MID MORNING MARKETS 16-08-19

The ASX 200 is up 11 in mid morning trade after a mixed night. COH helps H’care, banks ok, materials ↓ & Telcos dragged down by OML downdate, TLS property deal, results from COH, DHG, HLS, CAT milestone, CCP acquisition #ausbiz

m1m2m3TODAY

  • Earnings – Baby Bunting (BBN), Domain Holdings (DHG), Cochlear (COH), Healius (HLS), Newcrest Mining (NCM), Charter Hall (CQR), Star Entertainment (SGR)
  • Ex-dividend – Ansell (ANN) 38.2c, Magellan Financial Group (MFG) 111.4c

TONIGHT

  • US economic data – Housing Starts, Building Permits, Univ. of Michigan Consumer Sentiment – Prelim

COMPANY NEWS

  • Credit Corp (CCP) – Acquisition
  • Cimic (CIM) – Has won the $424mm Campbelltown Hospital Redevelopment Project
  • Charter Hall Long WALE REIT (CLW) – Trading Halt regarding a significant transaction, involving material acquisitions partly funded by an underwritten accelerated non-renounceable entitlement offer of CLW stapled securities on a pro rata basis to existing securityholders of CLW and an underwritten institutional placement. See announcement below?
  • Domain Group (DHG) – Revenue of $335.6 million down 6.1%, EBITDA of $98.0 million down 15.3%, EBIT of $65.9 million down 26.4%, Net profit after tax of $37.4 million down 29.3%, Earnings per share of 6.43¢ down 29.9%. Proprietary datasets have also shown some encouraging signs of buyer activity in the first weeks of FY20, including increased attendance at open for inspections and increased home loan application volumes. However, listings volumes remained weak in a seasonally low listings period, with national market new listings declining ~20% in July 2019, with Sydney and Melbourne new listings down 26% and 27% respectively. For FY20 Domain will remain disciplined in managing its cost base to take account of the trading environment, while continuing to invest in growth initiatives.
  • Ooh! Media (OML) – Revised guidance. Now expects to report revenue of $304.8m in the half, up 5%. Underlying EBITDA2 of $56.0 million, down 2% on a pro forma basis for the half year. Gross margin has been impacted by product mix. Now expects FY EBITDA of $125-$135m (Previous FY EBITDA guidance was $152-$162m). Integration of Commute remains on track with an expected run-rate of $16 million in cost synergies for FY19 with further synergies expected in 2020. Growth in operational expenditure in FY19 is expected to be below the previously forecast range 5-7 per cent while capital expenditure is expected to be in the middle of the $55-70 million forecast range.
  • Telstra (TLS) – Establishment and part sale of an unlisted property trust which will own 37 of Telstra’s existing exchange properties. A Charter Hall-led consortium will acquire a 49% stake in the new trust for $700m, reflecting a capitalisation rate of 4.4% and valuing the entire property trust at $1.43bn.
  • Cochlear (COH) – Reported sales revenue up 7% (2% in constant currency1) to $1,446.1m, with Services revenue up 20% and Cochlear implant revenue up 2%; Cochlear implant units down 3% to 34,083, with developed markets in line with FY18 while emerging market volumes declined; Reported net profit of $276.7m, up 13% (up 11% in CC) includes $10.8m in noncash net gains from the revaluation of innovation fund investments; Underlying net profit of $265.9m, which excludes the revaluation, up 7% (up 6% in CC); Strong cash flow generation supports the 10% increase in full year dividends; FY20 net profit guidance of $290-300 million, a 9-13% increase on underlying net profit for FY19.
  • Catapult (CAT) – Major Milestone. Catapult has now signed over 1,000 teams in North America, with substantial scope to continue growing both teams and revenue per team; 11 of its top 15 clients globally are in North America, including 29 of the 32 NFL teams, and all 31 National Hockey League (NHL) teams; 584 NCAA college teams covering 372 Universities now use Catapult.

OVERNIGHT

m10m11

SPI FUTURES -23

US EQUITIES – S&P500 +7 (+0.25%), Dow Jones +100 (+0.39%), NASDAQ -7 (-0.09%)

Main themes

  • 30-yr yield hit another record low
  • Trade tension – China vowed to retaliate for the latest round of tariffs
  • Walmart (+6.11%) provided upbeat earnings results and guidance and July retail sales rose above expectations

EUROPEAN MARKETS – All higher. STOXX600 -0.29%, UK FTSE -1.13%, German DAX -0.70%, French CAC -0.27%.

CURRENCIES

  • The USD is stronger at 98.16.
  • The Aussie dollar is higher at US67.76.

BONDS – 2-yr: -9 bps to 1.49%, 3-yr: -7 bps to 1.45%, 5-yr: -7 bps to 1.42%, 10-yr: -5 bps to 1.53%, 30-yr: -5 bps to 1.98%

COMMODITIES

  • Oil – WTI futures were down 1.4% to US$54.47.
  • Gold futures rose 0.50% to US$1,535.4.
  • Iron Ore – CommSec has iron ore down US$1.55 or 1.7% to US$88.80 a tonne.
  • LME metals – Stronger. Cu -0.29%, Ni +2.36%, Al -0.06%.

ECONOMIC DATA, NEWS & POLITICS

  • US economic data – July Retail Sales 0.7% (consensus 0.3%; prior 0.3%), July Retail Sales ex-auto 1.0% (consensus 0.3%; prior 0.3%), July Industrial Production  -0.2% (consensus 0.1%; prior 0.2%) and July Capacity Utilization 77.5% (consensus 77.8%; prior 77.8%); Weekly Initial Claims 220,000 (consensus 215,000; prior 211,000), Continuing Claims 1.726m (prior 1.687m), August Empire State Manufacturing 4.8 (consensus 1.1; prior 4.3), August Philadelphia Fed Index 16.8 (consensus 10.0; prior 21.8), Preliminary Q2 Productivity 2.3% (consensus 1.3%; prior 3.5%), and Preliminary Q2 Unit Labor Costs 2.4% (consensus 1.6%; prior 5.5%); June Business Inventories 0.0% (consensus 0.1%; prior 0.3%) and August NAHB Housing Market Index 66 (prior 64).
  • Hong Kong protests – Reports that adviser said that protest in Hong Kong do not warrant direct intervention yet due to a high risk of damaging international relations
  • Japanese data – June Industrial Production -3.3% (expected -3.6%; last -3.6%) and Capacity Utilization -2.6% (expected 0.2%; last 1.7%)
  • Australian employment data was better than expected.

m12

  • UK data – July Retail Sales increased +0.2% (expected -0.2%; last 0.9%) to be +3.3%yoy (expected 2.6%; last 3.8%). July Core Retail Sales +0.2% (expected -0.2%; last 0.8%) to be +2.9%yoy (expected 2.3%; last 3.6%).

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