MID MORNING MARKETS 19-2-18

MID-MORNING MARKETS

The ASX200 is up 9 points in early morning trade (was down as much as 14). Utilities in the lead due to IFN, while Energy and Materials lag. Results winners IFN, OML and GWA. Main loser IVC. WPL -6% after coming on line #ausbiz

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TODAY

  • Japanese trade data
  • Dividends – Boral (BLD) 12.5c, K2 Asset Management (KAM) 0.5c

TONIGHT

  • European current account and construction output
  • US market closed for Washington’s birthday.

COMPANY NEWS

  • Woodside Petroleum (WPL) – Has completed the institutional leg of its $2.5bn equity raising. Shares dwon over 6%.
  • Brambles (BXB) – 1H net profit nearly triples to US$447.2m (consensus est US$322m, Citi est US$315m), boosted by US tax law overhaul. Revenue up 9%. Underlying EPS 20.3c, up 9%. Interim dividend of 14.5c. BXB expects FY18 sales revenue growth in mid-single digits. The sale of CHEP Recycled has been completed with proceeds to be recognised in the 2H.
  • Nib Holdings (NHF) – 1H net profit down 0.3% to $70.9m (consensus est $68.33m, Citi est $58m), reflecting one-off costs associated with its GU Health acquisition. Group revenue up 8.9% to $1.1bn. New FY guidance for underlying profit of at least $165m. NHF funded around 24,000 public hospital admissions at a cost of $39m, up 5.9% on pcp. Comments – the domestic Australian health insurance market is soft, household incomes aren’t growing and there is no shortage of competition in the market place
  • Ooh!Media (OML) – FY net profit up 36% to $33.2m (consensus est $41.3m, Citi est $30.8m). Revenue up 13.1% to $380.3m. Underlying EBITDA up 22.5% to $90.1m. Final dividend of 15c. Road and Retail segments were 70% of total revenues. Strong double-digit growth through the continued digitisation of panels. Lease profiles were extended in CY17 – this means over 65% of OML’s revenue base is expiring after 2020. Acquisitions in CY16 are now successfully integrated with revenue synergies expected this year. Guidance for CY18 EBITDA of $94.0-99.0m.
  • Invocare (IVC) – FY18 net profit up 37% to $97.4m (Consensus est 62.375m, Citi est $76.77). Sales revenue up 1.8% to $470.9m. Operating EBITDA up 7.8% to $124.3m. Dividend of 27.5c. The performance was driven by the Australian cemetery and crematoria business and a strong performance from New Zealand. CEO said its $200m Protect and Grow plan is on track, with costs set to affect FY18 EPS and EBITDA due to temporary closures of locations for refurbishment.
  • Seek Limited (SEK) – Seek 1H net profit up 21% to $102m (consensus est $110m, Citi est $128m). Revenue up 26% to $620.3m. EBITDA up 20% to $221.2m. The Asian business is progressing well thanks to better macro conditions. Australian segment revenue growth up 15%. International revenue growth of 10%. Revenue guidance was confirmed at 20–25%. EBITDA guidance upgraded to 14–15% growth and reported NPAT confirmed at the upper end of the previous range of $225-230m.
  • GWA (GWA) – 1H net profit up 7% to $27.7m ((Citi est $26.2m). Interim dividend of 8.5c. Will divest its Door and Access Systems business over the next 6 months, with proceeds used in the Bathrooms and Kitchens business. Outlook – residential construction to remain broadly steady with continued momentum in Victoria and NSW, partially offset by weakness is QLD and WA. The renovation and replacement segment (half of GWA’s revenue) is expected to remain stable for FY18.
  • Cardno (CDD) 1H net loss of $21.9m versus $6.5m profit last year. No interim dividend.
  • Infigen Energy (IFN) – 1H net profit up 25% to $26.7m. No interim dividend.

