RunningMoney

The ASX 200 is up 13 points in mid morning trade, despite strong o/n leads. Short-lived enthusiasm for Trump’s Chinese whispers. Results include best NAN, RWC, CCX, HUB, worst ING. NBL, WES mixed

TODAY

• RBA – Speech by Guy Debelle, Deputy Governor – A Balance of Payments – at the Economic Society of Australia (ACT) Lunch Address, Canberra at 12:50pm
• Earnings – Wesfarmers (WES), Inghams (ING), Caltex (CTX)
• Ex-dividend – Ashley Services Group (ASH) 2.7c, Blackmores (BKL) 70.0c, Coca-Cola Amatil (CCL) 25.0c, Domino’s Pizza Enterprises (DMP) 52.8c, Fiducian Group (FID) 11.3c, NIB Holdings (NHF) 13.0c, Platinum Asset Mgmt (PTM) 14.0c, Reckon (RKN) 3.0c, Santos (STO) 8.6c, WorleyParsons (WOR) 15.0c
• Chinese data – Industrial Profits (YTD) YoY

TONIGHT

• UK data – UK Finance Mortgage Approvals
• US data – S&P/Case-Shiller Home Price, CB Consumer Confidence

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COMPANY NEWS

• Reliance Worldwide (RWC) – Results in line with guidance provided in May 2019. Reported NPAT up 102% to $133, reflecting first full year contribution from John Guest and continued growth in the Americas; Adjusted NPAT +80%to $152m (including synergies but before John Guest integration costs and other John Guest related adjustments); Successful integration of John Guest with expected first year earnings and synergy benefits $14.2m achieved; Strong earnings accretion with Adjusted EPS growth of 23% following John Guest acquisition; Dividend of 5c ff to give 9c for FY. Outlook – expects NPAT for FY2020 $150-$165m. Depends of external factors including the extent of Brexit disruption in the UK, economic and construction market conditions in other key markets, raw material costs and foreign currency impacts
• Wesfarmers (WES) – Results from continuing operations (excludes the impact from coles). NPAT +13.5% to $1,940m on revenue +4.3% to $27.92bn. Dividend of 78c, brining FY div to $1.78 and $2.78 including special dividend. Bunnings – EBIT +8.1% on revenue +5.0%, Kmart – EBIT -13.7% on revenue +1.1%, Officeworks – EBIT +7.1% on revenue +8.0%, Industrial – EBIT +4.4% on revenue +7.0%, Chemicals, Energy and Fertiliser – EBIT +14.2% on revenue +13.8%, industrial and safety – EBIT -27.1% on revenue +0.1%. Outlook – . The short-term outlook for WesCEF is generally positive, but earnings beyond this are expected to be adversely affected by an oversupply of explosive grade ammonium nitrate (EGAN) in the Western Australian market…The retail divisions are well-positioned within their respective markets and will continue to invest in their offer to customer
• Inghams (ING) – Core Poultry volumes +4.3% to 414.9kt, underlying Gross Profit +3% to $480.2m, EBITDA +14.2% to $242.2m, Underlying EBITDA +2.9% to $208.6m, NPAT +10.1% to $126.2m, Net Cash provided by operating activities excluding interest and tax of $221.5m, 112.7% of EBITDA excluding non-cash items; Net Debt of $263.8m, underlying leverage ratio of 1.3x; Final Dividend (fully franked) of 10.5c. Outlook – Demand strong (chicken affordable healthy protein), current feed costs remain close to historic highs, with outlook for pricing into 2H FY2020 dependent upon the next domestic grain harvest; margins negatively affected by higher input costs and channel mix. “Further Processing network rationalisation project has not delivered to plan. Stronger customer demand has impacted operations and resulted in higher costs. The financial impact will be significant in FY2020.” EBITDA in FY2020 will be below underlying FY2019, with a return to growth expected in FY2021.
• Nanosonics (NAN) – Record full year sales of $84.3 million, up 39%; Continued strong global installed base growth, up 18% to 20,930 units; Capital sales +29% to $32.8m; Sales +47% to $51.5m associated with consumables and service; Operating profit before tax +201T to $16.8m; Cash and cash equivalents up to $72.2 million, providing strong foundation for accelerated investment in growth; trophon® 2 successfully launched in North America, Europe and Australia during the year; Broadened geographical footprint through expanded distribution agreement with GE Healthcare to include Norway, Denmark, Finland, Spain and Portugal as well as new distributor agreements in Switzerland and Israel; Japanese market development ongoing with establishment of a wholly owned Nanosonics entity, regulatory approval of trophon2 and distribution agreement signed with GE Healthcare Japan; Substantial investment made in new product development. Important milestones met towards the introduction of the next significant new product targeted for end of FY20, subject to regulatory approval.  Further investments in business capability and capacity with the addition of four new executives to the Nanosonics leadership team in regional leadership, strategy, operations and marketing to drive the next phase of Nanosonics’ growth.
• HUB24 (HUB) – Underlying NPAT of $6.8m (up 27% on FY18), Underlying EBITDA of $14.8m (up 30% on FY18) and Underlying Platform EBITDA of $18.0m (up 52% on FY18). FUA +54% to $12.9bn ($13.6bn as at 23 August 2019); Platform Revenue +36% to $54.1m; Underlying Platform EBITDA of $18.0 million up 52%; Maintained position as the fastest growing platform provider in percentage terms; Second half dividend of 2.6cps (full year dividends of 4.6cps up 31%. Outlook – Now targeting a FUA range of $22-$26 billion by the end of FY213. This is a $3 billion uplift on our previous FY21 target FUA range.
• Caltex (CTX) – 1H 2019 result inline with guidance but weak market conditions in refining and retail have delivered a disappointing 1H result, Caltex is taking action

