The ASX200 is down 9 points in mid-morning trade after weak int’l leads and trade/tariff concerns. Banks the highlight, Telcos & Materials down. TCL WestConnex success, HVN miss and capital raising, Ex-div CGF 18c. Next week RBA, GDP and US jobs #ausbiz


  • Ex-dividend – Australian Finance Group (AFG) 5.7c, Barrack St Investments (BST) 2.0c, Codan (CDA) 8.5c, Challenger (CGF) 18.0c, Carlton Investments (CIN) 70.0c, Contrarian Value Fund (CVF) 4.5c, Easton Investments (EAS) 2.0c, Fortescue Metals (FMG) 12.0c, Helloworld Travel (HLO) 11.0c, Integral Diagnostics (IDX) 4.0c, Landmark White (LMW) 2.0c, Mineral Resources (MIN) 40.0c, Mortgage Choice (MOC) 9.0c, MCP Master Income Trust (MXT) 1.0c, Navitas (NVT) 8.0c, OZ Minerals (OZL) 8.0c, Resolute Mining (RSG) 2.0c
  • Economic data – Private Sector Credit
  • Japanese data – Unemployment Rate, Industrial Production, Construction Orders, Housing Starts
  • Chinese data – NBS Manufacturing PMI, Non Manufacturing PMI


  • European data – Inflation Rate, Unemployment Rate
  • US data – Chicago PMI, Univ. of Michigan Consumer Sentiment – final


  • Transurban (TCL) – Consortium (TCL 50%) will acquire 51% of WestCOnnex from the NSW government for $9.3bn. TCL will raise $4.2bn through a 10 for 57 accelerated pro rata renounceable entitlement offer with retail entitlements trading (Entitlement Offer) at $10.80, plus $600m through a placement to certain STP consortium members (Placement). The Offer Price is 10.4% below TCL’s close of $12.06 on 30 August. Distribution guidance of 59.0 cps for FY19 including a franked component of reaffirmed. Trading Halt in relation to a material transaction and pro-rata accelerated entitlement offer.
  • Harvey Norman (HVN) – NPBT down 17.1% to $530.17m. Underlying PBY down 0.96% to $532.54m. Dividend 18c. Company operated sales revenue up 8.8% to $1,993.76m. Franchise sales revenue up 2.6%. Entitlement offer – 1:17 offer at $2.50 to raise
  • Orora (ORA) – Acquisition of Texas based packaging distributor Bronco Packaging Corporation (Bronco) for a total consideration of up to USD$24m
  • Macca (MLD) – Has executed a ‘life of mine’ contract with Carabella Resources Pty Ltd for the provision of mining services at the Bluff Coal project near Blackwater in the Bowen Basin in Queensland
  • Freedom Foods (FNP) – Annual net sales increases 34.5% to $353m, in line with revised guidance (issued July 2018); Operating EBDITA rises 49.5% to $39.2m, operating EBDITA margins increased to 11.1% from 10.0%; Operating net profit increases 96.9% to $19.4m, statutory net profit up 68.7% to $12.7m; Final dividend increased to 2.75c from 2.25c; FY 2019 net sales guidance unchanged at $500-$530m; Full benefit of increased demand and capital expenditure initiatives expected to further grow sales and earnings into FY 2020 and beyond.
  • NEXTDC (NXT) – Revenue of $161.5m (guidance $152-158m, FY17: $123.6 million); Underlying EBITDA1,2 of $62.6m (guidance $58-62m, FY17: $49.0 million); CAPEX $285m (guidance $307-327m FY17: $159m); Statutory NPAT $6.6m (FY17: $23.0m); Operating cash flow of $33.4m (FY17: $44.9m); Cash and term deposits of $418m at 30 June 2018. Contracted utilisation up 28% to 40.2MW (30 June 2017: 31.5MW); Number of customers up 26% to 972 (30 June 2017: 772); Interconnection (cross connects) up 37% to 8,671 (30 June 2016: 6,342)


  • Regis Healthcare (REG) – Normalised profit in line with guidance. “Improvements in earnings from greenfield developments in the later stages of ramp up, income initiatives and strong cost controls were offset by mobilisation costs associated with new Facilities still ramping up, occupancy pressures in the first half of the year and the increased effect of the Federal Government funding cuts to residential aged care. The revenue increase is a result of growth initiatives, including the Presbyterian Care Tasmania acquisition and the new Facilities”. Outlook: FY19 EBITDA is anticipated to be broadly in line with normalised FY18.


