Afternoon Report / Unstoppable (FMG, DMP, JHX)

By Market Matters 09 November 17

Unstoppable (FMG, DMP, JHX)

Market Matters Afternoon Report 9th November 2017

The freight train rolled on today as the market confirmed it has broken out above 6000, once again setting new 24 month highs, as the market briefly cracked 6050. NAB went ex-div 99c today, falling $1.07. Real Estate was the sector on top today after news of investor lending falling month on month, while energy was the weakest dragged by a small fall in Oil overnight and weak commentary from Santos at their investor day. Overall, a range today of +/-31 points, a high of 6052, a low of 6018 and a close of 6049, up 33pts, or 0.55%.

ASX 200 Intra-Day Chart

ASX 200 Daily Chart

Fortescue (FMG) held their AGM today, an important one as the CEO Nev Power will leave the company in February while seeking to replace the Firetail mine that will be retired in 2021 – moving to develop their Eliwana deposit.  Andrew Forest, FMGs chairman, spoke at length regarding the impact Chinese President Xi Jingping’s crackdown on pollution has had on lower grade ore prices, highlighting the disparity being paid for high and low grade ore. Twiggy’s comments however don’t seem to be reflected in FMGs share price at this stage and we see risk to FMGs earnings as a result. FMG finished down 0.41% today to $4.88.

Fortescue (FMG) vs Iron ore Weekly Chart


Another notable AGM this week was held by Domino’s (DMP). DMP was once a standout in the market, reaching a lofty $80 last year after pushing an aggressive growth and innovation story – I thought I would be getting pizza delivered by drone by now! DMP missed guidance despite profit growth at 29%, and has struggle since yesterday announcing  a forecasted 20% growth for FY18, clearly not living up to investor expectations. DMP must meet high growth targets to justify its PE of 40x.

Domino’s Pizza (DMP) Weekly Chart vs DMP trailing PE

 

Building material supplier, James Hardie (JHX), posted a trading update on the first half of their 2018 fiscal year that ended in September, and despite a fall in profits and outlook being ‘somewhat uncertain,’ JHX jumped 7.6% to $20.39. The move today is even more surprising given there are doubts around the acquisition of German firm Fermacell announced yesterday and it’s ability to help James Hardie access the European market. Clearly some in the market liked it, pushing JHX to a 6 month high.

James Hardie (JHX) Daily Chart

Have a great night

The Market Matters Team

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