The ASX200 is up 27 points in late morning trade, with Utilities and Staples in the red. New VOC CEO, good results from RWC, ASL and BSL. QBE not so well-received. WES ex-div 103c taking 4 points off the index. #ausbiz
- Ex-dividend – Aurizon Holdings (AZJ) 14.0c, Coca-Cola Amatil (CCL) 26.0c, Flagship Investments (FSI) 3.75c, PRO-PAC Packaging (PPG) 1c, Steadfast Group (SDF) 2.8c, Wesfarmers (WES) 103c
- US New Home Sales
- Vocus (VOC) – CEO Geoff Horth has stepped down by mutual agreement. FY18 guidance reaffirmed. The role of Interim Group CEO will be assumed by Michael Simmons, currently Chief Executive of its Wholesale & International Division. Michael was also the founding CEO/MD at SP Telemedia, now TPG Telecom.
- Oil Search (OSH) – Earthquake in PNG. All personnel have been accounted for, no injuries have been reported and production operations are being shut.
- Newcrest Mining(NCM) – Strategic alliance with Lundin Gold
- QBE – In line with update on January 23. Reflect the record cost of catastrophes in 2H17 together with the deteriorating emerging markets businesses and two significant non-cash items. The net cost of catastrophes for QBE (after reinsurance) was $1,227m in 2017, up from $439m in 2016. Net loss of US$1.25bn, from net profit of US$844m a year earlier. Includes impairment of goodwill ($700m) and write down of the deferred tax asset following the reduction in the US corporate tax rate ($230m) in our North American Operations. Dividend of 4c (down from 33c). Sale of Latin American operations to Zurich for US$409m, expected to make a pre-tax profit of $100m on the sale. Will continue operations in Puerto Rico, which will be part of North America.
- Bluescope Steel (BSL) – 1H net profit up 23% to $441.2m and underlying NPAT of $32.1m, better than expected due to improving business performance and economic conditions, and $32.1m from a coal supply dispute settlement. Underlying EBITDA down 8% to $703.5m. Dividend of 6c. Extension of its buyback by a further $150m. Outlook – Guidance for underlying EBIT to be 25% higher in 2H. A good results and buyback extension likely to be well-received.
- G8 Education (GEM) – Underlying net profit $92.9m, in line with pcp. REvenu up 2.4%. Underlying EPS up 111.7/5 to 21.8c. GEM said last December market conditions were challenging during the year due to significant levels of new supply and continued weak demand growth having an impact on occupancy levels. The final result was “slightly short of previous guidance, driven by higher discounts and increased investment in resourcing for our recently acquired centres and our kindergarten rooms. It was pleasing to see our disciplined centre development and acquisition strategy performing in line with expectations and providing positive signs of continued future growth.” Outlook – Occupancy has been stable during January, with committed forward bookings heading in the right direction. With a strong balance sheet, national network, a committed acquisition pipeline, top quality executive leadership team in place and a clear strategy, we are in a very good position to grow earnings in 2018 and beyond.”
- Reliance Worldwide (RWC) 1H net profit up 18% to $41.5m. Revenue up 28.3% to $362.6m. EBITDA up 24.5%. Dividend 3.5c. Increased EBITDA guidance of $150155m (up from $145 –150m). Seeing continued strong US sales growth led by its core SharekBite products, now in 23,000 outlets.
- Ardent Leisure (AAD) – Pro-forma net loss of $13.2m (includes $22.8m impairment charge for Dreamworld), compared with $49.4 loss in the pcp. Total revenue down 12.1%, mainly due to the disposal of the Health Clubs and d’Albora Marinas businesses. Pro-forma revenue up 12.7%. Revenue at Main Event and Bowling up 25.4% and 16.6% respectively. Revenue up 56% at Dreamworld in post re-opening period vs pcp. Dividend 2c. Sale of Bowling and Entertainment for $160m. Trading at Dreamworld continues to improve, attendances up 32.6% and revenue up 55.6% for the period from 10 December 2017 to 13 February 2018 compared with the same post-incident period in FY17. However, the recovery has been slower than originally projected, resulting in the impairment charge of $22.8m. Outlook – Subject to no adverse changes to operating conditions, the Group expects to trade profitably in the second half, generating both a positive EBITDA and net profit after tax.
