Australia | Aug 28 2014
By Henry Jennings, Private Client Advisor, BBY Ltd
The two big stories to hit the market today were the huge record Qantas Airways Limited (A$1.385, +6.9%) loss and the price of Iron Ore continuing to fall away. The signs were there from overnight markets that we were due for a pause today and indeed we did. Nothing more than a flesh wound and normal reactions after the run we have had .In the end the ASX200 was down 27 points at 5624 with a high of 5651 and a low of 5621.
Qantas Airways Limited (A$1.385, +6.9%) kicked us off with a huge $2.84bn write down(non-cash) of its fleet and importantly Joyce suggested that the corner had been turned. Indeed. Well we shall see but the market was keen on the clean slate approach at least for now. Iron ore stocks continued their slide as the price slipped to $88.20 overnight. BHP Billiton Limited (A$36.88, -1.2%),RIO Tinto Limited (A$63.06, -1.7%) and Fortescue Metals Group Ltd (A$4.14, -3.9%) really getting whacked. The establishment old school players are less affected by the lower prices as the Johnny come lately’s with their higher cost base are in some strife. Atlas Iron Limited (A$0.57, -7.3%) announced, wish they hadn’t and fell in a heap. Other miners took their cue from the rusty ones and fell into line. Iluka Resources Limited (A$8.93, -1.3%),Oz Minerals Limited (A$4.33, -1.6%),Panaust Limited (A$2.30, -0.4%),Sandfire Resources NL (A$6.35, -1.2%),Alumina Limited (A$1.50, -2.6%) and Arrium Limited (A$0.76, -2.6%) all fell.
In financials, banks were mixed Westpac Banking Corporation (A$35.01, -0.3%) the best ,QBE Insurance Group Limited (A$11.36, +1.1%) also had a good day out in the Sydney sun as the CFO bought a few shares, but other insurers slid a tad. NIB Holdings Limited (A$3.41, +4.0%) also powered ahead consolidating gains after their results this week. Property trusts though eased off led by Stockland (A$4.23, -0.9%) and #SCG#
Energy stocks drifted lower with Woodside Petroleum Limited (A$42.49, -1.1%) and Santos Limited (A$14.76, -2.3%) joining Caltex Australia Limited (A$27.91, -1.7%) and oil services company WorleyParsons Limited (A$17.08, -4.5%) in the doggy house. Healthcare stocks were better as Ramsay Health Care Limited (A$52.06, +1.4%) reported today but Unilife Corporation (A$0.445, -11.9%) got clobbere3d with a speeding ticket after yesterday’s pre result run. Telcos were a bit all over the place as BigAir Group Limited (A$0.97, +3.2%) rallied hard ,Telstra Corporation Limited (A$5.54, +0.2%) popped up ,Hutchison Telecommunications (Australia) Limited (A$0.07, -5.4%) rang the wrong number and Macquarie Telecom Group Limited (A$4.64, -10.8%) also fell as did #SPK#. Consumer discretionary stocks also eased back with gaming stocks as Aristocrat Leisure Limited (A$5.48, -2.3%),Crown Resorts Limited (A$15.90, -1.3%),Tatts Group Limited (A$3.32, -0.9%) and TABCORP Holdings Limited (A$3.61, -0.6%) coming up lemons. Echo Entertainment Group Limited (A$3.19, +1.3%) bucked the trend.
Hitting the runway with full throttle were Qantas Airways Limited (A$1.385, +6.9%),Corporate Travel Management Limited (A$7.59, +8.4%),NIB Holdings Limited (A$3.41, +4.0%),Recall Holdings Limited (A$4.83, +3.2%),#OFX# and Virtus Health Limited (A$7.79, +1.8%) in the jets and #TON#,#ADJ#,Intrepid Mines Limited (A$0.28, +9.8%) and #NEA# in the single engine Cessanas. Failing to take off were Steamships Trading Company Limited (A$33.00, -6.9%),Atlas Iron Limited (A$0.57, -7.3%),Platinum Asset Management Limited (A$5.96, -5.1%),Senex Energy Limited (A$0.595, -4.0%) and Perpetual Limited (A$46.40, -4.0%) with Austin Engineering Limited (A$1.25, -17.2%),Unilife Corporation (A$0.445, -11.9%) and Buru Energy Limited (A$0.92, -8.0%) in the bi planes!
Volume was pretty good (ish) at around $4 bn helped by the #VED# placement from Macquarie capital. Aussie dollar at 93.60 and tulips at $550.Gold at $1287.Asian markets weaker with Tokyo and Shanghai down 0.54% and HK unchanged.
Stocks and Stories
Veda Group Ltd couldn’t wait could they? Escrow up ,PEP out. Well nearly.270m shares sold at 42.15.Overun with insto enthusiasm.
