The ASX 200 is down 9 points in mid-morning trade on “mild” leads. Banks and Telstra lead, Materials and h’care lag. Big news day. Qs from BHP. CGF, STO, BXB. API 1H result. DLX takeover and HLO trading update. Chinese data later on. #ausbiz
- Ex-dividend – Washington H. Soul Pat (SOL) 24.0c
- Economic data – Westpac Leading Index
- Japanese data – Industrial Production, Capacity Utilization, Imports/Exports, Balance of Trade
- Chinese – Retail Sales, Industrial Production, Fixed Asset Investment (YTD), GDP Growth Rate, PPI Input/Output
- UK – Inflation Rate
- European data – Current Account, Balance of Trade, Inflation Rate
- US economic data – Housing Starts, Building Permits, Fed’s Beige Book
- US eanrings – BNY Mellon (BK), Ericsson (ERIC), Morgan Stanley (MS), PepsiCo (PEP), U.S. Bancorp (USB), After The Close – Alcoa (AA).
- Fed Speak – St Louis Fed President James Bullard
- BHP Billiton (BHP) – Production guidance for the 2019 financial year remains unchanged for petroleum, copper, metallurgical coal and energy coal. Iron ore production guidance decreased to between 265 and 270 Mt (100% basis), reflecting impacts of Tropical Cyclone Veronica. Copper volumes expected to be in line with last year. Full year unit costs for Petroleum, Escondida and Queensland Coal are expected to be in line with guidance. Unit costs for Western Australia Iron Ore are now expected to be below US$15 per tonne(2), reflecting impacts of Tropical Cyclone Veronica. Unit costs for New South Wales Energy Coal are now expected to be approximately US$51following changes to the mine plan.
- Australian Pharmaceutical Industries (API) – 1H19 results. Total revenue growth +6.6%, excluding Hepatitis C medicine sales and PBS Reforms. EBIT +5.8% to $44.4m; NPAT +0.2% to $25.0m, includes the impact of financing costs associated with the Sigma share purchase. Underlying NPAT in line at $26.8m. Underlying ROE +101 basis points to 10.23% on the pcp. Fully franked interim dividend +7.1% to 3.75cps, representing a payout ratio of 77.0% for the half.
- Brambles (BXB) – 3Q trading update. 3Q revenue up 7% to US$3,409m. Volume growth o f 5% and price realisation of 2%. CHEP Americas sales revenue up 6% driven by strong price realisation and ongoing expansion with new and existing customers in the US, Canadian and Latin American pallet businesses; CHEP EMEA sales revenue up 8% driven by net new business wins and price realisation across the region. Like-forlike volume growth was modest in the European pallet and automotive businesses; and CHEP Asia-Pacific sales revenue up 4% driven by solid like-for-like volume growth and price realisation in the Australian pallets business. FY19 expectations remain unchanged. Brambles continues to expect FY19 constant-currency Underlying Profit growth to show modest improvement over the prior year, with increased price realisation and the delivery of cost efficiencies largely offset by ongoing global input-cost inflation.
- Helloworld (HLO) – Trading Update. TTV up 8.8% to $4.71bn, revenues up 8.0% to $260.5m at a gross margin of 5.5%, Australian segment TTV up 10.3% including an 11.0% growth in retail, while the New Zealand segment grew 2.4% and the Rest of the World segment declined 8.3% but off a relatively small base. Operating expenses +6.3%, resulting in EBITDA +14.7% to $54.9m. The EBITDA to revenue margin was 21.1%, up on the previous years’ margin of 19.8% over the same comparative period. Based on performance for the period to the end of March and forecast TTV, margin and cost outcomes for the remaining quarter, reconfirms previously released full year EBITDA guidance for FY19 of $76-$80m.
