Good Evening,

Welcome to Equity Espresso’s Daily Recap. 

The three-day win streak ended on Tuesday, as the ASX 200 index fell by 6.1 pts. or 0.08% to 7,659.0 on a mixed day that saw more sectors in green than red. BHP Group (-1.09%), the largest company on the ASX, ended the day lower after it reported a half-year profit of US$927 million - its lowest in eight years. The miner cut its interim dividend to US$0.72 from US$0.90 as profits fell due to $5.4 billion in write-downs, which it pre-warned the market about last week.

Telecommunication (+1.47%) was the best performer of the six sectors to finish the day in the green, with Telstra (+1.03%), REA Group (+2.43%) and CAR Group (+2.61%) all closing higher. Real Estate (+0.70%) and Financials (+0.44%) also finished the day ahead.

On the negative side, the Materials (-1.09%) sector dropped as Iron Ore prices in China and Singapore dropped for the second straight session as concerns linger on Chinese demand for steel. The Energy (-0.91%) sector also finished lower as Crude Oil prices fell marginally to US$78/bbl.

An appeal by ANZ Group and Suncorp, in which the latter would sell its banking division to ANZ, was successful today, with the Australian Competition Tribunal ultimately finding that the deal would not hurt competition in home, business or agribusiness lending. The deal will be the biggest merger in banking since 2008, when Commonwealth Bank bought Bankwest. ANZ Group (-2.18%) shares fell on the back of the announcement, whilst Suncorp shares (+5.96%) rose.

Star Entertainment Group (-19.6%) plunged after coming out of a trading halt after the NSW regulator said it was not satisfied the casino operator had sufficiently overhauled its culture to be allowed to operate.

Earnings reports continued to roll in this week:

• ARB Corporation (+10.2%) was one of the better performers today as it lifted its Net Profit After Tax by 8.1% to $51.3 million during the half due to improved margins and lower freight costs.

• Step One Clothing (+18.9%) saw its share price spike as it reported a 25.5% lift in revenue during the half, while EBITA grew by 35.6% to $10.1 million. The online innerwear brand added 182,000 new customers to over 1,540,000 customers globally.

• Baby Bunting (-10.9%) shares dropped after reporting a 2.5% fall in sales to $248.5 million, whilst comparable store sales were down 7.0%. The company's Net Profit After Tax was down 1.0% to $2.7 million.

• Sonic Healthcare (-7.8%) fell after it reported a 47% slide in Net Profit After Tax to $202 million as COVID-related revenue was reduced by 90%. Total revenue rose 5% to $4.31 billion.

• Ansell (-2.07%) reported lower sales and earnings during the first half of FY24, with profit dropping by 70% to US$19.4 million as the company has cut around 1,300 jobs.

• Coronado Global Resources (-5.4%) saw its profits fall by almost 80% on rising production prices, with statutory profits down to US$156.1 million compared to US$771.7 million a year earlier.

Economic Data

• Canadian producer prices fell by 0.1% in January from the previous month, which was in line with market estimates following a 1.6% fall in December.

• The Bank of China slashed its 5-year loan prime rate by 25bps to 3.95% during February - more than market estimates of a 15bps reduction.

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Quick Singles

🌎️ Around The Globe

• The New York Times reported that President Biden's administration intends to relax the stringent new Environmental Protection Agency (EPA) regulations that would have compelled US automakers to make electric vehicles (EVs) their primary business by 2032.

• Jeff Bezos has sold another 12 million Amazon stock valued at around $2 billion, making it $6 billion worth of shares sold in the past week.

• OpenAI has completed a deal that values the artificial intelligence company at at least $80 billion, according to a New York Times report.

• Reddit has reportedly signed a $60 million annual deal with an unnamed AI firm that will gain access to its user-generated content for model training. The deal can potentially establish a framework standard for future AI licensing agreements with social media platforms.

• The European Commission has accused TikTok of failing to adequately protect children by allowing kids to easily pose as adults, which gives them unrestricted access to harmful content.

• The Biden Administration will give $1.5 billion to Global Foundries to expand computer chip production in the country as it aims to become less reliant on China.

• Capital One plans to acquire U.S. credit card issuer Discover Financial Services in an all-stock transaction valued at $35.3 billion to create a global payments giant.

• New vehicle registrations in Europe increased by 11% in January, as automakers such as Volkswagen AG and Stellantis NV capitalised on order backlogs and a resurgence in demand for electric cars. According to the European Automobile Manufacturers' Association, passenger-car deliveries reached 1.02 million units last month.

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A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of February 14

🗂️ Broker Ratings

1. a2 Milk Co (A2M) - Downgrade to Neutral from Buy (Citi)

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

3. APM Human Services International (APM) - Upgrade to Buy from Hold (Bell Potter)

4. Imdex (IMD) - Upgrade to Hold from Sell (Bell Potter)

5. Lendlease Group (LLC) - Downgrade to Neutral from Buy (Citi)

6. Liontown Resources (LTR) - Downgrade to Sell from Neutral (Citi)

7. Macquarie Group (MQG) - Downgrade to Hold from Add (Morgans)

8. Reliance Worldwide (RWC) - Upgrade to Buy from Neutral (Citi)

9. Reliance Worldwide (RWC) - Upgrade to Add from Hold (Morgans)

10. Reliance Worldwide (RWC) - Upgrade to Accumulate from Hold Ord Minnett

👨‍💼 Director Transactions

What are the insiders doing? (On-market trade only)

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make financial decisions. We strongly recommend conducting your own research before making any investment decisions.