MID MORNING MARKETS 16-2-18

The ASX200 is up 16 points in early morning trade. Healthcare and Financials the top sectors, while Gold and Materials are lagging. Results from MPL, IFL, PRY and WHC the focus. Another good day. #ausbiz

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  • Economic data – New motor vehicle sales
  • Speech by RBA Governor Philip Lowe
  • Ex-dividend – Ansell (ANN) 26.4c, Argo Investments (ARG) 15.5c, Dicker Data (DDR) 4.8c

TONIGHT

  • UK retail sales
  • US economic data – Housing starts, building permits, imports/exports, University of Michigan Consumer Sentiment

COMPANY NEWS

  • Auckland International Airport (AIA) – After-tax profit up 17% to NZ$ 165.9m. Income up 6.9% to NZ$332.4m.Narrows FY guidance to NZ$250-257m. Total passengers up 6.4% on year.
  • Baby Bunting Grp Ltd (BBN) –1H net profit down 33.% to $3.5m. (Consensus est $4.13m, Citi est $3.7m). Dividend 2.87c.
  • iSelect (ISU) – Net profit down 81% to $478K. Dividend 1.5c.
  • IOOF Holdings Ltd (IFL) – Underlying net profit up 19% to $94.8m (Consensus est $93.5m, Citi est $76m). Acquisition of ANZ Wealth Management progressing as planned. Net inflows rose 15% to $120bn. Half year revenue was flat.
  • Medibank Private Ltd (MPL) – 1H net profit up 5.9% to $245.6m. (Consensus est $219m, Citi est $209m). Income from operations up 1.7%. Operating profit in the core health business rose 11%. Premium revenue was up 1.8%. Health claims were up 1.3%.  Net investment income was down 22%. Dividend of 5.5c, up 4.8%. Outlook – Similar underlying revenue trends to the first half are expected for the FY18 result.
  • Medical Developments (MVP) – (Consensus est $0.5m, Citi est $0.5m)
  • Primary Health Care (PRY) – (Citi est $40m). Underlying profit was $44m. 1H profit rose by 4.7% to $22.1m. Group revenue up 5.9% There were challenges of recruiting more doctors and the loss of a national bowel-screening contract. PRY reaffirmed expectations for FY profit of $92-97m, with an improved performance in 2H compared to 1H.
  • Sims Metal (SGM) – 1H profit up 14% to $91.5m. Revenue +25%. Interim dividend 23c, up 15% Expects to beat capital return target. “The stronger result was due to a combination of increased sales volumes and better metal margins, supported by gains from internal improvement initiatives.” US tax reforms also benefited.
  • Star Entertainment Group (SGR) – 1H underlying net profit up 12% to $120m. Gross revenue up 16%.  Expects FY CAPEX at $450-480m.  2H trading has been softer than expected in Sydney but “pleasing performance” in QLD and continued strength in international businesses…
  • Whitehaven Coal (WHC) – 1H net profit. up 63% to $257.2m. 13c divided. FY18 guidance revised to 20-5-21mt. Gearing is 4%.  Coal prices are strong and short-term outlook is positive.

BROKER CHANGES

  • Origin Energy (ORG) – Macquarie has reinstated coverage with a Neutral recommendation and a target price of $9.21UBS has upgraded to a Buy (from Neutral) recommendation.RBC has raised its target price by 10% to $11.00
  • Telstra (TLS) – UBS has cut its price target by 8.3% to $3.30. Citi has cut its target price by 1.6% to $3.10. Macqurie has cut its target price by 4% to $3.55. Credit Suisse has cut its target price by 1.3% to $3.95.
  • Event Hospitality (EVT) – Upgraded to Neutral (from Sell) by Citi and target price raised 13% to $13.20
  • Graincorp (GNC) – Macquarie has cut its share price by 3.3% to $7.62. UBS has cut its target price by 7.9% to $8.15.
  • HT&E (HT1) – Canaccord Genuity has raised its target price by 7.7% to $2.10.
  • IPH – Canccord Genuity has downgraded to a hold (from Buy) recommendation with a target price cut 24% to $4.40. Bell Potter has cut its target price 28% to $4.90. Morgans has cut its target price by 19% to $4.82
  • Woodside Petroleum (WPL) – Macquarie has cut its target price by 6.8% to $27.50.
  • Insurance Australia Group (IAG) – Macquarie has raised its target price by 8.3% to $6.55.
  • South32 (s32) – Macquarie has downgraded to an Underperform (from Neutral) recommendation with a target price of cut 16% to $3.10. UBS has cut its target price by 1.4% to $3.40. Credit Suisse has cut its target price by 5.7% to $3.30
  • Suncorp (SUN) – Morgan Stanley has cut its target price by 1.5% to $13.00. UBS has cut its target price by 4.4% to $14.20. Bell Potter has cut its target price by 7.4% to $14.35. Credit Suisse has upgraded to an Outperform recommendation.
  • Fletcher Building (FBU) – Morgan Stanley has cut its target price by 5.9% to NZ$8.00
  • Breville Group (BRG) – Credit Suisse has upgraded to an Outperform recommendation with a target price of up 6.3% to $13.50. UBS has raised its target price by 6.7% to $12.75. Macquarie has raised its target price by 16% to $12.40
  • ASX – Citi has raised its target price by 2.6% to $56.75. Credit Suisse has raised its target price by 5.9% to $54.00
  • Healthscope (HSO) – UBS has cut its target price by 8.1% to $2.50. Macquarie has cut its target price by 5% to $1.90. Citi has upgraded to a Neutral (from Sell) recommendation with a target price raised 5.9% to $1.80. Credit Suisse has cut its target price by 4.8% to $1.78.
  • Sonic Healthcare (SHL) – Citi has raised its target price by 1.4% to $22.00. Macquarie has cut its target price by 2.3% to $25.60
  • Newcrest Mining (NCM) – Citi has upgraded to a Buy (from Neutral) with a target price raised 13% to $27.10. Credit Suisse has raised its target price by 1.6% to $18.50.

