Share of Seek are down over 3% in early trade after announcing disappointing underlying earnings for the six-month period ending December 31st.
The company reported EBITDA of $170.3 million, down from $193.3 million in the previous period on revenue of $487.9 million.
Seek announced an interim dividend of 23 cents per share, which was up 10% versus a year ago.
Our Algo Engine has triggered a “short” signal at yesterday’s high of $15.92.
Shares of Oil Search are under pressure in early trade as the company reported a 70% drop in annual core profits.
Net profits fell to $106.7 million for calendar year 2016, compared to $359.9 million during 2015. The company cut its full-year dividend to 3.5 cents from 10 cents, which was slightly ahead of analysts’ expectations of 3 cents.
Oil Search reported plans to roughly double capital spending this year to between $360 to $400 million, with exploration and development campaigns underway near a recent find in Papua New Guinea.
The company expects oil production of between 28 to 30 million barrels over the course of 2017, which would be slightly less than 2016 production.
Our Algo Engine triggered a “short” signal back in October at $7.72
While BXB’s 1H17 result overall was below market expectations, the outlook for flat earnings growth in FY17 was much weaker than expected. FY17F EBIT was down 6% to US$950m.
The market was looking for stable EPS growth supporting an EBIT range of $1b – 1.1B over the next 12 to 24 months. The $950 million figure is a substantial miss and the new consolidating share price range for BXB is now $9.25 to $11.00.
Setting the covered call strategy at a more aggressive level will help to drive returns here, we look to lower the call strike and see $10.25 calls as an effective level.
Following the recent 1H17 earnings update, we will take a look at establishing fair value for the ASX.
1H17 NPAT of A$219m represented 3% underlying earnings growth. Moderate revenue growth occurred across most major ASX activities.
Here is the issue: the stock trades at 22x forward earnings on a 3.9% dividend yield. The earnings are stable but the stock is expensive. And whilst ASX delivered 3% revenue growth in 1H17, this is down on the 6% average level achieved over the last 3 years.
Our conclusion on fair value is; buy ASX on a pullback to $47 or a 4.5% dividend yield.
Full-time jobs growth has slowed since 2013.
Slowing in full-time jobs growth is primarily due to job losses in the mining and manufacturing sectors with full-time job losses concentrated in the mining-dominated states of WA and Qld.
More recently though, full-time jobs growth has also reportedly stalled in NSW.
The latest employment data reported a loss of 44.8k full-time jobs in January, offset by a 58.3k rise in part-time jobs.
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Chinese foreign exchange reserves dropped below $3 trillion in January for the first time almost 6 years. That’s down from $4 trillion in 2014. The drop is largely caused by the Chinese central bank intervening in the FX market as they buy yuan to prop-up the currency against the US dollar.
Overseas direct investment from China fell by 35% in January, compared to a year ago & Chinese investment in overseas property dropped by 84%.
Over-inflated Chinese property prices and the risk of their property bubble bursting, is a concern. We’re tracking resale data in the major cities and there’s evidence of price declines emerging since November of last year.
These are trends we’re watching closely as they form the basis of our “risk” scenario for global equities, especially given the gap between forward PE valuations and probable 2017 earnings growth.
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Boral has created a negative pricing structure following the stock making a lower low and then a lower high at $6.35 in last week’s trading.
With our general concerns around both domestic and US housing construction trends, combined with Boral’s high valuation and moderate underlying earnings growth, we think this is worth keeping on your “short signal” list.
The headline data from ANZ shows that the bank had a strong start to FY 2017. However, the pick-up in property and trading income are going to be difficult to replicate into H2 2017.
ANZ delivered around $2 billion in cash profit, which was well above the street’s expectations of $1.7 billion. The higher numbers were underpinned by strong trading income and a $283 million bad debt charge versus an expected $446 million charge.
We note that historically ANZ has had higher Q2 bad debt charges compared to Q1
We would expect price resistance to emerge at or around the January 9th high of $31.80.
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