The ASX200 is down 15 points in mid-morning trade after uneventful US session. Materials best with BHP and RIO ↑ but Cons sectors ↓ and AREITS worst. Banks mixed. PMV, SOL and BKW results RBA Bulletin later today #ausbiz


  • Ex-dividend – Automotive Holdings Group (AHG) 6.8c, Cellnet Group (CLT) 1.3c, Crown Resorts (CWN) 30.0c, Environmental Group (EGL) 0.1c, Keybridge Capital (KBC) 0.5c, Pengana International Equities (PIA) 3.5c, Pinnacle Investment Management Group (PNI) 7.0c, Peet (PPC) 3.0c, QMS Media (QMS) 1.2c, Sealink Travel Group (SLK) 8.0c, Spark New Zealand (SPK)11.0c, Xenith IP Group (XIP) 4.5c
  • Economic data – Westpac Leading Index
  • RBA Bulletin


  • UK Retail Sales
  • European – Consumer Confidence
  • US economic data – Philadelphia Fed, Existing Home Sales, Leading Indicators


  • Premier Investments (PMV) – Underlying EBIT up 10.3% to $150.1m. Total sales up 8.2% on FY17 to a record $1.18 billion; 2H18 sales up 9.5%; Like-for-like (LFL) sales up 3.3% on constant currency basis; 2H18 LFL sales up 4.2% with improving momentum in Q4-18 with LFL up 6.8%; Online sales of $112.5 million up 65.3% on FY17; 2020 Online sales target of $100 million delivered two years ahead of original plan; Smiggle’s global sales up 22.7% on FY17 sales and up 58% over two years; Peter Alexander’s sales up 14.5% on FY17 and up 31% over two years; Apparel brands delivered strong sales growth momentum with 2H18 sales up 5.5% and improving momentum in Q4-18 with total sales up 8.1%. KEY STRATEGIC INITIATIVES DRIVING FUTURE GROWTH Smiggle today announces a major strategic accelerated global growth plan with the aim to both deliver the targeted $450 million in global Smiggle retail sales by FY20 and set up pathways for major growth beyond FY20. The plan involves expanding Smiggle’s global reach through four major channels; Peter Alexander’s 2020 growth plan is progressing well ahead of expectations with annual sales expected to exceed $250 million by FY20; Premier Retail will continue investment in: Online technology, people and marketing initiatives to deliver a world class platform, New stores, upgrades and refurbishments, People and processes to deliver better products across all seven brands; Premier Retail global sales for the first five weeks of FY19 were up 10.2% with an improved gross margin on pcp. Pleasingly this includes Smiggle sales in the UK and Republic of Ireland that were up 29% during the first five weeks, which represent the key “back to school” sales period in these markets


  • Brickworks (BWK) – Outlook “Market fundamentals remain supportive for new housing construction, with employment levels healthy, low interest rates and high immigration levels projected to be sustained. External analysis indicates that a housing undersupply still exists in New South Wales and Victoria.”Also noted that tighter bank lending controls have reduced personal borrowing capacity, and this is now impacting building activity, due to delays and cancellations of dwelling construction.


  • Soul Pattinson (SOL) – Performance attributable to New Hope Corporation Limited, up 74.7%, Apex Healthcare, up 33.6%, Financial Services Portfolio, up 19.3%, Brickworks Limited, up 8.0%


  • Sydney Airport (SYD) – Growth came from Indonesia (+16.5%), Japan (+11.6%) and India (+11.3%) recorded notably strong growth, with those from South Korea (+10.7%) also contributing to the overall performance. Overall international passenger growth was predominantly driven by the delivery of additional seat capacit


  • Scottish Pacific (SCO) – Trading halt pending a material announcement by the Company regarding a possible control transaction involving the Company


  • Boral (BLD $6.90) – US site visit
    • Morgan Stanley has an Overweight recommendation with a target price of $8.00. The operational tour is providing confidence that increased fly ash volumes can be generated while maintaining attractive margins. The analyst sees improved conditions for the remainder of the US business and this should deliver growth along with synergies. The Australian business is also poised to benefit from strong construction markets.
    • UBS has a Neutral recommendation with a target price of $7.00. The analyst notes that there has never been this level of consolidation in the US fly ash industry and this is one of the arguments why storage & distribution is now a worthwhile investment. This should provide consistency of supply and lead to better penetration rates. The BLD pitch centres on offering a full suite of services backed by technology and marketing that is unrivalled by peers.


