Marcus Today End Of Day Report
VIEW MORE ARTICLES BY HENRY JENNINGS
- ASX 200 up 42 points on decent volume.
- High 6040 Low 5997.
- All sectors rallied, led by miners and financials.
- ANZ unveiled a $1.5bn buyback.
- Mining majors rallied on the back of stronger commodity prices Friday.
- Aconex’s share price exploded thanks to a takeover by NASDAQ listed, Oracle.
- Retail Food Group plunged to a five year low amid scathing media reports.
- Downer EDI fell on a termination of contract with coal miner, Adani.
- Orecobre posted lithium carbonate price assumptions 25% higher that the pcp.
- AUD edged to a six-week high at 76.65.
- US futures +102.
- Asian markets mixed: Hang Seng +1.36%, Nikkei +1.53%, China -0.14%.
- MARCUS CALL – How one professional fund manager identifies growth stocks. Other notable stuff on the market today – ANZ’s share buyback, and the bid for Aconex.
- TRADING PORTFOLIO – No new trades. Three stop losses raised.
- SMALL STOCK PORTFOLIO – A quick update. KDR and PLS rally again today. LYC up 2.17%. And why we love cobalt.
- INSIDERS – FIB has a technical view on LAA.
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Movers and Shakers
- ACX +44.23% on cash bid by Oracle.
- ORE +6.69% on 2017 sustainability report. And higher lithium carbonate pricing guidance.
- ANZ +2.13% on AGM and announcement of buyback.
- MQG +1.88% on across the board bank rally.
- TCL +1.48% on renounceable rights offer.
- DOW -0.58% on loss of contract.
- CIM +0.83% on new contract with Vic Government.
- MYS -2.87% on broker downgrades.
- AZJ -5.91% on QGC draft decision.
- DTL –13.20% on profit downgrade Friday.
- Biggest risers – PZC, RAW, WRTG, AXC, ANL, OGX.
- Biggest fallers – MPE, BPH, PKO, SMD, FFC, IEC, WFE.
- Cimic (CIM) +0.83% Announced today it has been awarded a A$312m Tunnel Rail Works Contract from Victoria State. The contract supports the $11bn Metro tunnel project, the state’s biggest ever investment in public transport. Revenue generated is in the order of $312m. Construction is set to commence next year, to be completed by 2026. CIM will provide all site construction services, including civil works, and lead the design, supply, installation, testing, integration and commissioning activities for train and power control systems, operational control systems, and conventional and high capacity signalling on the new Sunbury to Cranbourne/Pakenham rail system, it said in a statement.
- Aconex (ACX) +44.23% Has announced a cash bid by Oracle for A$7.80/share today, valuing the deal at around $1.2bn. ORCL (listed on the Nasdaq), will acquire 100% of shares in ACX; of which the board has unanimously agreed upon. The offer implies a fully diluted market cap of A$1.6bn, representing >4x return at ACX’s IPO price of 190c in December 2014.
- ANZ Bank (ANZ) +2.13% Announced that it has completed the sale of its 20% stake in Shanghai Rural Commercial Bank, and as such will now initiate a A$1.5bn share buyback, likely to begin in January. ANZ has its AGM tomorrow.
- Dexus (DSX) +15.00% Announced an uplift in its valuation of its current portfolio by an independent valuation. DSX said that 96 of its 103 assets, comprising 44 office properties and 52 industrial properties, which have been internally valued as at 31 December 2017, are now valued at $660m. The company said today the increase represents a 5.3% increase on its prior book value and as a result, NTA per security is expected to increase 65c.
- Aurizon (AZJ) –5.91% The Queensland Competition Authority (QCA) has announced its decision on AZJ’s network’s 2017 Draft Access Undertaking. The QCA has concluded that maximum allowable revenue for the period is $3.893bn (which includes a WACC of 5.41%). Aurizon says QCA has made fundamental errors and miscalculations in its assessment, in particular the maintenance allowance and the WACC. AZJ said in a statement if implemented, the draft decision would have ‘significant implications for the operational efficiency, volume capacity and reliability of the Central Queensland Coal Network (CQCN)’, which would result in an overall deterioration in performance of the export supply chain that serves the state’s coal industry. AZJ said in a statement it has drafted an initial response outlining its key concerns.
