The ASX200 is up 4 points in mid-morning trade (was up 21), following good leads with US and commodities up. TPM/Vodafone merger, TCL gets ACCS approval and results from RCH and PPT. Banks down, materials mixed #ausbiz



  • Ex-dividend – Australian Leaders Fund (ALF) 2.0c, Aurora Dividend Income Trust (AOD) 0.3c, Bapcor (BAP) 8.5c, Beach Energy (BPT) 1.0c, Cordish Dixon Private Equity Fund (CD1) 14.0c, Duxton Water (D2O) 2.5c, Gryphon Capital Income Trust (GC1) 0.6c, HT&E (HT1) 3.0c, Ironbark Capital (IBC) 0.9c, Iluka Resources (ILU) 10.0c, Jumbo Interactive (JIN) 11.0c, Macquarie Media (MRN) 4.0c, Medical Developments International (MVP) 2.0c, Platinum Asset Mgmt (PTM) 16.0c, Rand Mining (RND) 10.0c, Schaffer Corporation (SFC) 30.0c, SkyCity (SKC) 9.1c, Tribune Resources (TBR) 20.0c, Wellcom Group (WLL) 11.0c, Watermark Market Neutral Fund (WMK) 1.5c
  • Economic data – Building Permits, Private Capital Expenditure
  • Japanese data – Household Spending and Retail Sales


  • UK data – Mortgage Lending, Gfk Consumer Confidence
  • European data – Business Confidence, Services Sentiment, Consumer Confidence Final, Consumer Inflation Expectations, Economic Sentiment, Industrial Sentiment
  • US economic data – Personal Income, Personal Spending, PCE Prices


  • Transurban (TCL) – The ACC will not oppose TCL’s proposed acquisition of the majority interest in the WestConnex project, following the acceptance of court-enforceable undertakings. The undertakings require Transurban to publish important traffic data that will assist all bidders to compete for future toll road concessions.
  • TPG Telecom (TPM) – Merger with Vodafone. Details of merger. TPG shareholders will own 49.9% of the new merged group with VHA shareholders owning the remaining 50.1%. Pro forma enterprise value of approximately $15.0bn, revenue of over $6.0bn, EBITDA of over $1.8bn, Operating Free Cash Flow of $0.9bn, and a strong balance sheet with an investment grade credit profile and strong cash flow generation which is expected to support an attractive dividend. Expected to deliver substantial cost synergies from the combination of complementary networks, rationalisation of duplicated costs and economies of scale. Additionally, both parties recognise the potential for revenue synergies from the opportunity to cross-sell products across both TPG’s and VHA’s combined corporate and consumer customer bases. The company will be named TPG Telecom, but there is a 10-year licence to continue to use the Vodafone brand on products.
  • Norther Star (NST) – Has acquired the high-grade 4.1Moz Pogo underground gold mine in Alaska for US$260M (A$347M)
  • Ramsay Health (RHC) – FY results. Core NPAT up 6.8% to $579.3; Core EPS up 7.0% to 279.8c. Group Revenue up 5.4% to $9.2, EBITDA up 6.2% to $1.4bn; Australia/Asia: Australia revenue up 5.5% to $4.9bn, Australia EBITDA up 12.1% to $896.0m, Equity accounted share of Asian joint venture net profits of $16.8 million, up 27.7%; France: Revenue up 0.3% to €2.2bn, EBITDAR down 0.6% to €445.7m; United Kingdom: Revenue down 5.2% to £424.2m, EBITDAR down 9.8% to £102.7m; Final dividend 86.5c ff up 6.1%, bringing the full-year dividends to 144.0c ff, up 7.1%. Outlook: “combination of challenging circumstances in the UK, a slower rate of growth in Australia, and a neutral outlook in France… targeting positive Core EPS growth of up to 2%, adversely impacted by anticipated higher interest and tax in FY’19. This corresponds to Core EBITDA growth for the Group of 4% to 6%.”
  • Perpetual (PPT)- FY Results. FY18 NPAT up 2% to $140.2m; Fully franked full year dividend of $2.75, up 4% on FY17; Perpetual Private experienced record flows now with ten consecutive halves of positive net flows; Perpetual Corporate Trust delivered strong revenue growth and profit; Perpetual Investments remains a true to label value manager with performance challenged in current conditions


  • Bega Cheese (BGA) – Result yesterday. Revenue up 17% to $1,440m, Export sales increased 29% to $430m; Statutory EBITDA fell 60% to $92m; Normalised EBITDA grew 55% to $109.6m; Normalised profit after tax increased 45% to $44m; Diluted earnings per share of 15.6c; Final dividend of 5.5 cents per share, bringing its full year dividend to 11 cents per share; Outlook: Domestic retail market remains highly competitive, but Bega Cheese is well positioned to take advantage of several trends.
    • Morgans has downgraded to a Reduce (from Hold) recommendation with a target price of $7.00 (from $6.50). The analyst notes the FY18 results were in line with guidance and thinks they could have been stronger had the company elected to increase its farmgate milk prices to secure greater future supply. They found the outlook comments vague. To fund the acquisition Morgans believes Bega Cheese will require an equity raising as gearing ratios would otherwise increase to uncomfortable levels.