  • Estia Health (EHE $2.38) – Morgan Stanley has an Equal-weight recommendation with a target price of $2.63 (from $3.45). The analyst notes the RC makes the outlook unclear. Potential points for examination include over-estimating patient acuity to obtain higher aged care funding, appropriate registered nurse ratios and appropriate hours of care per day. They suspect Estia Health may gravitate towards a new bear case scenario and, at a minimum, a rise in compliance costs can be expected


  • Healthscope (HSO $2.06) – Credit Suisse has a Neutral recommendation with a target price of $2.08 (from $2.15). The analyst notes that HSO is pursuing a sale and lease-back of its property assets to an unlisted property trust, of which it will own 51%. Despite the company maintaining a majority ownership through the trust, Credit Suisse notes this may trigger capital gains tax. They think it provides an opportunity for the co-investor to include significant rent increases. Upside is considered muted by potential capital gains and stamp duty and they think a share buyback with the proceeds would be more accretive than repaying debt.


  • Incitec Pivot (IPL $3.95) – Credit Suisse has a Neutral recommendation with a target price of $4.02. The analyst notes there is press speculation about private equity expressing an interest in the company’s fertiliser assets. They question mentions of valuations of $1bn, given they value it at $2bn. Any divestment thesis hinges on the fact that fertiliser assets would likely be of more value to a global fertiliser manufacturing business that could maximise supply channels.





US EQUITIES – S&P500 +4 (+0.13%), Dow Jones +159 (+0.61%), Nasdaq -6 (-0.08%).

Main themes

  • Technology stocks underperformed
  • US 10 year yield at a 4month high

EUROPEAN MARKETS – All higher. STOXX500 +0.33%, UK FTSE +0.42% German DAX +0.50%, French CAC +0.56%.


  • The US dollar eased 0.1% to 94.55.
  • The Aussie dollar is higher at 72.62c.

BONDS – 2-yr: +2 bps to 2.81%, 5-yr: +2 bps to 2.96%, 10-yr: +3 bps to 3.08%, 30-yr: +4 bps to 3.24%


  • WTI crude futures closed up US$1.27 or 1.8% to US$71.12. US inventories fell for the 5th consecutive week, down 2.1mb.
  • Iron Ore – IRESS reports iron ore was unchanged at US$68.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was unchanged at US$69.80/dry ton. (CFR Tianjin port)
  • LME metals – MIxed. Cu +0.58%, Ni +0.89%, Al -0.44%.


  • US economic data – Housing Starts +9.2% to 1282K (consensus 1229K; prior 1174K), Building Permits -5.7% 1229K (consensus 1310K; prior 1303K), and Q2 Current Account Balance -$101.50bn (consensus -$103.30bn; prior -$124.10bn);  Weekly MBA Mortgage Index 1.6% (prior -1.8%)
  • Canadian trade talks – Resumed but Bloomberg reported that a deal this week is unlikely.
  • European data – July Current Account surplus €21.30bn (last surplus of €23.80bn)
  • Brexit – Initial reports that the EU is ready to improve its offer regarding Ireland/Northern Ireland border, but The Times reported that the offer will be rejected by Prime Minister May
  • UK data – August CPI +0.7% (expected 0.5%; last 0.0%) to be +2.7%yoy (expected 2.4%; last 2.5%). August Core CPI +2.1%yoy (expected 1.8%; last 1.9%). August Input PPI +0.5% (expected 0.4%; last 0.5%) and Output PPI +0.2% (as expected, last 0.0%); House Price Index +3.1%yoy (expected 2.9%; last 3.2%)
  • Bank of Japan meeting – The key policy rate was left unchanged at -0.1% in a 7-2 vote
  • Trade War – Chinese Premier Li Keqiang told World Economic Forum that China has policy tools to deal with risks and challenges and that China isn’t going to purposely devalue the yuan in a bid to boost exports
  • North Korea – Has agreed to further steps towards denuclearisation after meetings with south Korea.


“The two big advantages I had at birth were to have been born wise and to have been born in poverty.” – Sophia Loren, Italian actress born this day in 1934


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