BROKER CHANGES

  • Westpac (WBC) – Morgan Stanley has downgraded to an Equal-weight (from Overwight) recommendation and cut its target price by 6.5% to $30.00
  • Evolution Mining (EVN) – Morgans raised its target price by 6.9% to $2.65
  • Primary Health Care (PRY) – Morgans has raised its target price by 2.2% to $2.21. Credit Suisse has raised its target price by 5.9% to $3.60. UBS has raised its target price by 2.6% to $4.00. Morgan Stanley has raised its target price by 3.2% to $3.20
  • Whitehaven Coal (WHC) – Morgans has raised its target price by 1.3% to $4.00. Macquarie has cut its target price by 4.5% to $4.20
  • Newcrest Mining (NCM) – Morgans has raised its target price by 7.9% to $22.34.
  • Star Entertainment (SGR) – Morgans has raised its target price by 3% to $6.26. Credit Suisse has downgraded to a Neutral (from Outperform) recommendation with a target price cut 5.6% to $5.90. Citi has cut its target price by 1.5% to $6.75. Macquarie has cut its target price by 3% to $5.75. UBS has cut tis target price by 1.6% to $6.20. Deutsceh Bank has raised its target price by 4.9% to $6.40.
  • Baby Bunting (BBN) – Morgans has raised its target price by 4.1% to $1.78. Citi has raised its target price by 7.1% to $1.50. Macquarie has raised its target price by 6.7% to $1.60.
  • Medibank Private (MPL) – Morgans has raised its target price by 7.5% to $3.02. Credit Suisse has cut its target price by 3% to $3.25. Macquarie has cut its target price by 1.4% to $3.41
  • iSelect (ISU) – Credit Suisse has cut its target price by 2.5% to $1.95.
  • IOOF ( IFL) – Credit Suisse has cut its target price by 6.2% to $12.30. Citi has cut its target price by 1.7% to $11.80. Macquaire has cut its target price by 5.7% to $11.50. UBS has cut its target price by 6.5% to $10.75
  • Sims Metal (SGM) – Credit Suisee has downgraded to an Underperform (from Neutral) recommendation with a target price of up 3.6% to $14.50. Macquarie has raised its target price by 18% to $17.00
  • 3p Learning (3PL) – Macquarie has raised its target price by 43% to $1.79.
  • Sonic Healthcare (SHL) – UBS has raised its target price by 2.2% to $23.50
  • Auckland International Airport (AIA) – UBS has raised its target price by 1.9% to NZ$5.45. Morgan Stanley has cut its target price by 5.8% to NZ$5.8%. Morgna Stanley has cut tis target price by 5.8% to NZ$6.66
  • Breville Group (BRG) – Bell Potter has raised its target price by 23% to $413.00
  • ASX – Deutsche Bank has raised its target price by 2.6% to $55.90

 


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

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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LAST WEEK

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OVERNIGHT

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SPI FUTURES -7

US EQUITIES – S&P500 +1 (+0.04%), Dow Jones +19 (+0.08%). Nasdaq -17 (-0.23%)

Main themes –

EUROPEAN MARKETS – All higher. STOXX +1.09%, UK FTSE +0.83%, German Dax +0.86%, French CAC +1.13%.

CURRENCIES

  • The US dollar closed down slightly at 89.08.
  • The Aussie dollar is lower at 79.25.

BONDS – 2-yr: +1 bp to 2.19%, 5-yr: -1 bp to 2.63%, 10-yr: -1 bp to 2.88%, 30-yr: UNCH at 3.14%

COMMODITIES

  • WTI oil rose US34c to US$61.68. The UAE energy minister said oil producers, led by Saudi Arabia and Russia, aimed to draft an agreement on a long-term alliance by the year end. The Baker Hughes rig could rose 7 this week and is up by 51 oil rigs in the last four weeks, putting the total at a nearly three-year high of 798.
  • Gold was flat at US$1358.80 but finished the week up 2.4%
  • Iron ore unchanged at $78.30. (Chinese holiday)
  • LME metals were mixed – copper -0.71%, aluminium +1.99%, nickel -1.63%

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – January Housing Starts 1326K (consensus 1240K; prior 1209K), Building Permits 1396K (consensus 1300K; prior 1300K), January Import Prices ex-oil 0.4% (prior -0.1%), and Export Prices ex-ag. 0.9% (prior 0.0%) This will build into inflation expectation; Preliminary February Michigan Consumer Sentiment Index 99.9; Briefing.com consensus 95.5; prior 95.7). The key takeaway from the report is that consumer sentiment wasn’t affected by the stock market volatility. The improved sentiment reading was attributed to optimism over government policies, improved financial conditions, and expectations for larger income gains in the year ahead.
  • UK Retail Sales +0.1% (expected 0.5%; last -1.4%) and +1.6%yoy (consensus 2.6%; last 1.5%). Core Retail Sales +0.1% (expected 0.6%; last -1.5%) and +1.5%yoy (expected 2.5%; last 1.3%)

QUOTE OF THE DAY

“It makes so much sense to just love what you do and go to work every day to get to get to work.” – Millie Bobby Brown, English actress born this day in 2004. Couldn’t agree more Millie. Happy Birthday.

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