Good Evening,

Welcome to the ASX News Daily Recap.

Lost track of what happened on the market today?

Don’t stress. We’re here to catch you up.

Here’s a sample of what you may have missed:

1. 🚨Coles Theft Problem

2. ✅Altium Share Price Soars

3. 💲Megaport Maps Out Cash Flow Climb

4. 📱Softbank's Arm Preps for 2023's Mega IPO

5. 🏢Meta's Office Order

The Recap

Altium Dominates the Day as
Coles Grapples with Theft

A directionless day on the market, but the ASX200 was able to etch out a slight gain on Tuesday, rising 0.09% to 7,121.6

BHP Group and Coles were the heavyweights among dozens of companies that reported earnings today. Both fell after missing earnings estimates—more on that and the other companies who reported today later.

Megaport and Altium led the Tech (+5.19%) sector higher as both reported earnings that were received favourably by the market. WiseTech (+2.28%), Xero (+4.45%) and NextDC (+2.73%) all rode the Tech wave. Telco (1.92%) was the other big mover, as Telstra shares rose 3.28%.

The Staples sector was the biggest faller, thanks to Coles (-7.08%) on the back of higher-than-expected costs. Woolworths (-3.03%) and Wesfarmers (-2.20%) followed the grocer to finish lower.

The Gold price rose slightly on Tuesday after falling to five-month lows, taking some relief from a weaker U.S. dollar—oil prices to continue to be steady as weaker Chinese demand looms.

ASX200 Stock Snapshot

Wall Street

Stocks rose on Wall Street, with the NASDAQ up 1.56% and S&P500 up 0.69%. Nvidia surged 8.5% ahead of its earnings report, while Tesla increased 7.3% after falling 28% from its July 2023 high.

Bond yields, though, spiked with the 10-year Treasury climbing 9 basis points to a 16-year high of 4.3%. The 2-year yield rose above 5%.

S&P Global cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody's, warning that funding risks and weaker profitability will likely test the sector's credit strength.

UK chipmaker Arm, the creator of chips sought by Apple, Google, and Qualcomm, filed for a Nasdaq listing under the ticker symbol "ARM." Softbank, the Japanese conglomerate, owns the company and took it private in 2016.

Zoom's Q2 earnings beat estimates with revenue of US$1.14B and earnings per share of US$1.34, prompting a 4% share rise. The company also invested in AI startup Anthropic and raised its fiscal year 2024 adjusted earnings per share guidance to US$4.63-$4.67.

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Earnings

Company Earnings Summary

• BHP Group's full-year underlying profit dropped by 37% to $US13.4 billion due to lower prices from iron ore, copper, and coking coal and decreased Australian iron ore sales volumes. Shareholders will receive a US80¢ final dividend, bringing the yearly total to $US1.70 per share. Despite being 48% lower than the previous year, this year's dividends rank as the fourth highest in BHP's history. The company is also selling its Daunia and Blackwater coking coal mines in Queensland. Weather-related disruptions and port maintenance impacted BHP's sale of 280.7 million tonnes of iron ore, marking its lowest in four years.

• Coles Group reported a 5.2% increase in revenue, reaching $41.83 billion for FY23, with supermarket sales contributing $36.75 billion, a 6.1% rise. Despite food inflation at 6.7%, liquor sales dipped by 0.1%. The reported NPAT stood at $1.1 billion, matching consensus estimates. Shareholders will receive a final dividend of 30¢ per share on September 27, making the annual dividend 66¢, consistent with the previous year. However, Coles' shares dropped 7.1% following revelations of a 9.7% surge in business costs in its primary supermarket division. This increase was attributed to higher wages, increased leave entitlements, and higher bond rates. Notably, theft, termed as "loss" by Coles, saw a significant 20% rise in 2023, a trend observed in the U.S. due to inflation and living cost pressures. CEO Leah Weckert highlighted theft as a significant factor in the $298 million profit drop in the first half of 2023.

Here is a quick recap of some of the other companies that reported earnings

• AUB reported an underlying NPAT of $129.1 million for FY23, up from $74 million, as the company continues to grow in its agency business and turnaround in New Zealand. AUB set FY24 underlying NPAT guidance in the range of $154 million to $164 million

• Estia Health reported an increase in average occupancy of 92.3%, up from 91.6% in FY22. Estia reported a loss of $33.9 million after tax, an improvement of $52.4 million from a year earlier.

