Good Evening,

Welcome to Equity Espresso's Daily Recap. A nice start to November, with equity markets beginning the new month positively. Plenty of economic data to digest today, whilst quarterly earnings and trading updates continue to roll in. Let’s jump in.

The Recap

Markets followed Wall Street's positive lead overnight to cross back above the 6,800 mark, with the ASX200 index finishing up 0.85% to an intraday high of 6,838.3 to kick off November on a positive foot. Nine of the 11 sectors finished the day higher, with Real Estate (+1.85%) stocks leading the way, followed by the Health Care (+1.45%) sector. The positive day on the equity market came despite the Australian 10-year bond price edging closer to a 12-year high of 5.00% to trade at around 4.95%.

A mixed day for commodities. Gold prices dipped back below the US$2,000 mark to currently trade at around US$1,980, whilst Iron Ore futures rose to US$122.00, which helped some of the heavyweight miners on the ASX finish higher.

In company news, Regal Partners announced it was buying a 50% stake in global commodities financier Taurus Funds Management, which will take Regals Funds Under Management to $8 billion. Amcor shares also rose despite a fall in revenue and profit from the prior year, as it reaffirmed its full-year earnings guidance of $0.67 to $0.71.

Economic Data

• Australian Building Permit approvals fell by 4.6% during September - well below estimates of a flat read after August’s 8.1% rise.

• China’s Calxin general manufacturing PMI fell to 49.5 in October from 50.6 in September, missing market forecasts of 50.8.

• Eurozone Inflation continues to fall, declining to a 2.9% YoY rise in October, reaching its lowest level since 2021 and falling below the consensus of 3.1%. Core Inflation (excl. volatile items) fell to 4.2%, its lowest point since July 2022.

• Eurozone GDP contracted by 0.1% in the September qtr., slightly worse than the flat read expected by economists. This marks the first contraction in the Eurozone since 2020.

• New Zealand unemployment continues to creep higher, hitting 3.9% during the September quarter, its highest point since June 2021.

• The U.S. Home Price index rose 2.2% YoY in August, the biggest rise in seven months following a 0.2% increase in July. The 2.2% increase was ahead of a forecasted 1.6% rise.

Wall Street

Markets rose again in the U.S. for the second day running, with both key indexes, the S&P 500 (+0.65%) and NASDAQ (+0.48%) finishing higher. The Fed kicked off its two-day monetary policy meeting on Tuesday, where it is widely expected that interest rates will hold steady at 5.00%. U.S. 10-year treasury yields continue to flirt close to the 5% mark and are currently trading at around 4.91%.

Some of the companies that reported earnings included:

• Caterpillar shares fell 6.7% despite an earnings beat, flagging slowing demand in the upcoming quarter.

• Amgen was another stock that fell after a Q3 earnings miss.

• Advanced Micro Devices stock fell in after-hours trading after its Q4 revenue estimates of $6.1 billion fell short of investor expectations.

• Match Group posted positive results during Q3, but a weaker-than-expected Q4 revenue guidance disappointed investors, with the dating service provider guiding for revenue of between $855 million and $865 million.

• Pfizer reported a net loss during Q3 as the company recorded several write-offs related to its COVID antiviral treatment, Paxlovid and its COVID-19 vaccine.

Outlook

Futures markets in the U.S. were trading lower this afternoon, with the S&P 500 (-0.09%) and NASDAQ (-0.08%) slightly lower.

The second busiest night of the earnings week before Thursday’s blockbuster, which includes Apple and Novo Nordisk, to name a few. Some of the bigger companies to report tonight include PayPal, CVS, Qualcomm, Airbnb, Apollo, Albemarle, Etsy, Kraft Heinz, and DoorDash.

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Quick Singles

🪃 Local News

• International Monetary Fund (IMF) economists believe that Australian interest rates need to rise further to reduce inflation and that governments should slow down infrastructure spending to ease the burden on home borrowers. The IMF economists believe Australia is running above capacity with low unemployment and sticky inflation.

• Commonwealth Bank’s mortgage book has shrunk for the third month in a row. The bank’s lending to owner-occupiers and housing investors fell to $542.2 billion at the end of September, Australian Prudential Regulation Authority data shows. This was down on $543 billion in August.

🌏 Around The Globe

• The U.S. Treasury has revised its estimate for federal borrowing in the current quarter due to better-than-expected revenues. The new net borrowing estimate for the October-through-December quarter is $776 billion, lower than the previous estimate of $852 billion made in late July.