  • 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.
    • Citi has a Neutral recommendation with a target price of $7.50 (from $7.23). After the rally, the analyst thinks the share price is back into fair value territory. The trigger for the rally was the better than anticipated outlook for the fly ash business. Execution becomes the key, with FY18 report itself mixed. Earnings estimates have been raised 1-2%.
    • Credit Suisse has an Underperform recommendation with a target price of $6.40. The result exceeded the analyst’s forecasts but they are concerned with FY19 earnings guidance for North America. They suggest earnings growth guidance of “20% or more” would need to be 25% to match prior group consensus. The analyst’s numbers suggest a weak FY18 for North America was not just about weather, hence the better weather and increased synergies management assumed in its guidance is not convincing. They also believe fly ash volume guidance looks “unattainable”.
    • Macquarie has an Outperform recommendation with a target price of $8.05 (from $8.45). The results were ahead of the analyst’s expectations. BLD has now commenced negotiations in relation to its JV with USG, to either buy out the USG stake or evaluate and expanded option involving other plasterboard operators. The analyst was not that impressed with North American guidance and has lowered FY19 estimates. They think the upgrade to synergies will help calm concerns that have been raised following challenges in the roofing and fly ash businesses.
    • Morgan Stanley has an Overweight recommendation with a target price of $8.00. The analyst thinks BLD is well-postioned to leverage the strong US and Australian construction markets. FY18 results were welcomed, amid a synergy upgrade, favourable Australian pricing and confidence regarding US fly ash volumes. They suspect the fly ash business will be an attractive structural growth story and expects an update during the site tour in September.


  • Noni-B (NBL) – Results. Morgans has an Add recommendation with a target price of $3.94 (from $3.83). FY18 results were in line with recent guidance. The analyst notes the Specialty acquisition appears to be going to plan and the business is on track to break even in FY19, delivering annual cost savings of $30m by the end of FY19. They are also more confident after the successful turnaround of Pretty Girl.







US EQUITIES – S&P500 +17 (+0.57%), Dow Jones +61 (+0.23%), Nasdaq +60 (+0.23%).

Main themes

  • US 1Q GDP was upwardly revised to 4.2%.
  • Continued optimism amid ongoing trade negotiations between the U.S., Canada, and Mexico
  • Oil prices rose 1.4% on inventory data

EUROPEAN MARKETS – STOXX500 +0.29%, UK FTSE -0.71%, German DAX +0.27%, French CAC +0.30%.


  • The US dollar was a down 0.2% at 94.53.
  • The Aussie dollar is also lower at 73.10.

BONDS – 2-yr: +1 bp to 2.67%, 5-yr: +1 bp to 2.78%, 10-yr: UNCH at 2.88%, 30-yr: -1 bp to 3.02%


  • WTI crude futures closed up 98c or 1.4% at US$69.51 a barrel. US inventories fell 2.6mb, more than the 686kb expected. Other supportive factors included expectations exports from Iran are set to drop below 70mb during August
  • Iron Ore – IRESS reports iron ore down US50c US$66.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down US30c at US$65.55/dry ton. (CFR Tianjin port)
  • LME metals – Mixed. Cu -0.99%, Ni -1.28%, Al +1.80%


  • US economic data – Q2 GDP – Second Estimate 4.2% (consensus 4.0%; prior 4.1%) and Q2 GDP Deflator – Second Estimate 3.2% (consensus 3.0%; prior 3.0%); Pending Home Sales -0.7% (consensus 0.5%; prior 0.9%); Weekly MBA Mortgage Index (actual -1.7%; prior 4.2%)
  • Amazon (+3.38%) nearly broke the $2000 mark after Morgan Stanley raised its target price to $2500. MS also raised its target price for Alphabet.
  • European data – German September GfK Consumer Climate 10.5 (expected 10.6; last 10.6); French Q2 GDP +0.2% (as expected, last 0.2%) to be +1.7%yoy (as expected, last 1.7%). July Consumer Spending +0.1% (as expected, last 0.3%)


Warren Buffett, born this day in 1930. Today it’s a challenge – choose your own favourite Buffett quote of the day (there are plenty)…


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