• G8 Education saw half-year statutory profits bounce back to $15 million, from $8.5 million last year, after a challenging 2022; however, workforce shortages remain challenging. Overall occupancy was 67.4%, below pre-pandemic levels.

• Nanosonics reported Free Cash Flow for the year of $19.8 million, compared to a loss of $0.2m in FY22. Revenue increased by 38% to $166 million, and NPAT rose to $19.9 million. Nanosonics shifted to a new direct sales model in the U.S. during the year.

• Redbubble expects trading conditions to remain soft in its key markets, particularly the U.S. saying it expects GP After Paid Acquisition (GPAPA) to be between 23% - 26% in FY24 after reporting 28.5% for FY23. RBL reported a loss of $54.2 million for FY23, from $24.6 million in FY22.

• Perenti reported a record EBITDA of $552.6 million for FY23, up $126.2 million Y/Y; however, it did not declare a dividend.

• Peter Warren Automotive cut its dividend to 11c per share after posting a 0.3% decline in NPAT to $56.4 million.

• Scentre Group wrote down $329.5 million in the value of its shopping centre portfolio, sending its statutory profit down by 68.9% to $149.4 million. Operating profits rose by 3.2% to $508.8million

• Woodside increased first-half profits by 6% due to higher oil and gas production. An interim dividend of 80c per share was declared.

Markets

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Quick Singles

🪃 Local News

• Nuix has resolved the proceedings against Edward Sheehy. As a result, the former CEO's share options will be cancelled, and he will pay $700,000 towards the company's legal costs.

• Newmont has announced that the ACCC has cleared the company to proceed with its proposed acquisition of Newcrest Mining.

• Sandifre Resources has received approval from the Botswana Department for Mines to extend its Motheo Copper Mine Licence.

• QBE Insurance has announced that Todd Jones will be stepping down as CEO of its North American operations after nearly four years. An executive search will be conducted as Julie Wood takes over as interim CEO.

🌏 Around The Globe

• SoftBank’s ‘Arm’ filed what will be the biggest IPO of 2023 so far. Arm is seeking a valuation of $60 billion - $70 billion; however, this is not yet confirmed. SoftBank acquired the phone semiconductor company in 2016 for £24 billion.

• Coworking company WeWork announced a 1-for-40 reverse stock split on Friday to avoid getting delisted from the New York Stock Exchange.

• Canadian leaders are urging Meta to lift its news ban, citing the need for information sharing during wildfires in the Northwest Territories. Meta blocked news sharing in Canada after a law was passed requiring tech companies to pay news publishers for articles shared on their platforms.

• Meta informed employees that failure to comply with the new three-day-a-week office attendance policy may result in termination. The policy will be enforced starting September 5. As of June, employees only averaged 2.2 days a week in the office.

• Online grocery shopping and delivery company Instacart is planning an IPO as soon as September and will file plans to IPO as soon as next week

₿ Crypto Corner

• SEC requested permission from a federal judge to appeal her ruling that Ripple Lab’s XRP token was not a security when sold to the public

• FTX founder SBF, whose $250M bail was revoked due to witness tampering, is asking to be released five times a week to work on his defence.

• This time last week, Shiba Inu was leading the crypto market; now, the meme coin is down over 20% in the previous week after a lacklustre launch of its Shibarium Ethereum layer-2 blockchain.

Movers and Shakers

✅ Biggest Gainers

• Hub24 were among the big winners today, climbing 11.3% to $31.20 after reporting a 64% rise in underlying NPA to $58.8 million and Funds Under Admin (FUA) surging 23% to $80.3 billion. Platform FUA increased to $64.5 billion, with net inflows of $9.7 billion, down 17%. Hub said active advisers on the platform rose by 15% to 4,011, with 113 new agreements. A share buy-back program of $50 million was announced, set to start on September 11. The company aims to grow its Platform FUA to $92-$100 billion by FY25.

• Altium reported after the market close on Monday, with the share price popping 25.9% to $46.44. Altium reported a 19.2% increase in revenue to US$263.3 million, with a 19.9% rise from the company’s Design Software segment and a 7% lift in the Cloud Platform. The company’s Americas segment was the big winner, climbing by 32.3%, whilst China's revenue fell 8% to US$19.5 million. Total subscriber numbers grew by 7.5% to 61,159, with the average subscription seat growing 22.5% to US$2,408. Full-year dividend of 54c per share was up 14.9% from last year.

