Wednesday 12th August 2020
Financial Planner's morning report - ASX set for a weak open, $2bn for Sydney Airport (ASX:SYD), James Hardie (ASX:JHX) wins market share
It was another busy day as reporting season ramped up, the ASX 200 (ASX:XJO) finishing 0.5% higher as signs of slowing Victorian COVID-19 cases boosted National Australia Bank Ltd (ASX:NAB), rising 2.4%.
ASX set for a weak open, $2bn for Sydney Airport (ASX:SYD), James Hardie (ASX:JHX) wins market share
It was another busy day as reporting season ramped up, the ASX 200 (ASX:XJO) finishing 0.5% higher as signs of slowing Victorian COVID-19 cases boosted National Australia Bank Ltd (ASX:NAB), rising 2.4%.
Sydney Airport (ASX:SYD) finally capitulated going cap in hand to investors seeking $2 billion to ‘strengthen its balance sheet’ as the impacts of the pandemic look like extending beyond 2021. No dividend will be paid in 2020.
The offer is at a discount of just 13% ($4.56 per share) and I wouldn’t be surprised if retail investors stay away as they did with Qantas Holdings Ltd (ASX:QAN) last month; one to avoid particularly given the IATA has predicted it won’t be until 2024 that travel returns to normal.
James Hardie Industries plc (ASX:JHX) lead the market higher, adding 6.8% despite announcing an 89% fall in quarterly profit to a paltry USD$9.4 million.
Investors were surprised by JHXs market share gains as the company managed to avoid shutdowns in the US; management guided towards a strong recovery with a $330 – 390 million profit for 2021.
Mesoblast tanks, Challenger facing an existential crisis, Computershare keeps its dividend
Stem-cell research company Mesoblast Ltd (ASX:MSB) who have an application in to the US FDA for a potential COVID-19 treatment (not vaccine) tanked 30.1% on Tuesday, as briefing notes for their upcoming review did not reflect positively on their hopes for an approval this week.
Annuity seller Challenger Financial Group Ltd (ASX:CGF) also disappointed investors, falling 7.6% after writing down their Life time annuity business by $750 million; a combination of weaker investment returns and higher capital requirements due to lower interest rates is hitting the company’s bottom line.
Net profit was down 13% to $344 million but fell to a statutory loss of $416 million after the write-down. Life and annuity sales in Japan were a particular highlight, the unit growing 13%, as was specialist fixed income and credit manager Fidante Partners, which saw $3.8 billion in net inflows.
In an income starved world, Computershare Ltd (ASX:CPU) managed to maintain its dividend despite announcing a 2.3% fall in revenue and 3.7% fall in earnings.
A Russian vaccine, trump to cut capital gains tax, overseas markets split
US markets fell into the close, with the S&P 500 off 0.7% after nearing all-time highs during the session. As reporting season near its close investors are turning back to economic results, with the comments suggesting more stimulus is a long way off hitting confidence.
President Trump continued his one man re-election campaign flagging a potential reduction in capital gains tax by introducing an Australian-like inflation adjustment.
The news was positive in Europe with markets cheering a jump in Chinese automobile sales, +16.4% in July, supporting BMW (ETR:BMW) which headed 5.8% higher.
Vladimir Putin approved the first COVID-19 vaccine in the world, Russia’s own, after testing on just 76 people; only time will tell if it is the cure the market is seeking.
On a lighter note, reads of my Unconventional Wisdom newsletter may remember the Tom King of Nanuk Asset Management, a sustainable technology focused global equity fund, highlighted the potential benefits of feeding seaweed to cows in order to reduce emissions; well Graincorp Ltd (ASX:GNC) and Twiggy Forrest just sign a deal with the CSIRO to commercialise the product.
Drew is editor of The Inside Network's publications and a principal adviser at Wattle Partners.