• Speedcast (SDA) – 1H results. Group revenue up 17.3% to $357.6m; Statutory NPAT loss of $175.5m included a small positive impact due to AASB 16 and a $154.8m negative impact from the impairment of goodwill relating to the performance of the non-Government operating segment; Underlying results better reflect the true performance of the business and exclude the impact of the goodwill impairment: EBITDA, excluding $4.6 million impact of AASB 16, up 3.0% to $62.2m; NPATA of $14.7m; Operating cash flow of $23.9 million with cash conversion of 36% of Underlying EBITDA (H1 2018: 89%) due to working capital deterioration and non-recurring expenses; Net debt increased to $625 million at 30 June 2019 (31 December 2018: $586 million) due to non-recurring acquisition and Globecomm integration costs, negative working capital (that is expected to reverse in H2 2019) and payment of the final 2018 dividend; Continue to target Leverage Ratio (net debt: proforma EBITDA) to be below 4.0x at the end of 2019. Reaffirmed previous guidance for 2019 full year EBITDA in the range between $150-160m.
• Noni B (NBL) – Underlying EBITDA1 + 22% to $45.5m. 5.5c dividend; Group total revenue +136.8% to $881.9m, following the successful integration of the acquired five Specialty Fashion Brands; Statutory NPAT $8.2m after restructuring costs.; Like-for-like sales -4.3%, in line with management and integration plan expectations. Outlook – “The momentum mentioned in last year’s annual report is accelerating and, following substantial progress in the past year, we expect EBITDA in FY2020 to be in line with market consensus of $75m.”
• City Chic (CCX) – Sales Revenue +12.6% to $148.4m (comparable sales growth of 12.2%); Online penetration at 44% of total sales (FY18: 36%, 1H FY19: 40%); Northern hemisphere now 20% of global sales (FY18: 16%); Reported PBT from Continuing Operations of $19.2m (FY18: $11.5m); Underlying EBITDA4 of $24.9m (up 25%) with Underlying EBITDA margin of 16.8% (FY18: 15.1%); Normalised operating cash flow of $21.5m; Strong balance sheet with net cash of $23.2m (1 July 2018: $16.1m); Fully franked final ordinary dividend of 1.5 cents per share (cps); fully franked interim ordinary dividend of 2.5cps and special dividend of 2.5cps paid in March 2019. Positive comparable sales growth in FY20 to date is expected to continue for the full year
• Northern Star (NST) – Has made a takeover offer for Echo Resources at 33c, a 50% premium to Echo’s 20 day VWAP

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OVERNIGHT

SPI FUTURES +19

US EQUITIES – S&P500 +31 (+1.1%), Dow Jones +270 (+1.05%), NASDAQ +102 (+1.32%)

Main themes

• Trade talk optimism – Trump said China is ready to come back to the negotiating table. They sincerely want a deal. Trade talks were already planned and China has downplayed the calls, with the Foreign Ministry saying it was not aware of the call.
• China said it is willing to resolve US trade dispute through “calm” negotiations
• Gains broad-based

EUROPEAN MARKETS – Mixed. STOXX600 -0.02%, UK FTSE closed, German DAX +0.40%, French CAC +0.45%.

CURRENCIES

• The USD is weaker at 97.96.
• The Aussie stronger at US67.76.

BONDS – 2-yr: +2 bps to 1.55%, 3-yr: +3 bps to 1.48%, 5-yr: +2 bps to 1.43%, 10-yr: +1 bp to 1.55%, 30-yr: +1 bp to 2.04%

COMMODITIES

• Oil – WTI futures were down US53c or 1.0% to US$53.64.
• Gold futures rose 0.1% to US$1,538.90
• Iron Ore – CommSec has iron ore down US$2.95 or 3.3% to US$86.00 a tonne.
• LME metals – Closed

ECONOMIC DATA, NEWS & POLITICS

US economic data – Durable Goods orders +2.1% (exp 1.1%) an ex-transport +0.4% (exp 0.1%)

Italian politics – Opposition Democratic Party (PD) and the anti-establishment 5-Star Movement moved closer to a deal on forming a coalition government. Debate on whether or not caretaker prime minister Giuseppe Conte stays in his job to lead a new alliance.