- Chorus (CNU) – NPAT down -28.8% to $47m. EBITDA -1.8% to $329m , FY18 EBITDA guidance reiterated at $625-650m, tracking to top end, Operating revenue down 5.7%, Total fixed line connections down 3% to 1,559,000, Broadband connections stable at 1,181,000, Dividend 9c, 70,000 new fibre connections and 76,000 new VDSL connections. Strategic review is currently in underway, looking at the outlook and opportunities for the business, has resulted in a new operating model.
- iSentia (ISD) – NPATA of $2.2m, underlying NPATA of $2.6m. Content marketing exit completed by 31 December 2017 with an after tax loss of $11.9m. Dividend 0.647c. FY18 revenue guidance is updated to $133-136m for the media intelligence business (excluding content marketing). EBITDA guidance of $32-36m is unchanged. MD and CEO John Croll has resigned.
- Ausdrill (ASL) – Net profit more than doubles to $35.3m. Dividend 3.5c.
- Platinum Asset Management (PTM) – Bell Potter has downgraded to a Sell (from Hold) recommendation and cut its target price by 12% to $5.80. Credit Suisse has cut its target price by 9.9% to $6.40. Macquarie has cut its target price by 4.6% to $6.00. Morgan Stanley has cut its target price by 6.7% to $7.00.
- Woolworths (WOW) – Morgan Stanley has raised its target price by 4.5% to $23.00.
- Hansen Technologies (HSN) – Credit Suisse has raised its target rice by 12% to $4.75. Ord Minnett has raised its target price by 7.75 to $4.47
- Automotive Holdings (AHG) – Credit Suisse has downgraded to a Neutral (from Outperform) recommendation and raised its target price by 6.9% to $3.85. MAcquaire has raised its target price by 2.4% to $4.20.
- Southern Cross Media (SXL) – Deutsche Bank has cut its target price by 8.3% to $1.10. Macquarie has cut its target price by 9.2% to $1.18. UBS has upgraded to a Buy (from Neutral) recommendation and cut its target price by 4% to $1.20.
- Nextdc (NXT) – Deutsche Bank has raised its target price by 16% to $6.40. Morgans has downgraded to a Hold (from Add) recommendation and raised its target price by 9.7% to $7.01. Credit Suisse has raised its target price by 50% to $7.50. Macquarie has raised its target price by 15% to 15% to $6.32. UBS has raised its target price by 22% to $7.70. Citi has raised its target price by 14% to $8.00. Canaccord Genuity has upgraded to a Buy (from Hold) recommendation and raised its target price by 22% to $7.40.
- Nearmap (NEA) – Canaccord Genuity has raised its target price by 51% to $1.30
- MYOB (MYO) – Citi has cut its target price by 6.6% to $4.25. Ord Minnett has cut its target price by 9.2% to $3.95.
- Qantas (QAN) – Citi has raised its target price by 4.2% to $7.50.
- Nanasonics (NAN) – Canaccord Genuity has downgraded to a Hold (from Buy) recommendation and cut its target price by 5.6% to $2.55. Bell Potter has cut its target price by 9.2% to $2.48. Morgans has cut its target price by 5.3% to $3.22.
- Flight Centre (FLT) – Shaw and Partners has raised its target price by 13% to $59.00. MAcquaire has raised its target price by 13% to $47.50
- Cleanteq (CLQ) – Macquarie has cut its target price by 13% to $2.00
- Tassal Group (TGR) – UBS has cut its target price by 6.9% to $4.70.
- Regis Healthcare (REG) – UBS has raised its target price by 8.7% to $5.00.
- Blackmores (BKL) – Morgans has raised its target price by 22% to $125.00
- Qube Holdings (QUB) – Morgans has cut its target price by 4.3% to $2.68. Credit Suisse has upgraded to a Neutral (from Underperform) recommendation and raised its target price by 2.2% to $2.35.
