Midday Market Roundup 27/08/2008

Sydney, Aug 27, 2008 (ABN Newswire) - The market is down 20. That comes on the back of a 27 point rise on Wall St and a 6 point rise in Futures this morning. Pretty quiet day today. Hard to find a feature other than the fact RIO hasn't done much on the back of what looked like great results (see below). Resources flat and financials down a touch. We are awaiting Woodside's results.

Pretty quiet night on Wall Street – Dow closed up 27 - Up 50 at best. Down 46 at worst. Financials up a touch on an FDIC report saying 98% of companies were well capitalized. Homebuilders down on poor housing data, oil up and energy and resources up. Lehmans speculated to be planning to set up a company funded by third party investors to take on some of its mortgage assets to dispel the fears around its debt and one analysts said Fannie Mae and Freddie Mac had enough capital to last the year – the duo up 8.3% and 20.67%. Energy stocks up 1.8% - up for the first time in 3-days on higher oil prices and Anadarko Petroleum announcing a confident buy-back of $5bn in shares. In economic news, July new home sales were up 2.4%, economists had expected 525,000, and August consumer confidence was up 9.6%, beating analysts' expectations. The NASDAQ closed down 0.15%.

Wall St has a long weekend this weekend for the Labor Day holiday.


The SFE Futures suggested a 6 point gain in the market.

Both BHP and RIO up in ADR form overnight, 1.93% and 0.66%. BHP goes ex-dividend 46.9c on Monday.

Metals all down – Nickel down 4.06%, Zinc down 2.37% and Copper 1.29%. Aluminium down 0.88%.

Oil price up $1.46 to $116.31 as Hurricane Gustav threatened the oil infrastructure in the Gulf of Mexico.

Gold up $2.50 to $824.20

Bonds up with the 10 year yield down to 3.78% from 3.79%

Rio Tinto announced their 1H result late yesterday – They were written up on the website yesterday. The price performance in the US was less than exciting…up 0.66% in the US in ADR form and down 0.5% in the UK. Made US$5.474m against forecasts of $5.133m. Up 55%. EBITDA up 73%. Cash flow up 54%. Capex up 91%. Jury still out on the success of the Alcan acquisition (Aluminium price have been falling since the acquisition) but they say "Rio Tinto Alcan integration is making good progress and remains on track to deliver $1.1 billion of after tax synergies from the end of 2009". Dividend up 31%. They talked about a positive outlook, strength in commodity demand, low inventory levels and constrained supply. They continue to tell us the BHP offer is too low. RIO down 0.25% today.

Results out today…


WPL – Woodside– Results just out. NPAT up 67% to $1.016bn – at first sight its ahead of analyst forecasts of $955m. Expect stronger production in H2. Will meet production targets. Revenue up 45%. Of course they are reporting for six months in which the oil price went up from $60.85 to $139.96 so the results should be good. Since the end of the Financial year the oil price has fallen 17%. WPL up 1.15%.

WDC – Westfield Group – IN LINE - Net profit down 55% to $1.29bn mainly due to property revaluations - Analysts' on average expected between $983.8m-$1.004bn. Operating income up 14.7% in constant currency terms to $928m, brokers predicted operating profit of $940m on average. WDC down 20% so far this year, outperforming the REIT sector by 12%. WDC down 1.7%.

TCL – Transurban – BELOW EXPECTATIONS - Underlying earnings up 19%. Posts a FY net loss of $142.8m. EBITDA up 19% to $489.6m, up from $419.9m last year – analysts' expected EBITDA of $543m ranging from $492.2m to $573.2.Revenue up 30% to $1.02bn. TCL down 0.7%.

TPI – Transpacific Industries – UNDER - Report a FY net profit of $175.3m, up 70% after a distribution to step up preference security holders. Analysts' on average expected $179.5m. GSJB Were expected $174.8m. Declare a final dividend of 10.1c. TPI down 3.3%.

MMG - Macquarie Media Group– FY net profit up to $273.8m from $37.8m on the back of acquisitions and asset sales. Declared a final distribution of 22.5c, down from 24.5c last year. MMG up 0.5%.

CEU – Connect East – Announce a FY net loss of $13.6m. Intends to declare a distribution for the period from 1 April to 30 September of 5.25c. Says the EastLink average daily trips in the first month came in at 135,555. While marginally ahead of the 133,722 trips during the first week, it was still well below the company's forecasts of around 186,000 daily trips during the first month of operations. CEU down 4.6%.

AIX - Australia Infrastructure Fund – FY net profit up 23% to $206.5m. Final distribution of 8.5c. Expects a satisfactory performance in 2009. AIX down 3.6%.

MCW - Macquarie Countrywide Trust– Net profit down 79.7% to $100.4m from $493.3m. FY total income down 76% to $150.7m. Declare a final distribution of 7.2c, down from 7.8c. MCW unchanged.

Gloucester Coal (GCL) – IN LINE – FY net profit up 30% to $23.4m and expects further profit growth this year. Big increase in contract coking coal prices in the 2H helped lift profits. Declared a final dividend of 16c. GCL down 1.3%.

AUW - Australian Wealth Management – said its net profit was up 13% to $65.2m and said it was well placed for further acquisitions. AUW down 6.9%.

In other news…


Babcock and Brown Infrastructure looking for investment partners to buy stakes in three of its core assets. BBI down 10.75%.

Babcock & Brown Communities (BBC) has requested a Trading Halt as it finalizes its response to the previously announced strategic review. Its board expects various agreements to be conducted with Babcock & Brown (BNB). 

Record Realty (RRT) has provided an update on record Realty Property Transaction loans. Down 2.5%.

According to Australian Broadcasting Corp.'s 7.30 TV program last night, we can expect some bad news from ABC Learning (ABS) – which remains suspended for a third day ahead of its FY result. The show detailed questionable accounting practices.

Lots of broker stuff on Woolworths this morning – Merrill Lynch say BUY with a 3500c target price, Citi HOLD, Credit Suisse cut their recommendation to NEUTRAL from Outperform and Macquarie Equities upped their recommendation to Outperform. WOW up 1.42%.

The response from Brokers on Foster's Group post results is also mixed – Macquarie expect it to Underperform, Credit Suisse says it will Outperform and JP Morgan have labeled it as Neutral. Fosters up 3.1%.

Tomorrow we have another busy day on the reporting front with the results from Origin Energy, Tattersalls, AMP and Aristocrat Leisure. See the website today for the mass of research post results in the last week – go to the Broker Archive link on the "Broker Stuff" page for over 2,000 broker recommendations in the last year showing the performance since the recommendation….a lot of them miserably embarrassing considering the Bear market and the inability of brokers to write the word SELL.

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