cash NPAT up 30% to a record of $114.5m. Management fee revenue up 18% to $247.9m led by a 14.1% increase in FUM.
Janus Henderson (JHG) +2.61% 1Q results. Strong investment performance across all time periods, with 79%, 68% and 84% of assets under management (“AUM”) outperforming benchmarks on a 1, 3 and 5 year basis, respectively, as at 31 March 2018; net outflows of US$2.7bn compared to US$2.9bn in the fourth quarter 2017; AUM increased to US$371.9bn, supported by positive market performance and favourable foreign exchange moves; achieved US$96m of run rate net cost synergies, exceeding target, ahead of schedule; quarterly dividend increased 13% to US$0.36 per share.
Iluka (ILU) +1.91% Class Action Update. An update on proceeding related to alleged breaches of Iluka’s continuous disclosure obligations and misleading and deceptive conduct in relation to disclosures between April to July 2012. On 9 May 2018 Iluka was informed that the shareholder class action has received funding from the applicant’s third-party litigation funder, Harbour Fund II LP. Iluka denies liability in respect of the allegations and will defend the proceedings.
Boral (BLD) +2.31% Has reached an agreement to sell its US Concrete & Quarries business for US$127m which represents an 8-9x multiple of the assets (EBITDA of the last 12 months). Boral expects to realise a pre-tax profit of US$45m to be reported in FY18.
Cleanaway (CWY) +0.29% The Federal Court has approved the acquisition of Toxfree Solutions (TOX).

BEST AND WORST

ECONOMIC NEWS

Citigroup has pushed out the timing of its forecast for the Reserve Bank of Australia’s first rate rise this cycle to the first-quarter of 2019 from the fourth-quarter of 2018.
ASIC takes $30m budget hit. Hard to believe after Royal Commission.
RBNZ keeps rates on hold at 1.75% but is aiming for 2.0% by 1Q 2020 as economic growth remains robust and global growth supports NZ exports.

BOND MARKETS

ASIAN MARKETS NEWS

Malaysian elections in focus as Dr. Mahathir wins shock election and demands to form a government. He is the 92-year old comeback kid with big plans for the country.
Japan’s current account surplus widened by 4.7% YoY to JPY 3.12 trillion last month. This beat expectation of 3.00 trillion and continues the rapid uptrend in current account surplus since it bottomed at the start of this year. Exports grew 3.7% YoY and imports decreased 0.9% YoY.
China’s CPI eased from +2.1% the previous month to the latest reading of +1.8% for April, below forecasts of 1.9% YoY. PPI also come in below forecasts, +3.4% vs +3.5% expected, however, showed a strong increase in last month’s +3.1%.

Economic growth remained on a solid footing in the Philippines during the first quarter, with gross domestic product rising 6.8% from last year.
Fitch has issued a warning over the increasing integration of Hong Kong’s banking environment with China’s financial system.

EUROPE AND US MORNING HEADLINES

Royal Bank of Scotland has agreed a US$4.9bn settlement with the US Department of Justice that clears the way for the British government to sell more shares in the bank.
House prices have been falling at their fastest rate since February 2009 in London, amid expectations that the rest of the UK housing market will hold steady in the next year, an industry survey has found that 69% of respondents to its UK Residential Market Survey reported that houses with a price tag of more than £1m were being sold for less than hoped.