MID MORNIG MARKETS 29-08-18

The ASX200 is up 11 points in mid-morning trade, following flat markets overnight. Banks again the lead, resources ok, staples and Energy lag. TLS ex-div 11c taking a couple of points off. Results: BLD +ve buth others BAL, BWX, VAH mostly disappoint #ausbiz

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TODAY

  • Ex-dividend – Contact Energy (CEN) 17.1c, Downer EDI (DOW) 14.0c, Steadfast Group (SDF) 4.7c, The Star Entertainment Group (SGF) 13.0c, Super Retail Group (SUL) 27.5c, Telstra (TLS) 11.0c

TONIGHT

  • US economic data – Adv. International Trade in Goods, Adv. Wholesale Inventories, S&P Case-Shiller Home Price Index, Consumer Confidence

COMPANY NEWS

  • Boral (BLD) – Net profit after tax before amortisation and significant items up 47% to $514m reflecting significant growth from Boral North America with a full year contribution from the acquired Headwaters businesses, together with higher earnings from Boral Australia and a solid result from the USG Boral joint venture. NPAT (after significant items) up 49% to $441m, sales revenue up 34% to $5.9bn, reflecting the Headwaters acquisition and solid revenue growth in Boral Australia; EBITDA before significant items +4% to $1.06bn; significant contribution from Headwaters and the delivery of US$39m of synergies in year 1 against a target of US$35m; Strong Australian construction markets and value creating property transactions resulted in 15% EBITDA growth from Boral Australia; Final dividend of 14c with full year dividend of 26.5c, up 10% on last year.
  • Virgin Australia (VAH) – Outlook. Strong momentum in FY18 has continued into FY19. In July 2018, the Group recorded its highest ever July revenue outcome and there is further positive momentum in forward bookings. Based on current market conditions, Group revenue in the first quarter of the 2019 financial year is expected to grow by at least 7% on the prior corresponding quarter. The Group expects to be profitable at the Underlying Profit Before Tax and statutory levels in the first half of the 2019 financial year notwithstanding an expected fuel price increase (net of hedging and FX) of $85 million.

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  • Cabcharge (CAB) – Revenue up 22% $185.5m; Underlying EBITDA $34.6m; Underlying NPAT $13.6m; 28% increase in fleet size with 2,094 Taxis joining the Network in FY18; 4.5% growth in Taxi fares processed to $993m in FY18; 74% YoY increase in 13cabs App downloads in face of increased competition; Fully franked full year dividend of 8c per share; Growth strategies internally funded with strong net cash position; Initiatives gaining traction with revenue growth enabling accelerated investment in services and brands

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  • Bellamy’s (BAL) FY18 guidance was achieved (33% Revenue growth, 23% EBITDA margin); Group Revenue growth of 37% (to $329m) and normalised EBITDA growth of 65% (to $71m); A strengthened balance sheet with $88m held in cash, zero debt and $39m in supply-chain investments funded throughout the year; Stronger Gross Margin of 42% in 2H18 versus 37% in 2H17; Significant increase in brand, product and marketing investment and sustained management of other overheads; Camperdown achieved breakeven in 2H18

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OVERNIGHT

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SPI FUTURES -6

US EQUITIES – S&P500 +1 (+0.03%), Dow Jones +14 (+0.06%), Nasdaq +12 (+0.15%).

Main themes

  • Market continues to be boosted by US-Mexico trade agreements. The new agreement last 16 years and will be reviewed every 6 years.
  • Optimism an agreement with Canada will also be reached.
  • The S&P 500 briefly traded above 2,900 and the Nasdaq also reached a record high.

EUROPEAN MARKETS – STOXX500 -0.03%, UK FTSE +0.52%, German DAX -0.09%, French CAC +0.11%.

CURRENCIES

  • The US dollar was a little lower at 94.72.
  • The Aussie dollar is also lower at 73.42.

BONDS – 2-yr: +1 bp to 2.66%, 5-yr: +3 bps to 2.77%, 10-yr: +4 bps to 2.88%, 30-yr: +4 bps to 3.03%

COMMODITIES

  • WTI crude futures closed down 33c at US$68.54 a barrel. The major influences on oil prices are US sanctions against Iran (which could reduce supply by 650k-1.5mbpd) and the impact of the US-Chinese trade dispute.
  • Iron Ore – IRESS reports iron ore unchanged at US$67.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was unchanged at US$65.85/dry ton. (CFR Tianjin port)
  • LME metals – Generally stronger. Cu +0.69%, Ni +1.94%, Al +1.84%

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – Advance International Trade in Goods -$72.2bn (prior -$68.3bn), Advance Wholesale Inventories 0.7% (prior 0.0%), S&P Case-Shiller Home Price Index 6.3% (consensus 6.4%; prior 6.5%); August Consumer Confidence 133.4 (consensus 126.5; prior 127.9)
  • European data – M3 Money Supply +4.0% (expected 4.3%; last 4.4%), Private Sector Loans +3.0% (as expected (last 2.9%); French Consumer Confidence 97 (as expected, last 97); Italian PPI +0.3% (last 0.3%) to be +3.2%yoy (last 2.9%), Business Confidence 104.8 (expected 106.2; last 106.7), Consumer Confidence 115.2 (expected 115.9; last 116.2).

QUOTE OF THE DAY

“Our shared values define us more than our differences. And acknowledging those shared values can see us through our challenges today if we have the wisdom to trust in them again.” – John McCain, American politician born this day in 1936. Died 25 August 2018.

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