The ASX200 is down 2 points in early trade. Big news day. CSL +4.9% and adding 10 points after results. CPU and IAG also up, while DMP -9.0%. MYR CEO gone. WPL $2.5bn cap raising. CBA ex-div $2, dragging 13 points off the market. #ausbiz
COMPANY NEWS
- Myer (MYR) – CEO Richard Umbers has stepped down. Looking for a new CEO. It comes after 3 profit downgrades over the last year and continued pressure from shareholder Premier investments to improve performance. Chairman Garry Hounsell will act in the role.
- CSL – 1H NPAT rose 31% to US$1.086bn due to higher immunoglobulin sales and growth in seasonal flu vaccines. (Citi est US$901m). Revenue rose 13% to US$4.1bn. Immunoglobulin sales rose 13% on a constant currency basis and that seasonal flu vaccine sales rose 43%. Dividend was up 23% to US79c. Outlook – expects annual net profit of US$1.55-1.60bn in constant currency terms, but warned there would be an “uneven profit profile” between the 1H and 2H given the seasonality of the flu business and the timing of expenses.
- Domino’s Pizza (DMP) – Net profit up 17% to $58.7m. (consensus exp $69.55m, Citi exp $69.4m). Revenue up 5%. Interim dividend of 58.1c. Reaffirmed guidance for FY net profit growth of around 20%. European sales were strong. Expects growth to be stronger in 2H. Less positively, DMP lowered its expectations for growth in its main A/NZ to 6-8% from 7-9%. Reaffirmed same-store sales growth expectations for Europe at 6% to 8%, and Japan at 0% to 2%.
- Woodside Petroleum (WPL) – Net profit +18% to $1.02bn (consensus $1.047b, Citi est $988m). Dividend 49c.$2.5bn rights issue to buy Exxon’s 50% Interest in WA-1-R, containing Scarborough gas field for US$444m. Sees final project ready for final investment decision in 2020. Sees 2018 investment expenditure of $2-2.05bn
- Insurance Australia Group (IAG) – NPAT up 23.5% to $551m (Consensus $467.33m, Citi est $443m). Gross written premium up 0.6%, insurance profit up 30.1% Underlying margin up to 17.3%. Reaffirmed outlook guidance for GWP growth of low single digit and reported insurance margin of 15.5-17.5%
- Computershare (CPU) – 1H net profit up 14% to US$171.2m helped by improvements in mortgage services and efficiencies across the company. Management-adjusted EPS rose 17% to US30.22c. Dividend of 19c, up from 17c. Said US tax changes boosted 1H NPAT by US$2.5m. CPU also upgraded earnings guidance due to the benefits from stronger corporate activity globally and central banks raising interest rates. CPU now expects its management-adjusted EPS to grow 12.5%, up from the prior target of 10% growth.
- Goodman Group (GMG) – 1H net profit fell 2.5% $542.7m Operating profit was up 8.5% $421.3m, helped partly increase online consumption which in turn has spurred demand for warehouses and logistics operations close to major cities. GMG also increased its target for annual operating EPS to5c, from a prior forecast of 45.7c. That would represent growth of 8% on the prior year. Forecast of FY distribution of 28.0c, up from previous guidance of 27.5c.
- Vicinity Centres (VCX) – 1H net profit down 35% to $29.7m despite valuation uplift. Reaffirms FY guidance for funds from operations of 18-18.2c.
- Fletcher Building (FBU) – Has come out of a trading halt, saying market losses in its construction division would be far worse than it previously warned – losses in its building and interiors division would blow out by a further NZ$486m – there would be no 1H dividend and that the chairman was stepping down.
BROKER CHANGES
- Boral (BLD) – Citi has upgraded to a Neutral (from Sell) recommendation and target price raised 5.5% to $7.32. Credit Suisse has downgraded to a Neutral (from Outperform) recommendation with its target price up 5.5% to $161.00. Macquarie has raised its target price by 3% to $8.50.
- Transurban (TCL) – Deutsche Bank has upgraded to a Buy (from Hold) recommendation with a target price raised 1.1% to $13.25. Macquarie restarts coverage with an Outperform recommendation and a target price of $12.44. Credit Suisse has cut its target price by 3% to $12.80.
