Market Matters Afternoon Report Tuesday 16th August 2016
Market Data
What Mattered Today
Another fairly tight day from an index perspective however once again we saw some BIG individual stock moves play out. We had an extremely tight range of +/- 19 points, a high of 5549, a low of 5530 and a close of 5532, down -8 points or -0.14%.
ASX 200 Intra-Day Chart
On the positive side, Mirvac (MGR) released good profit numbers and guidance, and the dividend was inline – the stock finished up +3.26%, however, we continue to see these property stocks as too highly priced at current levels.
Mirvac (MGR) Daily Chart
Challenger Group Financial (CGF) also impressed with strong annuity sales numbers pushing good growth in earnings. Annuity sales increased by 55% in Q4 which is huge. Guidance was also sound and capital levels were good which is very important for future growth (CGF must hold capital against written liabilities – increased annuity sales = more need for capital). Naturally it creates an impediment for growth but CGF more than adequate for now.
Challenger Group Financial (CGF) Daily Chart
Domino’s (DMP) missed consensus on earnings ($82m v $89m expected), beat on the dividend and provided a reasonable outlook, however, you can’t afford to stumble at all when you’re priced on 80 times....We would have thought a higher dividend is also not necessarily a positive for a growth stock particularly one that is suggesting store roll outs abroad have cost more than they had previously guided to. We know it’s a brave call and one that may prove to be premature however this result is not good enough to support the current share price in our view. The stock fell -3.74% today to close at $74.11.
Domino’s Pizza (DMP) Daily Chart
….While the result that most have been waiting for – BHP – has just dropped and the conference call with management is about to start (@6pm this evening). On first read through, there’s some good & bad in the result.
The Good
Top line revenue was inline printing $30.912bn v $30,929bn expected
Underlying earnings were $12.340bn v the market which sat at $11.648bn – so a bit better
Underlying net profit was $1.215bn v the market which was at $1.1bn
FY17 Free Cash Flow estimate by BHP came in at $7bn – they had discussed $5bn when last commented on in May this year
The not so good
Net debt was higher than expected – by about $1bn coming in at $26bn v $25bn expected by the market
The Dividend was a miss – with the full year at 30cps v the 32cps expected by the market
Iron Ore was weak (and was the only division to miss) – coming in at $US$3.7bn vs. $4bn expected.
All up
A very weak read through however the market has had about 12months to digest the likely result ahead of time. You’ll read a lot about the biggest loss in history, the weak result, poor profitability from a big asset base, which are concerns that have some merit however FY16 will likely be seen as the earnings NADIR. Not a pretty result and the higher debt is probably the biggest negative for us offset partially by a better free cash flow number and lower than expected capex.
More details to come post conference call. The stock was fairly quite in trade today.
BHP Billiton (BHP) Daily Chart
Sectors
Source; Bloomberg
ASX 200 Movers
Reporting this week
NPAT = net profit after tax (consensus numbers)
EPS = earnings per share (consensus numbers)
DPS = dividend per share (consensus numbers)
Select Economic Data – Today & Tomorrow; Stuff that really Matters in Green
What Matters Overseas
FUTURES pointing to a lower start overseas…
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 16/08/2016. 5:00PM.
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