- Data#3 (DTL) -13.02% Announced a ‘substantial’ profit downgrade late Friday. it expected its 1H 2018 profit to be substantially lower than the result it recorded in the previous comparable period (when it happened to be a record result). It cited delays to a number of projects due to supply constraints in November and December and also said that the performance of Business Aspect has been below par. The company went on to say it still expects it’s the 2H to be stronger. It also told shareholders that it will decommission the Data#3 cloud.
- Downer EDI (DOW) –0.58% Has had its contract terminated with coal miner, Adani. DOW was a leading contractor to conduct drilling, blasting and haulage in a deal that was reported to be worth $2bn. Adani has vowed to develop the mine on an "owner operator" model, and the scale of the project has been revised down. The termination came after QLD Premier, Annastacia Palaszczuk vowed to block any federal attempts to fund a railway to the Carmichael project through the Northern Australia Infrastructure Fund (NAIF).
- Orecobre (ORE) +6.96% Delivered an update on expected lithium carbonate pricing. It said 85% of production pricing for the 2H FY18 has now been finalised, and tight market conditions have resulted in ‘increased contract prices being negotiated’ which equates to prices 25% higher than received on the pcp. It also said that it will meet previous pricing guidance for the December quarter of more than US$11,000/t.
The Mid-Year Economic and Fiscal Outlook today reported a $9.3bn improvement over the four years to 2020-21, helped by $6.5 billion in lower-than-expected spending - caused by lower welfare costs due to jobs growth and a crackdown on rorts. Spending is down to 1.9%. Another $2.3bn is due to lower interest payments on debt, the growth of which has slowed by $23bn in terms of gross debt over four years.
The government said it has trimmed growth forecasts, but said improved company profits and continued commodity demand from China would help keep the country on track to return to surplus inside three years – which is now expected to reach A$10.2 billion by 2021.
Economic growth is expected to grow by 2.5% for FY18, compared with a 2.75% forecast in the May full-year budget statement. The budget deficit for the current fiscal year was forecast at A$23.6 billion compared with a previous projection of A$29.4 billion, helped by an improving global economy. The improved outlook means Australia's pristine AAA rating will remain intact as S&P Global Ratings
- Japanese exports accelerated sharply in November, yet again pointing to growing momentum in the world's third-biggest economy.
- China's Tencent, JD.com invests $863m in online retailer Vipshop.
- Growth in China's new home prices sustained its momentum in November, with increases seen in provincial centres and smaller cities in a sign policymakers may need to step up curbs to rein in speculation in the property market.
- China announced on Sunday a five-year plan to convert northern Chinese cities to clean heating during the winter through to 2021, state media reported, amid a deepening heating crisis.
EUROPE AND US MORNING HEADLINES
- British Prime Minister Theresa May will pitch her plan for a Brexit transition period with unchanged access to European Union markets when she briefs lawmakers on Monday about her latest negotiating trip to Brussels.
- A poll has found that 51% of Britons would now keep European Union membership while 41% want to leave the bloc, a near reversal of last year's referendum result.
Henry Jennings has been involved in financial markets for over 35 years as both a trader and a broker in London and Sydney.
Starting his career in London trading derivatives and moving to Australia in 1989, Henry eventually settled at Macquarie Group, rising to become a Divisional Director responsible for Equity Trading in Australia. For the last decade, Henry has been involved in private client broking and now writes exclusively for the renowned financial newsletter Marcus Today. Henry regularly appears on ABC TV and Sky Business as a market analyst, commentator and strategist and has presented at various conferences most recently for the AIA on the Gold Coast.
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