  • Reece (REH)


NEXT WEEK – It’s a big week

  • Australia – retail sales Monday, RBA meeting Tuesday, GDP on Wednesday (0.7%/2.7% expected), trade data Thursday, housing finance Friday
  • China – Caixin manufacturing index Monday, Caixin services and composite PMI Wednesday, trade data next weekend
  • Europe – manufacturing PMI Monday, PPI Tuesday, GDP and retail sales Wednesday,
  • US – closed Monday, ISM Tuesday, employment Friday



Building Approvals

Approvals for dwellings fell by 5.2% in July (seasonally adjusted), driven by a 6.6% decrease in units while houses fell 3.0%. This was much weaker than the 2.5% drop expected by economists, although the previous month was revised up from 6.4% to 6.8%.

In trend terms, total dwellings fell 1.3%, with units down 6.6% and houses down 3.0%.

State trends included

  • NSW -2.2% (houses -0.7%)
  • VIC -4.3% (houses -2.4%)
  • QLD -0.3% (houses -0.3%)
  • WA +1.0% (houses 1.1%)



CAPEX fell 2.5% in the June quarter (seasonally adjusted). It was much weaker than the 0.6% increase expected, although the March quarter release was updated to 1.2% (from 0.4%). CAPEX was up 0.4% over the June quarter 2017.

For the quarter, mining fell 7.2%. Building and structures fell 10.2%, while equipment, plant and machinery rose 5.6%.

CAPEX estimates – Much of the focus with CAPEX numbers relates to the forward looking estimates. The final estimate (estimate 7) for 2017-18 CAPEX is $118.927m, up 1% from estimate 6 and is up 4% from the finale estimate for 2016-17. The latest estimate (#3) for the current year is $101.997m. It is up 16.1% that the previous estimate (#2). While the overall numbers are disappointing, this lift is quite substantial and well above the decade average (for a June quarter increase) of 12.4% (from CommSec).





US EQUITIES – S&P500 -13 (-0.44%), Dow Jones -138 (-0.53%), Nasdaq -21 (-0.26%).

Main themes

  • Tariffs – Reports Trump could authorise tariffs on $200bn worth of imports from China next week. (These tariffs were first raised on June 18, but the office of the US Trade Representative Robert Lighthizer has until September 6 to provide comments on the recommendation).
  • Emerging markets concerns re-emerged, with Turkey back in the spotlight

EUROPEAN MARKETS – STOXX500 -0.32%, UK FTSE -0.62%, German DAX -0.54%, French CAC -0.42%.


  • The US dollar was up 0.11% at 94.70.
  • The Aussie dollar is lower at 72.66.

BONDS – 2-yr: -2 bps to 2.65%, 5-yr: -3 bps to 2.76%, 10-yr: -2 bps to 2.86%, 30-yr: -2 bps to 3.01%


  • WTI crude futures closed up 74c or 1.1% at US$70.25 a barrel, the highest close in 6 weeks, on expectations of disruptions to crude supply from Iran and Venezuela and the previous day’s drop in inventories.
  • Iron Ore – IRESS reports iron ore unchanged at US$66.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US20c at US$65.75/dry ton. (CFR Tianjin port)
  • LME metals – Mostly lower. Cu -0.33%, Ni -1.59%, Al -1.84%


  • US economic data – Personal Income 0.3% (consensus 0.4%; prior 0.4%), Personal Spending 0.4% (consensus 0.4%; prior 0.4%), PCE Prices 0.1% (prior 0.1%), July PCE Prices – Core 0.2% (consensus 0.2%; prior 0.1%), weekly Initial Claims 213K (consensus 214K; prior 210K), and Continuing Claims 1708K (prior 1728K)
  • Argentina – The central bank raised interest rates to 60% from 45% to control inflation (currently more than 31%). The current fell a further 15.6% a record low 39 pesos per USD.
  • European data – Business and Consumer Survey 111.6 (expected 111.9; last 112.1); German Import Price Index -0.2% (expected 0.0%; last 0.5%) to be +5.0%yoy (expected 5.2%; last 4.8%). Unemployment Change -8,000 (as expected, last -6,000) and Unemployment Rate 5.2% (as expected, last 5.2%); Spanish CPI +0.2% (as expected, last -0.7%) to be +2.2%yoy (as expected, last 2.2%). August Business Confidence -4.3 (last -2.1)
  • UK Mortgage Approvals 64,770 (expected 65,000; last 65,370) and July Mortgage Lending £3.20bn (expected £3.90bn; last £3.85bn). July Net Lending to Individuals £4.00bn (expected £5.50bn; last £5.40bn)


“When you educate a girl, you kick-start a cycle of success. It makes economic sense. It makes social sense. It makes moral sense. But, it seems, it’s not common sense yet.” – Queen Rania of Jordan. Born this day in 1970. Ditto for girls in positions of leadership.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s