- Challenger Group (CGF) – UBS has cut its price target by 5.1% to $12.90. Citi has cut its target price by 3.8% to $13.75. Macquarie has downgraded to a Neutral (from Outperform) recommendation and cut its target price 3.6% to $12.95.
- Cochlear (COH) – Citi has upgraded to a Neutral (from Sell) recommendation and raised its target price by 9.4% to $175.00. UBS has raised its target price by 8.7% to $150.00. Credit Suisse has raised its target price by 13% to $161.00. Morgan Stanley has raised its target price by 1.3% to $160.00
- GBST (GBT) – UBS has raised its target price by 31% to $2.35.
- SG Fleet (SGF) – Citi has downgraded to a Neutral (from Buy) recommendation and cuts its target price by 11% to
- Dreamscape (DN8) – Canaccord Genuity cuts its target price by 38% to 20c.
TODAY
- Economic data – Westpac consumer confidence
- Ex-dividend – Commonwealth Bank (CBA) 200c, Milton Corporation (MLT) 8.8c
- Japanese GDP (preliminary DecQ)
TONIGHT
- US inflation and retail sales
- European industrial production and the second estimate of GDP
- Market closures – Indian markets closed today for Mahashivratri. Markets in China, Hong Kong, and South Korea will be closed tomorrow and Friday for Lunar New Year celebrations.
OVERNIGHT
SPI FUTURES +14
US EQUITIES – S&P500 +7 (+0.26%), Dow Jones +39 (+0.16%). Nasdaq +32 (+0.45%)
Main themes –
- Market respects narrow range ahead of Wednesday’s release of January CPI (consensus 0.4%; prior 0.1%)
- Oil price weaker on IEA report about increased US output exceeding demand growth
EUROPEAN MARKETS – All eased. STOXX -0.63%, UK FTSE -0.13%, German Dax -0.70%, French CAC -0.60%.
CURRENCIES
- The US dollar closed down 0.57% at 89.70.
- The Aussie dollar is little changed – trading at 78.60.
BONDS – 2-yr: +2 bps to 2.09%, 5-yr: -3 bps to 2.53%, 10-yr: -3 bps to 2.83%, 30-yr: -2 bps to 3.14%
COMMODITIES
- WTI oil was down 10c to $59.19. The International Energy Agency raised its forecast for oil demand growth in 2018 (to 1.4mbpd from 1.3mbpd), but warned rapidly rising output, particularly in the US, could outweigh any pick-up in consumption
- Gold was 0.26% higher at US$1329.87.70
- Iron ore up US$1.30 to $77.90.
- LME metals saw considerable strength – copper +28%, aluminium +0.71%, nickel +2.67%
ECONOMIC DATA, NEWS & POLITICS
- US economic data – NFIB Small Business Optimism Index (actual 106.9; prior 104.9)
- UK inflation -0.5% (-0.6% expected) for the month or 3.0% yoy, higher than the 2.9% increase expected.
- The Bank of America Merrill Lynch survey showed professional investors slashed bond allocations to their lowest levels in 20 years
- Fed speak – Cleveland Federal Reserve President Loretta Mester said the recent market rout is not affecting the Fed’s economic outlook. “”While a deeper and more persistent drop in equity markets could dash confidence and lead to a pullback in risk-taking and spending, the movements we have seen are far away from this scenario.” She also inflation should pick up this year but not at a rate that requires a faster Fed reaction.
- NAFTA – US trade representatives said progress is being made in NAFTA talks, especially with Mexico. Canada’s chief NAFTA negotiator Steve Verheul said that chapters on customs and telecommunications are close to being completed, but substantial differences remain on autos.
- Market closures – Indian markets closed today for Mahashivratri. Markets in China, Hong Kong, and South Korea will be closed tomorrow and Friday for Lunar New Year celebrations.
QUOTE OF THE DAY
“It’s not so much knowing when to speak, as when to pause.” – Jack Benny, American comedian born this day in 1894. Died 26 December 1974
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