Aussie market punches through 5800 on decent result from CBA – Dominos tanks
CBA set the tone this morning with a good result and that saw the market open strongly before grinding higher throughout the session – punching through 5800 around 12.30pm. We had a range of +/- 51 points, a high of 5817, a low of 5766 and a close of 5809, up +53pts or +0.94%.
Banks clearly the standout accounting for 27pts of the indexes advance today. CBA alone put on +10index points!! Some very big intra-day moves once again with CSL and Cochlear recovering very well from early weakness while Dominos (DMP) was hit hard, as it should be after they missed expectations but upgraded guidance…trying to sugar coat a poor result with a promise that they’ll do better next time. Amateurish and the market saw through it. The stock down -14.36% to $53.56. We have interest in that stock.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Commonwealth Bank (CBA); Good result this morning. Cash profit of $4,907m (Exp 4821m) , EPS of $2.77 (Exp $2.74) and an interim dividend of $1.99 (ex 22nd Feb) versus Exp $1.98 . Margins down 4 bps but inline with expectations at 2.11%, bad debts lower than forecasts but costs slightly higher. Capital was very strong with CET 1. of 9.9% v 9.6% Exp. The Result includes a one off gain of $397m offset by one off-cost increase $393m due to software write off. All up a very good result from CBA. Shares closed up +2.30% to $84.53. We own CBA
Commonwealth Bank (CBA) Daily Chart
Wesfarmers (WES); Some good and bad in the WES result this morning however the mkt seemed to like it. Cash earnings ahead of consensus expectations at $1,577m (exp $1,500m) which is up +13.2% on this time last year. Most attention on the result should be on the food and liquor business which accounts for 38% of earnings, and margins were lower (1.3%) but within the expected range of 1.0% to 1.5%. Interestingly, price deflation was -0.9% which was a drag as competition hots up in the sector.
Good chart here from Shaw and Partners highlighting the trending like for like sales growth of Coles, which is clearly deteriorating as the BIG behemoth of Woolies turns its ship around and new entrants come into the fray.
Source; Shaw and Partners
Elsewhere in the business, Bunnings which is 30% of group was good but growth is slowing, Officeworks was OK but it’s only 2% of group, Kmart which is 15% of group seems to be improving, Target which brings nothing to the table in terms of earnings was poor again while their Industrial business which is 15% of group was weak (although within this commodities were strong).
So, top line looks ok but composition and trends are a little weak – probably the opposite of what we saw with Suncorp (SUN) recently. Shares closed up 2.85% to $43.33. We don’t own WES
Wesfarmers (WES) Daily Chart
CSL (CSL); A good result from CSL and inline with their pre-announced number ($800m) while they expect to grow that in the range of 18 to 20% (on constant currency) which is pretty much what they had previously guided to recently, however they said that EPS growth will again exceed profit growth which is a result of their share buy back program. CSL closed up +2.9% to $118. We own CSL
CSL Daily Chart
Cochlear (COH); A stock we wrote about this morning looking to BUY around $124. It traded to a low today of $124.20 however only a few shares traded – we hope some subscribers were quick enough to get on board and enjoy the recovery back up to $129.20 before the close. Unfortunately, we weren’t quick enough. COH ended up 0.19% to $129.20
Cochlear (COH) Daily Chart
Earnings spreadsheet back tomorrow – time got away from us this afternoon after a busy day on the desk!
Have a great night,
The Market Matters Team
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