🔻Biggest Fallers

• Data#3 (DTL) share price fell 18.7% after a miss to consensus estimates profit. NPAT for FY23 was $37.0m, which was 22.4% higher than FY22 but below estimates of $39.0m. Total revenue rose 16.9% to $2.5 billion, fuelled by strong growth from multi-cloud revenue and products that facilitate its customers' investments in cloud solutions. The Data3 share price had run up strongly before today’s earnings report, climbing 22.3% in the last 12 months before today’s update.

• ARB Corporation fell today on falling profit and revenue, with an NPAT of $88.5 million for FY23, down 27.5% from FY22. ARB said the profit decrease reflected a difficult trading environment stemming from inflationary pressures, the timing of sales price increases, exchange rates and overhead recoveries. The company did say they expect sales and profits to grow into FY24, with GP% now recovering to historical levels. ARB finished the day down 4.1% to $32.18

Deep Dive

Megaports Momentum Continues,
Projects Major Gains Ahead

Megaport investors have had a wild ride the last three years, with the one-time market darling reaching share price highs of $21.00 in 2021 and lows of $4.10 earlier this year. Megaport reported its FY23 earnings today, sending the share price 16.9% higher to $12.15 as its 2023 resurgence continues.

Strong revenue growth, positive free cash flow and a rosy FY24 forecast were the main drivers of the increase.

Financial Highlights

• Revenue: $153.1 million, +40% vs. FY22

• Customers: 2,856, +8%vs. FY22

• Annual Recurring Revenue: $178.6 million, +39% vs. FY22

• Gross Profit Margin: 68%, up from 62% in FY22

• Normalised EBITDA: $20.3 million, up from a loss of $10.2 million in FY22

• Net Loss: $9.8 million, up from a loss of $48.5 million in FY22

The big jump in revenue was due to organic growth and the Cloud VXC price increase.

Megaport lowered its Direct Network costs to 21% of revenue vs. 27% in FY22 as the company implemented cost control measures. This helped drive up Gross Profit Margins.

Despite the increase in revenue, operating expenses only rose by 2% Y/Y, which the company said resulted from its operational review and the impact of its cost-out program. Megaport also decided to pay $2.3 million to staff in stock bonuses rather than cash.

Whilst Megaport reported a Net Cash outflow for the year of $34.5 million, it said Q4 had a positive cash flow of $2.3 million.

Megaports Net Cash on Hand on June 30 was reported as $33.3million

Outlook

Megaport said it would be net cash flow positive for the next financial year and would continue its investment in sales roles and planned capital expenditure. Megaport lifted its earnings guidance for FY24, with EBITDA growth to be between 152% - 182%, coming in between $51 million and $57 million. Revenue was guided to be between $190 million and $195 million, an increase of 21% - 27%.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of August 16

1. Core Lithium (CXO) - 10.77%

2. Flight Centre (FLT) - 10.29%

3. IDP Education (IEL) - 9.04%

4. Syrah Resources (SYR) - 8.93%

5. JB Hi-Fi (JBH) - 8.31%

6. Pilbara Resources (PLS) - 8.30%

7. Lake Resources (LKE) - 8.25%

8. Brainchip (BRN) - 7.67%

9. Elders Limited (ELD) - 7.62%

10. 29Metals (29M) - 7.36%

📊Broker Ratings

What do the brokers have to say?

1. A2 Milk (A2M) - Upgraded to Neutral from Underperform (Macquarie)

2. a2 Milk (A2M) - Upgraded to Add from Hold (Morgans)

3. Iress (IRE) - Upgraded to Add from Hold (Morgans)

💲Dividends

Companies trading ex-dividend today

• Kelly Partners Group Holdings - $0.0044

• Computershare - $0.40

• Deterra Royalties - $0.1685

• Netwealth Group - $0.13

• Microequities Asset Management Group - $0.015

• GQG Partners - $0.0235

• IPH Ltd - $0.175

📅 Economic Calendar

Data to keep an eye on this week

DISCLAIMER: None of the information provided in this newsletter should be constituted as financial advice. This newsletter is strictly for educational purposes only. It should not be taken as investment advice or a solicitation to buy or sell assets or make financial decisions. Please do your research.