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Marcus Today End Of Day Report
BY HENRY JENNINGS - MARCUS TODAY COMMENTATOR - 21/02/2018
VIEW MORE ARTICLES BY HENRY JENNINGS

Market Summary

  • ASX 200 up +3 points to 5944.
  • Index goes nowhere, components volatile.
  • High 5955 Low 5920. Tight range again.
  • Results focus as volatility in hits and misses.
  • A2M cream rises. BHP sinks.
  • WTC fails to deliver on disappointing guidance.
  • AUD weaker on wage growth at 78.49c
  • Bitcoin rallies hard to US$10,887.
  • AUD Bullion around $1327
  • US futures down -24.
  • Asian markets ease with Japan down 0.04%. China closed.

MT Stuff:

  • MARCUS CALL – The BHP result, the up and coming wages index, and some beginners tips thrown in.
  • SMALL STOCK PORTFOLIO – SWM keeps its position in the portfolio on the back of good results. RUL, not so much.
  • INSIDERS – SKF has reinvented itself. Henry takes a look.
  • TRADING PORTFOLIO – We were stopped out of BHP on the open. Five stop losses raised.
  • INSIDERS CONNECT WITH US - We invite you to send us your own stock ideas. We also have the facility for you to email us any questions. Click on the "Ask Marcus Today" button in the newsletter or below - Ask us anything:

Advancers and Decliners

  • BWX -31.40% guidance disappoints.
  • MSB +3.68% looking better technically.
  • APT +6.48% breaking to the upside again.
  • MLX -4.49% results underwhelm.
  • APX +28.83% another stellar result.
  • CTD +13.76% broker upgrades after results.
  • SVW +11.58% solid result. Expect upgrades.
  • GSW -46.32% hit with class action.
  • SM1 -6.39% falls on A2M strategic deal with Fonterra.
  • FBU -5.43% nasty result.
  • WSA -3.47% broker downgrades.
  • LYC -3.17% slipping away.
  • NTC +18.22% promising results.
  • TRS +13.05% good results.
  • VOC -6.23% sinking fast.
  • PLS -3.01% lithium under pressure.
  • BAL +10.31% catches infant formula wave.
  • CWY +8.57% good results.
  • BIG – suspended awaiting more details on financing and ASX issues.
  • Speculative stock of the day: Primary Gold (PGO) +28.21% after a 5.75c a share cash takeover offer from Hanking. Directors recommend offer unanimously.
  • Biggest risers – A2M, APX, CTD, BAL, SVW and BAL.
  • Biggest fallers – BWX, WTC, SDF, FBU and PME.

Stock Picking

If the market wobbles then Stock Picking will be a lot more important this year. Find out how to do it on one of my one day courses costing $750 - click on the button below - we are adding new dates all the time as they sell out:

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TODAY

  • A2M +29.74% 1H revenue NZ$4.3bn, up 70% on the previous year, EBITDA was NZ$143 million, 123% more than the prior period and profit for the last 6 months came in at NZ$98.5m, up 150% on the back of strong and continued growth in its core markets. A2 restated that earnings growth will be skewed in the 2H with higher marketing expenses in China and the US. The company also announced a strategic relationship with New Zealand's Fonterra Co-Operative Group Ltd, who will produce and distribute A2 milk products to markets in Southeast Asia and the Middle East.
  • BHP -4.76% Results released after hours last night. A miss on earnings coming in at US$4.1bn against market forecast of around US$4.24bn. Dividend of US55c which is a big jump, up 38%. The market took it badly falling 4.6% in London. Iron ore delivered more than 49% of BHP's earnings before interest and tax. The company also commented on the sale of the US shale assets which has been the target of shareholder activist Elliott, the company announced that the sale was going well but stopped short of saying it would return proceeds of any sale to shareholders and cited an expected rise in costs for its next iron ore project. BHP is hoping to complete the sale of the US assets by Christmas, but CEO said that any out of cycle shareholder payout would be dependent on commodity markets. ‘One thing at a time’ he said. As far as the dual listing in London and Australia is concerned, the company is still not keen to pursue it as it does not believe that it is in the interests of shareholders. CEO Mackenzie said there were about $US1bn of costs, mostly additional taxes, that would be incurred if the current structure was unwound. Net debt was reduced 23% to US$15.4bn and the company is targeting US$10bn-$14bn next year.
  • Wesfarmers (WES) +3.02% 1H operating revenue $35.9bn, up 2.8%. NPAT $1.1bn, down 3.3%. EPS 19c, down 3.2%. Operating cash flow $2.9bn. Declared dividend of 103c. NPAT included post-tax significant items of $1.3bn relating to the troubled UK business, and Target. Bunning Australia revenue increased 10.2% to $6.6bn underpinned by strong and continued sales growth across all market segments. Bunnings UK reported a £517m loss, 15.5% lower than the pcp. Coles’ earnings decreased 14.1% to $790m. Despite good sales momentum, lower fuel and financial services earnings dragged on the result. Department store revenue increased 3.2% to $4.8bn. Kmart outperformed, which was offset by Target headwinds resulting in a non-cash impairment of $306m. Officeworks revenue increased 9.7% to $1.0bn.
  • Downer EDI (DOW) +1.49%1H net loss of $11.1m, the results were weighed down by $126m in significant items including an impairment of goodwill in its mining business and write downs linked to a freight rail divestment. Interim dividend was lifted 8.3% to 13c. The company expects underlying profit of $295m for FY18 before minority interests, including profits of $202m for Downer and $93m for Spotless.
  • Lendlease (LLC) +6.52% reported a $425.7m profit for the first half year, up 7.8% from a $394.5m profit last year. Revenue in the six months ended December 31 rose 9.4% to $8.69bn from $7.95bn in the year-earlier period. Dividend 34c. Optimistic outlook statement with an extensive development pipeline of $56.7bn, with $40.3bn of urbanisation projects and $16.3bn of Communities and Retirement projects. $28.3bn in funds under management and approximately $4bn of secured future FUM.
  • Fairfax (FXJ) +5.32% Revenue of $877.1m with net profit of $38.5m compared to $83.7m. Significant items lead to a $38.7m loss. EBITDA up 1.3% to $146.9m and a dividend of 1.1c. The balance sheet was strong but the FXJ result is all about Domain these days. The underlying value of the rump of the assets is secondary to the 60% holding in DHG. Stan is a sleeper with a subscriber base now of 930l and has led to an 83% growth in subscription revenue in three years. Outlook statement was less optimistic with revenues around 4-5% lower than last year. Publishing trends were broadly consistent.
  • Sydney Airport (SYD) -3.26% Revenue up 8.7% to $1.5bn, record passenger numbers up 3.6% to 43.3m, EBITDA up 8.3% to $1.2bn and net profit up 9% to $349.8m. Results helped by strong passenger numbers and macro tailwinds from growing global tourism and travel. The company also said it expected to offer a full-year distribution of 37.5c for 2018, up 8.7%.
  • Steadfast (SDF) -7.06% Underlying NPATA $43.0m, up 5%. Underlying revenue $269.6m, up 7.8%. EPS 4.31c, up 7.7%. Statutory NPAT of $33.8m down 10.9% due to non-trading gains being lower on the pcp. A fully franked interim dividend of 2.8c was declared. The company said it delivered a record $2.6bn of GWP while its underwriting agencies produced record earnings driven by price and acquisition growth. Meanwhile, the rollout of its Client Trading Platform continued with nine insurers and underwriting agencies now connected with QBE to go live in April 2018. Guidance was maintained.
  • Coca-Cola Amatil (CCL) +1.61% FY17 results. Total revenue $5.0bn, down 3%. Net Profit A$445m, up 81%. Underlying Net Profit A$416m, down 0.4%. Final dividend 26c, up 4%. The company’s New Zealand and Fiji segment delivered 15% of EBIT, and Indonesia and Papua New Guinea 30.6%. Alcohol and coffee segment grew 11.2%. Australian beverages underperformed, with revenue down 3%.
  • Fortescue Metals (FMG) -4.66% Net profit has fallen 44% to US$681m ($864.5m) from $1.22bn in the year-earlier period. Revenue in the six months ended December 31 fell 18% to $US3.68bn from $US4.49bn in the year-earlier period. Net debt of US$3.3bn inclusive of US$892m in cash. 11c fully franked dividend. US$12.11wmt down 7% on pcp. Guidance of C1 cost of between US$11-US$12wmt. Dividend payout ratio of between 50-80% of NPAT. Nev Power leaves and Elizabeth Gaines now at the helm.
  • Wisetech (WTC) -23.21% Reported a rise in net profit for the first half to $15.6 million from $14.4 million a year ago. Revenue jumped 31% for the six months ended December to $93.4m. Operating profit climbed 26% from a year ago to $22.5m. The company lifted its interim dividend to 1.05c a share from 1c a share a year ago.
  • Santos (STO) -3.09% Profit excluding one-off items jumped to $US336m, but still fell short of consensus estimates of $US349m. Sales rose 21% $US3.172bn. The company forecasts it will deliver 70 petajoules of gas into the east coast domestic market this year. No dividend as it continues to pay down debt.
  • Data#3 (DTL) -0.91% Net profit after tax, excluding minority interests, fell 52.5% in the December half to $2.7m, due to unplanned events which affected its product and services divisions. EBITDA dropped 45.6% to $4.9m and revenue rose 8.2% to $547.3m. The company's interim dividend fell 52.2% from the previous year to 1.60c.
  • Pacific Smiles (PSQ) +3.73% a 49.2% decline in its statutory net profit for the December half to $2.7 m. Revenue rose 10.8% to $50.5m and underlying profit after tax fell 8.5% to $4.9m. Dividend of 2.3c.