OVERNIGHT

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SPI FUTURES +20

US EQUITIES – S&P500 +33 (+1.21%), Dow Jones +307 (+1.23%). Nasdaq +113 (+1.58%)

Main themes –

  • Stocks rallied for the 5th day despite high interest rates.
  • The S&P 500 and Dow crossed their 50-day moving average for first time since the correction began
  • January PPI (actual 0.4%) matched expectations while core PPI (actual 0.4%; consensus 0.2%) was higher than expected. The February Empire Manufacturing survey and Philadelphia Fed survey also suggested upward pressure on prices but Industrial Production was weak (actual -0.1%; consensus 0.2%)

EUROPEAN MARKETS – All higher. STOXX +0.53%, UK FTSE +0.29%, German Dax +0.06%, French CAC +1.11%.

CURRENCIES

  • The US dollar closed down another 0.58% at 88.60.
  • The Aussie dollar is higher at 79.47.

BONDS – 2-yr: +1 bp to 2.18%, 5-yr: -1 bp to 2.64%, 10-yr: -2 bps to 2.89%, 30-yr: -3 bps to 3.14%

COMMODITIES

  • WTI oil rose US$74c or 1.2% to US$61.34.
  • Gold was down 0.15% at US$1356.00
  • Iron ore unchanged at $78.30.
  • LME metals were mixed – copper -0.53%, aluminium -0.55%, nickel +0.35%

ECONOMIC DATA, NEWS & POLITICS

  • US Economic data – Weekly Initial Claims 230K (consensus 227K; prior 223K), Continuing Claims 1.942m (prior 1.923m), January PPI 0.4% (consensus 0.4%; prior -0.1%), core PPI 0.4% (consensus 0.2%; prior -0.1%), February Empire Manufacturing 13.1 (consensus 19.0; prior 17.7), and February Philadelphia Fed 25.8 (consensus 22.0; prior 22.2); January Industrial Production -0.1%; Briefing.com consensus 0.2%; prior 0.9%) and Capacity Utilization 77.5% (consensus 78.0%; prior 77.9%); February NAHB Housing Market Index 72 (consensus 73; prior 72)
  • Reports that Amazon is teaming up with Bank of America to provide loans to merchants
  • European data – Eurozone December trade surplus €25.40bn (expected €30.20bn; last €26.30bn), French Q4 Unemployment Rate 8.9% (last 9.6%)

NEXT WEEK – The domestic focus will be RBA meeting minutes, wages data and CAPEX, while international data includes Japanese and European inflation, and UK employment. Not much in the US and Chinese markets are closed for New Year.

  • The RBA meeting minutes are released on Tuesday, followed by the what will the very closed analysed wages data on Wednesday and CAPEX data on Thursday.
  • Japanese inflation is on Friday, following trade data on Monday an the Nikkei manufacturing PMI on Wednesday.
  • China will be closed for Chinese New Year
  • The European focus with be inflation on Friday, with the Markit PMI numbers on Wednesday and consumer confidence on Tuesday.
  • UK employment data is out of Wednesday, and the second estimate of UK GDP is released on Thursday (0.5%/1.5% the first estimate),
  • Nothing in the US – Just existing home sales and leading indicators

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RESULTS SEASON continues in full force. This is an indicative calendar only. Key results will be:

  • Monday – Brambles Limited (BXB), Domain Holdings Aus (DHG), InvoCare Limited (IVC), NIB Holdings Limited (NHF), Seek Limited (SEK)
  • TuesdayBHP Billiton Limited (BHP), Oil Search Ltd (OSH), Seven West Media Ltd (SWM), Vocus Group Ltd (VOC), Bapcor Limited (BAP), Monadelphous Group (MND)
  • Wednesday – Downer EDI Limited (DOW), APA Group (APA), CocaCola Amatil (CCL), Fairfax Media Ltd (FXJ), Fortescue Metals Grp (FMG), McMillan Shakespeare (MMS), Santos Ltd (STO, WorleyParsons Ltd (WOR), The A2 Milk Company (A2M), Wesfarmers Limited (WES), BWX Limited (BWX)
  • Thursday – Alumina Limited (AWC), Bellamy’S Australia (BAL), Blackmores Limited (BKL), Catapult Grp Int Ltd (CAT), Flight Centre Travel (FLT), IRESS Limited (IRE), Link Admin Hldg (LNK), Nextdc Limited (NXT), Nine Entertainment (NEC), Qantas Airways (QAN), Qube Holdings Ltd (QUB), Webjet Limited (WEB), Qube Holdings (QUB)
  • Friday – Automotive Holdings. (AHG), Mayne Pharma Ltd (MYX), Tassal Group Limited (TGR), Woolworths Group Ltd (WOW)

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QUOTE OF THE DAY

“You learn in this business: It you want a friend, get a dog.” – Carl Icahn, American businessman born this day in 1936. Great advice. This is my best friend Cooper, born 14 February 2011 (Happy Birthday for yesterday Coops!)

MMM!

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