Afternoon Report / Markets meander into the weekend

By Market Matters 15 February 19

Markets meander into the weekend

Market Matters Afternoon Report 15th February 2019

WHAT MATTERED TODAY

The market chopped around par today and was once again dominated by company results….US Futures were lower but our market simply ran its own race – it’s been doing it all week and what’s more, weakness in US futures has typically been leading to strength locally implying that the long SPI / short S&P has been playing out during our time zone.

It’s been a huge week on the desk, and another one coming up next week as reporting rolls on. I’m off to see Xaviar Rudd at Taronga Zoo tonight with the bride and a few friends – (i.e no kids!!). A blue bell afternoon in Sydney at the moment leading to a cracking night.  

Overall today, the index closed up  +6pts or +0.11% today to 6066 and was up down  -0.09% for the week. Dow Futures are trading down -97 points / -0.39%.

ASX 200 Chart

 

ASX 200 Chart

 

Reporting;  Another solid week or reporting and we’re now at the midpoint – next week has a similar volume of companies out with Wednesday being a huge day.

Whitehaven Coal (ASX:WHC);  While they printed strong numbers on all financial parameters (NPAT, EBITDA CF up 11%, 12% and 5% respectively) they missed the lofty market expectations of the market at the NPAT, Sales and EBITDA line by 20%, 2% and ~10% respectively – which is big on the flipside, the Board has proposed to pay an unfranked dividend of 20 cents per share to shareholders to be comprised of an interim dividend of 15 cents and a special dividend of 5 cents – Market expectation was 20c so inline; and this takes total shareholder return over the past 18 months to 80 cents per share, or almost $800 million. Nice. We are looking at WHC more closely after today’s 6% drop  

Whitehaven Coal (ASX:WHC)

 

Vicinity Group (ASX:VCX) -0.39%, 1H19 result was lower than expected  with funds from operations -2.3% on pcp to $349.5m vs expectations of ~$360m. The issue looking like more of a timing one around asset divestments  rather than anything more sinister as well the impact of the share buy-back. FY19 guidance was reiterated at FFO/share of 18.0-18.2¢ which is a positive.  The other interesting aspect was around some positive momentum in retail sales, consistent with what we witnessed at VCX’s 1Q FY19 update. Given the delay in asset sales, coupled with the impact of the share buy-back, the lack of upgrade to guidance is surprising – not sure why however this is on our radar.

Domain Holdings (ASX:DHG) +21.05% - a cracking day for the listing company with net profit coming in at $21.1m which was around 10% above expectations. The market was negative this stock with the shorts going to town recently  - rising to 6% of issued capita. . NEC now also worth watching given their DHG holding.

Domain (ASX:DHG) 

Other companies reporting today…

Sectors this week;  A mixed bag – CSL had weighed on Healthcare

Stocks this week;

Some of the stock specific events we covered during the week…

Telstra Result; Dividend was cut again however stock now in a more sustainable footing. Click here

CarSales; Why the stock should trade lower. Click here

Macquarie Group; Another strong update from Macquarie, but is the market too optimistic? Click here

Bendigo Bank; A poor result highlighting the challenges faced by Australia’s second tier lenders. Click here

Medibank Private: Result today a good one. Click here

NAB Hybrid: A new hybrid was put to market from NAB this week and there was very strong demand – we penned this note before the broker book build closed on Wednesday. Click here

OUR CALLS

No changes to the portfolios today.

Watch out for the weekend report. Have a great night,

James / Harry & the Market Matters Team

Disclosure

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.

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