- Dulux Group (DLX) – Recommends acquisition proposal from Nippon Paint holdings for $9.80 a share. 16.1x FY18 EV / EBITDA implied acquisition multiple and a 35.4% premium to the 3-month VWAP of DuluxGroup shares. Also 27.8% premium to previous price. No expected changes to DuluxGroup leadership, business portfolio, manufacturing and operations. Nippon has essentially no ANZ operations; Increased opportunity for DuluxGroup to pursue its growth ambitions, leveraging Nippon’s global scale and resources.
- Challenger (CGF) – 3Q performance. Total assets under management $81 billion, up 4%; Funds Management FUM, up 4%; Total annuity sales $662 million, down 13%; Australian annuity sales, down 7%; Japanese annuity sales, down 49%; Total Life net book growth -1.2%; Progressing MS&AD strategic relationship expansion
- Spark Infrastructure (SPK) – Has acquired Bomen solar farm in Wagga Wagga, NSW.
- Santos (STO) – Record quarterly production. Up 33%, primarily due to sustained strong asset performance and the acquisition of Quadrant Energy. Production in the quarter was impacted by cyclone activity in Western Australia and by facility outages in the Cooper Basin. Sales volumes of 22.8 mmboe were 21% higher than the corresponding quarter. Sales revenue was up 28% to $1,015 million, the second highest quarterly revenue on record.
- Rio Tinto (RIO) – Joanne Farrell will retire. She was most recently Manager, Australia.
- Evolution Mining (EVN) – Quarterly report.
- Orocobre (ORE) – Quarterly report.
- Nib Holdings (NHF) – Presentation to JP Morgan Emerging Companies forum
- Atlas Arteria (ALX) – AGM
SPI FUTURES -17
US EQUITIES – S&P 500 +1 (+0.05%), Dow +68 (+0.21%), NASDAQ +24 (+0.30%)
Main themes –
- Johnson & Johnson (+1.10%), UnitedHealth (-4.01%), and Bank of America (+0.13%) beat earnings estimates;
- Netflix performed well prior to result (+3.04% but -0.96% in after-hours trade) and was upgraded by Deutsche Bank to Buy from Hold. Results from IBM (-2.85%)
- Health Care sector underperforms, semiconductor and financial stocks outperform
EUROPEAN MARKETS – All higher. STOXX600 +0.29%, UK FTSE +0.44%, German DAX +0.67%, French CAC +0.36%.
- The USD is a bit stronger at 97.05
- The Aussie dollar is also little changed at US71.74.
BONDS – 2-yr: UNCH at 2.39%, 3-yr: +3 bps to 2.38%, 5-yr: +3 bps to 2.40%, 10-yr: +4 bps to 2.59%, 30-yr: +3 bps to 3.00%
- Oil – WTI futures closed up 65c or 1.0% at US$64.0.
- Gold – Futures closed down over 1% at US$1,277.30
- Iron Ore – IRESS reports that iron ore was up US50c at US$96.00. CommSec reports iron ore was down US$1.50 or 1.6% at U$94.30
- LME metals – Mostly weaker. Copper +0.02%, nickel -0.35%, aluminium -0.48%
ECONOMIC DATA, NEWS & POLITICS
- US economic data – Industrial Production -0.1% (consensus 0.2%; prior 0.1%) and Capacity Utilization 78.8% (consensus 79.1%; prior 79.0%); April NAHB Housing Market Index 63 (consensus 63; prior 62)
- Japanese trade talks – Economy Minister Toshimitsu Motegi described the first day of trade talks with the US was “frank and good,” adding that the bulk of the meeting was focused on the trade of goods. Mr Motegi opposed including an agreement on currencies in any potential trade deal.
- European growth concerns – Reuters reported that a “significant minority” of ECB policymakers expressed doubt about the likelihood of a rebound in economic activity during the second half of the year.
- European data – April ZEW Economic Sentiment 4.5 (expected 1.2, previous -2.5), German April ZEW Economic Sentiment 3.1 (expected 0.8, previous -3.6). ZEW Current Conditions 5.5 (expected 8.0, previous 11.1).