ALL ORDS SECTOR SUMMARY

ALL ORDS TOP MOVERS

ALL ORDS BOTTOM MOVERS

ASX 200 SECTOR SUMMARY

ASX 200 TOP MOVERS

ASX 200 BOTTOM MOVERS

ECONOMIC NEWS

  • The ABS wage price index rose 0.6% in the fourth quarter, above the 0.5% that economists had forecast. Victoria was the highest through the year wage growth of 2.4% and The Northern Territory recorded the lowest of 1.1%.

  • The Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from +1.39% in December to +0.73% in January.
  • The Housing Industry Association (HIA) has released its National Outlook for 2018, which shows the record levels of building activity over the past two years had finally made an impact, providing enough housing stock to meet current population growth in east-coast metropolitan areas.

Bond Markets

ASIAN MARKETS

  • Chinese markets back online tomorrow.

EUROPE AND US MORNING HEADLINES

  • Venezuela says it has raised US$735m in the first day of the pre-sale in the new cryptocurrency ‘Petro’.
  • US chipmaker Qualcomm has bowed to investor pressure and raised its bid for NXP Semiconductors, hoping a new $44bn offer to buy the Dutch company will seal the longstanding deal.
  • US President Donald Trump says he has asked for a rule banning devices that can make legal weapons mimic fully automatic ones.

 

MARKET MAP



View More Articles By Henry Jennings

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.

To gain further insights from Henry Jennings, Marcus Padley and the Marcus Today team of analysts, click here to register for a free trial of the Marcus Today daily newsletter.



Important note: Any financial product advice contained in this email is general financial product advice only and does not take into account any one person's objectives, financial situation or needs. Therefore, before acting on any financial product advice in this email, you should consider, with or without the assistance of an independent adviser, the appropriateness of the advice, having regard to your objectives, financial situation and needs.
 

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