- OceanaGold (OGC) – UBS has upgraded to a Buy (from Neutral) and raised its target price by 18% to $4.00.
- Iluka Resources (ILU) – Morgan Stanley has raised its target price by 24% to $12.30
RESULTS SEASON SCORECARD
SPI FUTURES +31
US EQUITIES – S&P500 +43 (+1.60%), Dow Jones +348 (+1.39%). Nasdaq +66 (+0.92%)
Main themes –
- Energy sector outperformed due to rise in oil. Oil is set for rise of about 3.3% for the week.
- Fed speak back in focus: Four Fed speakers today – New York Fed President (permanent voter) William Dudley; Boston Fed President (alternate voter) Eric Rosengren; Cleveland Fed President (FOMC voter) Loretta Mester; and San Francisco Fed President (FOMC voter) John Williams
- Bond market rallied with the yield on the US 10year down 5 basis points to 2.87%
EUROPEAN MARKETS – Mixed. STOXX +0.22%, UK FTSE -0.11%, German Dax +0.18%, French CAC +0.15%.
- The US dollar was up 0.12% at 89.84.
- The Aussie dollar is trading 0.19% lower at US78.30c.
BONDS – 2-yr: -2 bps to 2.24%, 5-yr: -3 bps to 2.62%, 10-yr: -5 bps to 2.87%, 30-yr: -5 bps to 3.16%
- WTI oil was up US78c or 1.2% at US$63.55, reversing earlier losses, after the shutdown of the El Feel oilfield in Libya, which produces 70,000bpd. Also supportive was comments from Saudi Arabia’s energy minister that inventories should keep declining this year.
- Gold futures were down US$1.80 at US$1,330.90
- Iron ore unchanged at $79.50.
- LME metals were mostly lower – copper -0.94%, aluminium -2.06%, nickel -0.47%
ECONOMIC DATA, NEWS & POLITICS
- Fed Monetary Policy Report – Of interest because it’s is expected to be the basis of new Fed Chair Jerome Powell’s testimony before Congress next week (his first appearance!). Not much new – it called for a path of gradual rate hikes with the Fed noting that it expects inflation will creep closer to the 2.0%yoy target as economic activity continues to expand at a moderate pace. Very little market response.
- European data – CPI -0.9% as expected (last 0.4%) to be +1.3%yoy, also as expected (last 1.3%). January core CPI -1.7% (last 0.5%) to be +1.0%yoy, as expected (last 0.9%); Germany’s Q4 GDP +0.6%, as expected (last 0.8%); +2.3%yoy, as expected (last 2.3%)
- Earnings – Hewlett Packard Enterprise (9.84%) and HP (5.00%) were stronger after earnings
- Inditex (owner of Zara) fell 7% following reports that it is to run-down its Irish-based web unit.
- BT rose over 5% on news that regulators will cap the price it can charge its rivals for using its fast broadband service.
- The Chinese government has seized control of Anbang Insurance Group and the company’s founder has been accused of committing “economic crimes”
NEXT WEEK – Domestically, CAPEX will be the min focus while in the US< we have PCE prices (the Fed’s preferred measure of inflation,
- Australia – CAPEX on Thursday. Private sector credit, on Wednesday, Manufacturing on Thursday. New home sales on Friday.
- China – Official manufacturing and services PMI on Wednesday, Caixin PMI on Thursday.
- Japan – Retail sales, industrial Production, Housing starts, consumer confidence, unemployment.
- Europe – Consumer confidence on Tuesday, inflation on Wednesday, unemployment on Thursday. And PPI Friday.
- UK – House prices, consumer confidence, credit and lending data
- US – Second estimate of GDP on Wednesday. And ISM on Thursday. Also new home sales and Durable Goods orders on Monday, PCE prices and Uni of Michigan consumer confidence. US fed Chair speaking on Wednesday
QUOTE OF THE DAY
“Change your opinions, keep to your principles; change your leaves, keep intact your roots.” – Victor Hugo, French author born this day in 1802. Died 22 May 1885.