MID MORNING MARKETS 04-09-18

The ASX200 is down 16 points in mid-morning trade after no US leads. SUN life sale and $600m return, KGN director sales, NUF Brazil sales allowed. Telcos leads, IT and banks weaker. Ex-div BLD 14c, OSH 2.7c. RBA today, US ISM tonight #ausbiz

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TODAY

  • Ex-dividend – Bega Cheese (BGA) 5.5c. Boral (BLD) 14.0c. Hansen Technologies (HSN) 4.0c. Nine Entertainment Co. Holdings (NEC) 5.0c, National Veterinary Care (NVL) 3.0c, Objective Corp (OCL) 5.0c, Oil Search (OSH) 2.7c, Probiotec (PBP) 2.0c, Propel Funeral (PFP) 6.4c, QANTM Intellectual Property (QIP) 4.3c, St Barbara (SBM) 8.0c, Scottish Pacific Group (SCO) 10.0c, Spark Infrastructure (SKI) 8.0c, Whitehaven Coal (WHC) 27.0c
  • RBA meeting and Interest Rate Decision
  • Economic data – Current Account

TONIGHT

  • UK – Construction PMI
  • European data – PPI
  • US economic data – ISM Index, Construction Spending

COMPANY NEWS

  • Suncorp (SUN) – Will sell its Australian life insurance business to TAL Dai-ichi Life Australia Pty Ltd under the Share Sale Deed for approximately $725m, which includes the purchase consideration and adjusted net worth and includes a 20-year distribution agreement where Suncorp will continue to earn income on the distribution of life insurance. Expected to return approximately $600m to shareholders following the completion of the Transaction
  • Bubs Australia (BUB) – Mr Nicholas Simms is stepping down as CEO and Founder and Managing Director Kristy Carr is stepping into the role.
  • Capitol Health (CAJ) – Has extended its on-market share buy-back for a further 12 months.
  • Orocobre (ORE) – Trading Halt pending an announcement concerning media reports from Argentina that have flagged the potential imposition of export taxes.
  • Nufarm (NUF) – The Brazilian court has now overturned an earlier ruling that had suspended the sale of products containing glyphosate in Brazil, enabling Nufarm to continue to sell glyphosate for use in the Brazilian soybean planting season. The Brazilian Health Agency, ANVISA, will continue with the current regulatory review of glyphosate.
  • Codan (CDA) – Investor presentation
  • Kogan (KGN) – Mr Ruslan Kogan and Mr David Shafer have sold 6.25m shares worth $40m. Completes intention and advised they have no intention to sell any securities prior to the release of the 1HFY19 financial results

ANALYST CHANGES

  • CSL ($227.31)- UBS has a Neutral recommendation with a target price of $230 (form $220). The analyst has looked at competitor results in the June quarter and estimates that CSL’s Idelvion captured 25% of the recombinant FIX market. Afstyla is at around 2% of the FVIII market. They have revised forecasts for both Idelvion and Afstyla higher, based on an assumed increase in market share through FY19. With an estimated margin of 35%, they forecasts FY19 operating earnings from these two products of US$200m, up 22%.

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  • Incitec Pivot (IPL $3.92) – Macquarie has an Outperform recommendation with a target price of $4.16 (from $3.95).

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  • Medibank Private (MPL $3.04) – Macqaurie has a Neutral recommendation with a target price of $3.15 (from $2.95.).

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  • TechnologyOne (TNE $5.55) – Bell Potter has raised its target price by 13% to $6.50. The analyst thinks the potential for a limit on health insurance pricing creates significant margin risks for the industry and that this isn’t completely priced in. FY19 earnings estimates are upgraded by 0.2% and FY20 downgraded by 0.3%. While valuations are supporting, they are neutral on the sector. Shares have had a great rally and have broken out of the medium term downtrend and out of the upper Bollinger Band…they are approaching overbought territory on the RSI (the red line) but I suspect with the positive momentum in the tech sector they could stay this way for a bit longer

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  • REA Group (REA $91.13) – Morgans has an Add recommendation with a target price of $95.21 (from $95.41). REA’s US affiliate, Move (controlled by NWS), will acquire Opcity, a sales lead qualification company servicing real estate agents and brokers across the US. The analyst has made some minor changes to forecasts and think there is valuation upside if the US strategy proves successful. The MACD indicator (the blue bars) is about to give a medium term Buy signal)

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OVERNIGHT

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SPI FUTURES -3

US Market closed

Main themes

  • Trading in European markets was muted due to the US labour day holiday.
  • Concerns centred on the escalating trade tensions, with US/Canadian talks concluding Friida with no agreement.

EUROPEAN MARKETS – Small moves in a quiet session. STOXX500 +0.07%, UK FTSE +0.97%, German DAX -0.14%, French CAC +0.13%.

CURRENCIES

  • The US dollar was flat at 95.14.
  • The Aussie dollar is stronger at 72.13 after hitting a low of US74.66c.

COMMODITIES

  • WTI crude futures closed unchanged at US$69.80 and Brent was up US20c at US$77.84. OPEC production rose 220kbpd in August, boosted by a recover in Libyan production and with Iraq exports hitting a record.
  • Iron Ore – IRESS reports iron ore was up US 50c at US$67.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US5c at US$66.20/dry ton. (CFR Tianjin port)
  • LME metals – Mostly lower. Cu -0.13%, Ni -0.06%, Al -1.32%.

QUOTE OF THE DAY

“Make yourself an example, achieve it, but don’t hurt anyone on the way up. I don’t think I did that.” – Dawn Fraser, Australian athlete born this day in 1937.

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