Investment Ideas From the Edge of the Bell Curve
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The ASX 200 closed flat at 7,611.2 in another subdued day that saw mixed earnings reports from some of the ASX’s biggest names.
So, what were the themes of the day?
Top Dog: Insignia Financial soared 13.7% to $2.57 after its earnings report, claiming the best performer crown on the ASX 200.
Airline Woes: Qantas shares plummeted 6.8% to $5.21 despite a $400 million buyback announcement, as pre-tax profits dipped 12.8%.
Mining Mania: Fortescue Metals revelled in high iron ore prices, boosting its interim dividend 44% and sending shares up 2.1% to $27.83.
Lithium Slump: Pilbara Minerals felt the pinch, with profits plunging 82% due to the lithium price drop. Shares still managed to gain 3% to $60.90. Mineral Resources also cut its dividend by 83.3%, but shares rose 3% to $60.90.
Healthcare Hiccup: Medibank shares sank 5.4% to $3.65 after its 2024 premium growth guidance fell short of expectations.
Retail Gem: Discount jeweller Lovisa sparkled, growing net profit 10.4% and sending shares soaring 10.4% to $27.30.
Five-Year Frenzy: Lovisa’s impressive performance continues, with its share price skyrocketing 176% over the past five years.
Mania is likely to hit US stocks overnight as the huge Nvidia earnings smashed past expectations.
Dan Ives of US research firm Wedbush called it “probably the most important earnings that we’ve seen from any company in the market for the last five years”.
Financial wealth giant Insignia Financial [ASX:IFL] shares are up by 13% in trading this afternoon at $2.55 per share.
The move comes after the company’s half-year results showed Funds under management up 5% on PCP to an eye-watering $300.6 billion.
Insignia delivered a statutory net profit after tax of $49.9 million, while its struggling advice business showed improvement, up $21.2 million (but still in the red by $700,000).
The company said it expects its advice and financial services arm to return to profitability by mid-2024.
Mr Mota said the company is pleased to deliver a solid half-year result.
“The momentum and progress we have made… through disciplined execution positions the business for sustainable future growth,” he said.
“With Australia’s growing pool of superannuation and demographic trends, Insignia Financial is well placed to support Australians with their financial wellbeing into the future.
The company declared an interim dividend of 9.3 cents per share.
The big four and miners dragged down the ASX 200 at midday with the index flat at -0.06% 7,603.7.
While today is subdued, expect Wall Street to fire on all cylinders tomorrow as blockbuster earnings from Nvidia will likely be the main diver.
Lots of big earnings reports out today on the ASX with:
Fortescue lifted its interim dividend 44% to $1.08 per share on strong earnings from high iron ore prices.
Qantas dropped -1.8% after earnings fell -13%. The company also announced a $400 million share buyback.
Nine cut its dividend by 33%, saying the advertising market was ‘markedly weaker’; shares are down by -4.50%/
Pilbara Minerals’ profits fell sharply, down -83%, as low lithium prices continued to weigh on the sector.
Similar bad news for miner IGO, whose profits also were down -53% on the back of weak lithium prices.
Lithium miner Pilbara Minerals [ASX:PLS] experienced a significant financial hit, with its net profit falling a staggering 83% in the first half of the year. This drastic decline is directly linked to the dramatic collapse in lithium prices.
Despite a 7% increase in spodumene concentrate shipments to 330,000 tonnes, the Perth-based company’s net profit plummeted from $1.24 billion to a mere $220 million compared to the same period last year.
This harsh reality was further reflected in their revenue and EBITDA, which dropped 65% and 77% respectively, reaching $755 million and $415 million.
Chief executive Dale Henderson said the company was pushing ahead with plans to boost production at its Pilgangoora mine in WA.
“Although pricing has reduced significantly from the prior year’s record highs, the company finds itself in a position of strength,” he said.
“Our strong balance sheet positions the business to navigate any period of softer pricing and provides a competitive advantage relative to many peers within the sector.”
Shares are down by -1% in trading this morning, with shares at $3.62 per share.
Fortescue Metals Group [ASX:FMG] reported a significant leap in profits for the first half of fiscal 2024, exceeding analyst expectations.
Net profit jumped 41% to US$3.33 billion (A$5.1 billion) compared to the same period last year, fueled by stronger-than-expected iron ore prices.
This performance resulted in a fully franked interim dividend of $1.08 per share, marking a 44% increase from the previous year’s payout and reaffirming the company’s 65% payout ratio.
Fortescue surpassed analyst predictions, pushing its stock price up by 2.66% in its share price in trading this morning. The current price is $28.02.
The company reaffirmed guidance for iron ore shipments, costs, and capital spending.
The impressive profit hike and generous dividend increase reflect the favourable environment for iron ore producers like Fortescue at the moment.
In the past week however we have seen iron ore prices start to slip from their lofty highs, with the current price near a 4-month low.
Source: Fortescue half-year earnings presentation 22-02-24
Good morning. Charlie here
The ASX 200 opened down -0.23% to 7,590.8 this morning as US stocks slipped after pre-jitters of Nvidia’s earnings sparked a profit-taking selloff.
Nvidia reported after hours and smashed expectations with an 8% beat on already lofty expectations. Highlights were:
Things are looking better, according to Goldman Sachs, which upgraded its S&P 500 target for the second time in the past six months.
While famed economist David Rosenburg says forget the DotCom bubble, ‘The Magnificent Seven tech stocks are looking a lot like the Nifty Fifty bubble in the 1970s.’
‘These were real companies with real investment themes behind them, but investor sentiment turned to euphoria and fueled prices and valuations into bubble territory,’ he said last night.
Wall Street: S&P 500 +0.13%, Dow +0.13%, Nasdaq -0.32%.
Overseas: FTSE -0.73%, STOXX +0.32%, Nikkei -0.26%, SSE +0.97%.
The Aussie dollar rose +0.04% to US 65.50 cents.
US 10-year bond yields rose +4bps to 4.32%.
Australian 10-year bond yields rose +4bps to 4.21%.
Gold is up +0.09% to US$2,026.07, while Silver is down -0.56% to US$22.88.
Bitcoin fell -1.39% to US$51,607, while Ethereum fell -2.34% to US$2,946.
Oil Brent rose +0.96% to US$83.13, while WTI Crude rose +1.30% to US$78.04.
Iron ore fell -1.5% to US$119.0 a tonne.
4:53 pm — February 22, 2024
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Investment ideas from the edge of the bell curve.
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