The ASX200 is down 25 points in mid-morning trade with US tariffs the focus. Telcos lead and aged care stocks recovering. Healthcare, consumer and materials weaker. TPM and KMD result. ABS House prices and RBA meeting minutes today. #ausbiz


  • Ex-dividend – Absolute Equity Performance Fund (AEG) 2.5c, Embelton (EMB) 30.0c, IVE Group (IGL) 7.5c, Qube Holdings (QUB) 4.8c, Zenitas Healthcare (ZNT) 1.5c
  • TPG Telecom (TPM) – FY Results
  • RBA Meeting Minutes
  • Economic data – House Price Index


  • US economic data – NAHB Housing Market Index, Net Long-Term TIC Flows


  • TPG Telecom (TPM) – Modest underlying EBITDA increase in FY18 despite the significant headwinds that were experienced during the year from the migration of DSL customers to lower margin NBN services, loss of gross profit from home phone services as customers migrate to NBN bundled services and electricity price increases. The main contributors to this growth came from the Corporate Segment, TPG FTTB (‘fibre to the building’) services, and cost savings from the ongoing integration of iiNet.


  • Kathmandu (KMD)


  • CIMIC (CIM) – Consortium has won a NZ$750 contract to deliver the Waikeria Corrections and Treatment Facility Public Private Partnership (PPP) project.
  • Capitol Health (CAJ) – Has acquired 6 clinics in Perth & 3 clinics in Melbourne from 4 independent vendors. The network represents strategic geographic expansion into attractive Perth market
  • Reliance Worldwide (RWC) – Investor presentation.


  • Ardent Leisure (AAD $1.76) – JP Morgan has a Lighten recommendation with a target price of $1.65. The analyst notes that Main Event competitor Dave & Buster’s, has raised FY18 guidance for like-for-like sales to decline (was 3.5% decline previously). The analyst thinks there is some risk to Ardent Leisure earnings and struggles with the valuation at current levels. The AGM is scheduled for November 20.


  • Flight Centre (FLT $55.55) – Deutsche Bank has a Hold recommendation with a target price of $56. The analyst points to international travel volumes which grew strongly, with returns up 5.9% and consistent with the growth in June. They note the ABS has shifted focus to resident arrivals from resident departures yet provided some data on departures, where volumes increased by 4.4%.


  • Premier Investments (PMV $19.59) – UBS has downgraded to a Neutral (form Buy) recommendation with a target price of $20.30 (form $17.30). The analyst thinks the data from Australian shopping habits and brand positions across the fashion sector is broadly supportive of Premier Investments in terms of brand awareness and online strength, particularly at Peter Alexander. They suspect some weakness in fashion expenditure early in 2018 but note recent data from the ABS indicates trends have improved since April. While they expect a solid FY18 result on September 20, they have downgraded on valuation grounds.


  • Reliance Worldwide (RWC $5.47) – JP Morgan has an Accumulate recommendation with a target price of $6.20. UK site visit. The analyst notes John Guest has impressive manufacturing capabilities and the integration is well underway, with an early October deadline for merging product offerings. They note the majority of the company’s European sales team has moved across to John Guest.


  • Sydney Airport (SYD $7.25) – Macquarie has downgraded to an Underperform recommendation with a target price of $7.13 (from $7.05). The analyst notes that the Productivity Commission review in the next nine months resets the focus to the threat around regulatory intervention. Submissions are taking a similar approach to previous reviews, with the airports supporting the current regime and airlines arguing for a more credible threat of “final offer” arbitration. The Macquarie analyst doubts that regulatory intervention would make an impact on end-users versus lifting airline profitability. They take a conservative approach, suggesting the pace of dividend growth will likely need to slow to ensure a smooth path for re-pricing and a shift to tax being paid.


  • Transurban (TCL $11.34) – UBS has a Buy recommendation with a target price of $13.30 (from $13.35). The analyst has adjusted forecasts to allow for the $4.8bn equity raising and $4.4bn WestConnex acquisition. This results in dilution of around 20% until WestConnex generates meaningful cash flow distribution from 2024. Dividend forecasts have been modelled to grow 6% per annum over the next 10 years and they expect WestConnex to generate $1.7bn in operating earnings by 2028 which will account for 10% of the group’s earnings.


  • Macquarie on the Resources sector – The Macquarie team believes the earnings upgrade cycle for the diversified major miners has resumed after a brief lull. There are some downside risks for most base and precious metals but core commodities are all trading well above forecasts for both the short and medium-term.
    • BHP Billiton (BHP $31.61. Outperform recommendation with a target price of $40.00


  • Rio Tinto (RIO $73.01) – Outperform recommendation with a target price of $91. The analyst prefers BHP Billiton (BHP) because of its earnings upside at spot prices, larger cash returns and a more diverse asset portfolio as well as options for organic growth.


  • South32 (S32 $3.81) – Outperform recommendation with a target price of $4.00. The analyst thinks S32 continues to offer the largest upside at spot prices driven mainly by alumina and manganese and they are positive despite the 15% rise in the share price recently.





US EQUITIES – S&P500 -16 (-0.56%), Dow Jones -93 (-0.35%), Nasdaq -114 (-1.43%).

Main themes

  • Announcement on Chinese tariffs was made after the bell. Initially 10% on $200m, rising to 25% at the end of the year. If China retaliates, against famers or other industries, phase 3 will be tariffs on another $267b of imports.

EUROPEAN MARKETS – Mixed. STOXX500 +0.12%, UK FTSE -0.03%, German DAX -0.23%, French CAC -0.07%.


  • The US dollar fell 0.5% to 94.49.
  • The Aussie dollar is 0.5% higher at 71.90c.

BONDS – 2-yr: UNCH at 2.78%, 5-yr: UNCH at 2.90%, 10-yr: +1 bp to 3.00%, 30-yr: +1 bp to 3.14%


  • WTI crude futures closed down US35c to US$68.64.Major influences were concerns about the impact of tariffs on Chinese/global demand, while support came from the expected tightening of supply from Iran sanctions.
  • Iron Ore – IRESS reports iron ore was unchanged at US$68.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was down 10c at US$69.50/dry ton. (CFR Tianjin port)
  • LME metals – Mostly lower. Cu -0.47%, Ni -3.28%, Al -0.54%.


  • September Empire Manufacturing (actual 19.0; Briefing.com consensus 23.0; prior 25.6)
  • Tech stocks moved on company specific analyst news – Twitter (analyst said cost growth should accelerate), Microsoft (analysts cut target prices due to weaker prices for memory chips), and Amazon (analyst suggested corporate split to avoid anti-trust scrutiny).
  • European data – CPI +0.2% (as expected, last -0.3%) to be +2.0%yoy (as expected, last 2.0%). Core CPI +0.2% (as expected, last -0.3%) to be +1.0%yoy (as expected, last 1.0%)


“I still have a fear about going broke. I always think about it.” –  Gerry Harvey, Australian businessman born this day in 1939


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