26 April 19
Flight Centre lands in a heap (FLT)
26 April 19
Flight Centre lands in a heap (FLT)
26 April 19
Reviewing 5 market themes catching our eye - (BEN, BOQ, FLT, FMG, MMM, NHF, RMD)
24 April 19
Noflation should lead to imminent rate cut (BAL, HLS, EHL, CGC)
24 April 19
Platinum Portfolio Alert – Reduce Telstra (TLS)
24 April 19
Income Report: Will NAB cut its dividend? (NAB)
24 April 19
Reviewing 5 of the World’s largest 10 companies
23 April 19
ASX 200 breaks 6300 – Energy stocks lead the way (TLS, NAB, XRO)
23 April 19
5 stocks MM is watching post Easter (SIQ, SGR, NCM, FMG, LLC)
18 April 19
Unemployment data drags market
18 April 19
Are we seeing the next big sector rotation with healthcare & resources set to be the losers?
The ASX 200 has opened marginally higher this morning with some reasonable buying being targeted towards the banking stocks. As suggested in the AM report this morning, it seems likely that the US has now formed a low, in the short term at least.
Today we’re again rejigging the Income Portfolio to get better exposed to market upside from here. For the week, the portfolio dropped by -0.61%. For the financial year to date, the portfolio has just has turned negative down -0.29% versus its benchmark of RBA cash rate +4% which sits at 1.72%. Since inception (5th July 2017) the portfolio has added 5.6% versus its benchmark of 7.16%.
Nick Scali (NCK) – sell out or buy more?
Yesterday NCK held their AGM and the stock fell more than 5% as a result to close the day at $5.64, the lowest level since just before we added the stock to the portfolio in July of 2017. The obvious question- do we buy more of sell out based on what we heard yesterday?
What they said;
- 1Q19 written sales orders have grown by 12% with comparable sales orders up 2% - an excellent result given many retailers are printing negative LFL comps.
- Company reiterated that LFL sales growth will be challenging in this volatile trading environment, particularly given the significant slow-down in residential sales, a key driver and catalyst for furniture sales
- A lower AUD will also impact gross margin in the short term as market forces generally take time to make the price adjustments in line with a lower dollar
We’ve previously discussed the impact a weak housing market could have on Nick Scali and it is a clear negative, however it does seem the company is doing a good job in driving sales growth where it can while also opening new stores to drive earnings. The company expects to add another 25 stores across ANZ, with “the possibility of further off-shore expansion.” There wasn’t a lot of detail in the address by the CEO or the Chairman, and the market seems to be focussing on small comments made despite some positive data points splattered throughout the presentation.
The market expects profit growth in NCK of ~10% and the company has a history of under promising and over delivering. Of the last 11 earnings reports, they’ve beaten expectations 10 times and missed once with an average beat of 3.73% and an average share price reaction of 6.62%. We like Nick Scali for a number of reasons. Firstly it is a quality, specific and brand name retailer – all of which should see it supported in a significant deterioration in retail sales. It is also driving margin expansion – up 20bps in FY18, cost control will be key for long term retail survival. Thirdly, it still has many untapped markets both from a location – increasing store numbers by 45% in the long term - and an offering standpoint – in January they will launch a bedroom and bedding range. On ~10x estimated forward PE, it’s cheap considering earnings growth of 10% and we are using this recent weakness to up weight by 2% in the MM Income Portfolio, taking the position to 5%. Watch for alerts
- We remain bullish on Nick Scali (NCK)
Nick Scali (NCK) Chart
Alumina (AWC) – Increasing commodity exposure
We’re bullish on the ‘late cycle’ resources trade and Alumina is a stock that has commodity price tailwinds and pays a healthy dividend. Its’ been a volatile ride for AWC in recent times thanks to supply disruptions which forced a squeeze higher in the Alumina price, however that has now largely played out. Alumina (AWC) has been in the MM Income portfolio in the past – we bought at $1.96 and sold at $2.17 plus we picked up an 8cps dividend along the way. The stock is clearly trading above that level now however markets are fluid and we’re again looking at AWC from an income perspective. AWC is one of only a handful of mining sector names that have stock specific tailwinds offsetting to a large extent the sector headwinds of tariff’s and USD strength.
The stock is expected to yield 6.9% fully franked in FY19, trading on an estimated P/E of 8.5x.
· MM are bullish AWC targeting ~$3.20, adding it back into the portfolio
Alumina (AWC) Chart
Australian Leaders Fund (ALF) – Reallocating capital elsewhere
ALF is a market neutral listed invested company trading at an ~18% discount to the value of its assets (NTA) – so it’s cheap. We originally added ALF into weakness after they cut their dividend due to poor performance, which does seem odd for an income portfolio. Our expectations at the time was that depressed prices would not last as performance improved in a choppy market environment (given they are long-short) and the eventual reinstatement of their dividend would see the LIC trade back up towards their NTA.
Performance has improved, although not by enough in our view while they did reinstate the dividend paying 2c fully franked in August. However, our thesis hasn’t really panned out and the share price has stayed subdued. Ultimately, we see better opportunities to deploy these funds into the current market weakness.
- MM are cutting ALF from the MM Income Portfolio, taking a small loss.
Australian leaders Fund (ALF) Chart
Eclipx (ECX) – Cutting for a loss
Back at the start of August, ECX downgraded earnings and dropped sharply, trading to a low of $1.67 before recovering strongly thanks in part to a conditional offer from rival SG Fleet. We view that offer as an opportunistic play given the issues faced by ECX at the time. The proposed deal was for $2.00 cash plus 0.15 SGF shares per ECX share. On the close price yesterday, that values the deal at $2.54 versus $2.56 close. Independently to the offer, we expect ECX to tread water around current levels while the SGF share price looks like testing the $3.30 region – another ~8% lower providing a negative influence on ECX.
- MM are cutting ECX from the MM Income Portfolio, taking a loss
Eclipx (ECX) Chart
Axsess Today Bond (AXLHA) – Update
The AXL stock and the AXLHA bond were due to come out of voluntary suspension on the 22nd October, however they requested a continuation of that voluntary suspension as they finish a business review. They should be back trading no later than the 30th November.
A few important points;
- Waivers to the technical and covenant breaches (3 primary reasons given in a previous announcement) to lending agreements with senior bank lenders have been granted.
- Business is continuing to operate throughout suspension (inference being writing further new business volumes) and a revised FY19 guidance will be provided at the end of the review
- They plan to simplify the business, returning to core products and market segments where they had most traction. They say that involves the funding of business critical equipment (equipment finance) in hospitality and transport businesses – its about 95% of their business anyway
- They plan to wind up two loan books – a Canadian operation with a $2m book and business loan funding with a ~$15m book. That will have an impact on earnings & the balance sheet.
The announcement was light on detail however from what we can see, the company seems to have the support of senior lenders. We’ll provide more detail when it comes to light
We plan to add Alumina (AWC) to the portfolio & increase Nick Scali (NCK) into weakness
We are cutting ALF & ECX, both for a loss
Watch for alerts.
Have a great day!
James, Harry & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 24/10/2018
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you must subscribe to one or more membership categories available on the website.
To subscribe to the Market Matters website you must go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction). You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]om.au
All cancellations of month-by-month subscriptions will be cancelled and not billed again the next month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as iPads, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifely Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2013 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US persons and by accepting these terms you confirm that you are not a US person.