MID MORNING MARKETS 13-02-18

The ASX200 is up 6 points in early trade, after opening up 30 and then slipping into negative territoty. Materials and Gold leading while AREITS and consumer stocks lag. Disappointment for reports from BLD, COH and SGF. WFD and TAH ex-div #ausbiz

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COMPANY NEWS

  • Boral Limited (BLD) – (Citi est $174m). Net profit attributable to members up 12.85 to $173m. Underlying NPAT up 44% to $214mTotal revenue up 40.3% to $2.937bn. Expects continued growth across all businesses in FY18.

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  • Challenger Limited (CGF) – (consensus est $205m, Citi est $207m). Group assets under management up 18% to $76.5bn, normalised NPAT up 6% to $208m, Revenue up 20%. Challenger Life book growth of $948m, up 12%, Life sales of $3.3bn, up 21%, Funds Management net flows of $3.9 billion, up 22%, Record low normalised cost to income ratio of 32.1%, improved 80 bps, Interim dividend 17.5 cents per share, up 3%. Said it is on track for FY18 NPBT guidance of $545-565m, growth of 8% to 12% on FY17. Consensus is at $564 so the market may see this as a little disappointing. Challenger continues to target an overall normalised pre-tax ROE of 18% over the medium term. FY18 ROE will be affected by higher levels of capital from the MS&AD equity placement. ROE is expected to increase from current levels as the benefits from the new capital are generated. Actual number above consensus by guidance may disappoint.
  • Cochlear Limited (COH) – (Citi est $118m) Profit down 1% to $110.8m(would have been up 1% in constant currency). Sales revenue up 6% and EBIT up 3%.  Cits currency volatility and US tax changes. Maintains FY18 net profit guidance of $240-250m, a 7-12% increase on FY17, as currency headwinds are expected to moderate strong underlying business growth. Dividend $1.40, up from $1.30. Said sales of its new iPhone compatible sound processor, the Nucleus 7, started well after being launched half way through the period.

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  • GPT Group – FY result (Consensus est $550.7m, Citi est $556.90m). NPAT up 10.1% to $1.267bn. Funds from operations grew 3% to $554.2. Distribution 5.1% giving total return of 15.2%. Outlook FY guidance is FFO per security growth of approximately 3%; and distribution per security growth of approximately 3%.
  • Transurban (TCL) – Net profit almost quadrupled. (up 280%). 1H proportional EBITDA up 11.6%. 1H18 distribution of 28.0c, FY18 distribution guidance of 56.0c was reaffirmed, growth of 8.7% over FY17. Group toll revenues rose 9.6% to $1.13bn, while construction revenues jumped 69% to $462m. Toll revenue increases were driven by both traffic growth and higher toll fares. Average daily traffic growth across all of Transurban’s roads in Australia and the US rose 1.4%, although some roads were disrupted by construction works.
  • Pilbara Minerals (PLS) – Outstanding results from 5MTPA stage 2 PFS paves way for major expansion of Pilgangoora lithium-tantalum project.  Exceptional financial outcomes and robust economics demonstrate compelling case for expansion after first production from the Stage 1, 2Mtpa Pilgangoora Project in mid-2018
  • SG Fleet (SGF) – Net profit up 19% to $31.6m. Interim dividend 8.78c. Expects stronger 2H compared to 1H. Pipeline of opportunities remains healthy. Continues to weigh M7A.
  • Fisher & Paykel (FPH) – Presentation to the NZ Shareholders’ Association
  • Mt Gibson Iron (MGX) – 1H net profit more than triples to $80m. No dividend.
  • GBST (GBT) – 1H NPAT down 43% to $2.5. Dividend 2.5c.

BROKER CHANGES

  • Bendigo & Adelaide Bank (BEN $11.00) – UBS has upgraded to a Neutral recommendation from Sell. Morgan Stanley has cut its target price by 1.9% to $10.20. Bell Potter has cut its target price by 4.8% to $11.90. Macquarie has cut its share price by 4.3% to $11.00
  • AWE (96.5c)– Morgan Stanley has upgraded its recommendation to Equal-weight with a target price up to 95c (from 45c)
  • Origin Energy (ORG $8.43) – Citi has cut its target price by 13% to $8.97.
  • JB Hi-FI (JBH $25.86) – Bell Potter has downgraded to a Sell from Hold recommendation with a target price cut by 6.1% to $23.00. Citi raised its target price by 1% to $21.20
  • Ansell (ANN $23.86) – UBS has cut its price target by 3.9% to $25.00
  • Aurizon (AZJ $4.69) – UBS has raised its target price by 4.3% to $4.90. Macquarie has cut its target price by 3.5% to $4.91.
  • Amcor (AMC) – Citi has cut its target price by 3.2% to $15.00. Macquarie has cut tis target price by 2.7% to $16.15.
  • Praemium (PPS) – Bell Potter has cut its target price by 3.6% to $1.06. Canaccord Genuity has cut its target price by 4.6% to 83c.

TODAY

  • NAB business confidence
  • Results – Boral Limited (BLD) – (Citi est $174m), Challenger Limited (CGF) – (consensus est $205m, Citi est $207m), Cochlear Limited (COH) – (Citi est $118m), GPT Group – FY result (Consensus est $550.7m, Citi est $556.90m), Transurban (TLC), SG Fleet (SGF)
  • Japanese PPI
  • Ex-dividend – Class (CL!) 2.5c, GUD 24c, Scentre (SCG) 10.87c, Tabcorp (TAH) 11c, Westfied Corp (WFD) 16.35c

TONIGHT

  • UK inflation

 


OVERNIGHT

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SPI FUTURES +33

US EQUITIES – S&P500 +36 (+1.39%), Dow Jones +410 (+1.70%). Nasdaq +107 (+1.56%)

Main themes –

  • Early volatility but things settled to a gradual rise, followed by a modest afternoon sell0off.

EUROPEAN MARKETS – All higher. STOXX +1.17%, UK FTSE +1.19%, German Dax +1.45%, French CAC +1.20%.

CURRENCIES

  • The US dollar closed down 0.34% at 90.13.
  • The Aussie dollar was stronger – up 0.50% to 78.57.

BONDS – 2-yr: +1 bp to 2.07%, 5-yr: +4 bps to 2.56%,10-yr: +3 bps to 2.86%,30-yr: UNCH at 3.14%

COMMODITIES

  • WTI oil was up 9c to $59.29, breaking the recent losing streak
  • Gold up 0.81% at US$1326.30
  • Iron ore unchanged at $76.60.
  • LME metals mostly higher– copper +1.13%, aluminium +0.05%, nickel +1.00%

ECONOMIC DATA, NEWS & POLITICS

  • Trump’s budget projects an $873bn deficit (prior $440bn) in fiscal year 2018 and a $984bn deficit (prior $526bn) in 2019
  • January Treasury Budget $49.20bn (consensus $51.00bn; prior $51.30bn)

QUOTE OF THE DAY

“A woman’s place in public is to sit beside her husband, be silent, and be sure her hat is on straight.” – Bess Truman, American First Lady, born this day in 1885. Died 18 October 1982.

Lovely Bess…doing my best.

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