Surf’s up? Not! Billabong International Limited (A$0.54, -3.6%) posted a net loss of $233.7 million for the year to June 30, including significant items such as impairment charges on brands and goodwill, compared with a net loss of A$860 million the previous year.
Qantas Airways Limited (A$1.385, +6.9%) reported a better than expected full-year underlying loss before tax of $646 million but a loss of $2.84 billion as a result of hefty restructuring charges and writedowns to its fleet of A380 bought when the AUD was low and now it’s higher.. This was better than analysts were expecting and positive comments from Joyce were encouraging. Have heard them all before so large grain of salt needed perhaps.
Ramsay Health Care Limited (A$52.06, +1.4%) posted a 14 per cent rise in full-year net profit to $303.8 million, boosted by strong growth in its Australian hospitals and the acquisition of French psychiatric operator Medipsy.
Atlas Iron Limited (A$0.57, -7.3%) Australia’s fourth biggest iron ore producer in tonnage mined, produced 10.9 million tonnes of iron ore in fiscal 2014 ended June 30, up 47 per cent on the previous fiscal year. A $9 million underlying annual after-tax profit compared with a year-ago loss as sharply higher production offset lower iron ore prices.
Nine Entertainment Co Holdings Ltd has reported a full-year net profit of $144.2 million, compared with $136.7 million the previous year.
Platinum Asset Management Limited (A$5.96, -5.1%) posted a 34 per cent rise in annual net profit led by growth across all its divisions and cost savings.Net profit for the year to June 30 came in at $81.6 million compared with $61 million a year ago. Underlying net profit, without one-off and significant items, rose 37 percent to $104.1 million.
Austin Engineering Limited (A$1.25, -17.2%) reported net profit after tax slumped 97 per cent to $900,000, in line with the company’s guidance in May, due to the subdued capital spending in the mining sector.
Revenue fell 27 per cent to $209.9 million and EBITDA dived 70 per cent to $15.2 million. Ouch!
ICAC isn’t big Nath only issue as Peabody Energy has pulled the $150 million sale of its Wilkie Creek coalmine to his former billionaireness.
Linc Energy today announced that they had sold back the royalty stream to the Indian company Adani for $155m.Of course Linc aren’t listed here anymore so do we care? Suspect some still do.
New home sales fell 5.7 per cent in July, after a 1.2 per cent rise in June.
Tomorrow’s News Today
Telecom Italia offers $9.2bn for Vivendi’s GVT biz.
Did anyone care that JO Morgan and four other US top banks were hacked? Apparently not.
Zee Germans get serious and give Rasputin a stern talking to as he tells them one thing then his troops stray into the Ukraine. He must have his fingers crossed behind his back when he talks to Angela.
Profits at Chinese e-commerce giant Alibaba have nearly tripled ahead of the firm’s planned US stock market debut this autumn.In a filing with US regulators, Alibaba said second-quarter profit was 12.3bn renminbi ($2bn; £1.2bn), compared to 4.3bn renminbi last year.
Good to see the Coalition of the willing trying to get their money back from Cadburys!
In China, Dalian futures (Iron Ore) are down 1.6 per cent at 632 yuan, pointing to continued pressure on the bulk commodity’s price.
To be sure to be sure. House prices in Dublin rose more than 23% in the last year and are now at their highest level in more than seven years. But soberingly in the country as a hole, house prices across the country are still 42.3% below what they were at their peak.
Coming soon to a Uni student near you, if Christopher gets his way. As we follow the US . As of 2012, one out of two US college graduates is either underemployed or unemployed, and the country has more than $1 trillion of student debt. 40 per cent of people under 30 have outstanding student loans, and the average student debt is $23,300. Ten per cent of borrowers owe more than $54,000, and 3 per cent more than $100,000. Columbia charges a flat $US46,846 a year for tuition. And you thought private school fees were bad!
Malaysian airlines looks set for a massive overhaul as Government clears the way for route cuts and job cuts.
Indian PM wants everyone to have a bank account, whilst in the US a peer to peer lender, the Lending Club, is raising $500m to value themselves at $5bn!
And the winner is Belarus as they consume, on average, 17.5 litres of pure alcohol each a year. Aussies over the age of 15 drink about 12.2 litres of pure alcohol each a year. That is the equivalent to about 480 beers, 135 bottles of wine or 40 bottles of vodka each. Equal 14th with France and Croatia.
That is all
Henry Jennings
Private Client Advisor
BBY Limited
Participant of the Australian Securities Exchange
Authorised and Regulated by the Financial Services Authority
Level 17, 60 Margaret St
Sydney NSW 2000
D +61 2 9226 0067
M +61 414 345 137
E hcj@bby.com.au
W www.bby.com.au
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