• Orange Juice prices hit an all-time high of $4.17 per pound, rising 90% this year due to limited production in the U.S., Brazil, and Mexico, with Brazil facing uncertainty in supply rebound.

• Meta will launch paid subscriptions and temporarily pause ads for users under 18 in Europe to comply with E.U. privacy rules.

• WeWork plans to file for bankruptcy as early as next week, according to the Wall Street Journal.

• Private equity firm KKR closes $1.6 billion deal to buy book publisher Simon & Schuster.

• Shein buys British fast fashion brand Missguided for £20 million ahead of potential U.S. initial public offering.

• Britain will host the first-ever AI safety summit next month, positioning itself as an arbiter on AI between the U.S., China and the EU post-Brexit.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Sector

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

• Alcidion Group (ALC) sunk by over 27.84% to $0.070 after coming out of a trading halt today, announcing a Share Purchase Plan (SPP) to raise $1.0 million at a placement price of $0.075.

• Amcor (AMC) reaffirmed its FY24 outlook while announcing a Q1 2023 return of about $205 million to shareholders through dividends and repurchases.

• Aussie Broadband (ABB) will acquire Symbio Holdings (SYM) in a cash-plus shares deal, with the value of the deal totalling $3.01 per Symbio share. The Symbio Board unanimously recommends its shareholders vote in favour of the agreement. Symbio shares closed 1.70% higher to $30.44.

• Australian Clinical Labs (ACL) has extended its offer period to February 2024 regarding its merger with Healius (HLS).

• Ioneer (INR) shares rose by over 10.7% after the lithium-boron producer signed a MoU with Kore’as EcoPro Group, which will research, test and develop lithium clat at Ioneer’s Rhyolite Ridge site in rural Nevada.

• Novonix (NVX) has finalised a $US100 million grant from the U.S. Department of Energy (DOE) to expand domestic production of high-performance, synthetic graphite anode materials at its Riverside facility in Chattanooga, Tennessee.

• Oricia (ORI) and CF Industries are suing each other in the U.S. about an ammonium nitrate contract, with both companies pursuing separate lawsuits.

• Regal Partners (RPL) shares closed the day 7.7% higher after announcing it will buy a 50% stake in Taurus Funds Management as the company expands in credit and resources royalties.

• Sezzle (SZL) achieved its fifth straight profitable quarter in September, with a 36.0% year-over-year increase in total income to US$14.4 million. Its shares finished the day with 1.12%, which is higher.

 📱 Post of The Day

Technical Indicators

Chart Watch

A bearish chart to keep an eye on - Sandfire Resources (SFR)

Notes

• On a 4H timeframe, Sandfire has shown weakness when approaching both the 100 & 200-day Exponential Moving Average (EMA), where it formed another lower high.

• The share price is respecting the diagonal trend line, which acted as resistance multiple times, confluent with the 100 & 200 days EMA.

• The trading volume appears to be declining on a gradual slope

• If selling continues and Sandfire makes another low, it could find support at $5.60.

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Analyst Report

Beamtree Holdings - Buy

Code: BMT | Market Cap: $59.3m  | Current Price: $0.20
Price Target: $0.70 | Sector: Technology | Broker: Shaw & Partners

Beamtree Holdings develops and commercialises clinical decision support (CDS) systems for the healthcare industry in Australia and Internationally. Beamtree’s RippleDown technology provides real-time patient monitoring and alerting solutions.

The company provided a Q1 trading update last week:

September Quarterly Highlights

• Q1 Revenue was ahead of Beamtrees FY24 growth targets, with a 23% year-on-year increase and a 4% jump from the previous quarter.

• Signs that momentum is building from global Healthcare company Abbott with multiple sales disclosed and a robust pipeline

• Agreement to build a next-generation coding platform

• Bemtree continues to progress with the commercialisation of data and analytics company Ainsoff, which it acquired in 2021

Broker Recommendation

The broker reiterates their buy rating and price of $0.70. Beamtree trades on a FY24 EV/Revenue multiple of just 1.8x. The broker believes that this does not reflect several points, including:

1. Beamtree’s 20% growth rate and aspiration to achieve $60 million of ARR by the end of 2026.

2. Expectations to break even in FY25 - with the cash balance to get there

3. The company RippleDown technology

4. Potential with current partners and customers that it engages with.

If you would like the full copy of the report, reach out to us at [email protected] 

Daily Quiz

❓️ Test Your Knowledge

Yesterday’s Daily Quiz Question. Which of these Dating apps is not real?

Answer: MetaMates - For people who want to find love in the metaverse.
Sorry to the 68% who voted for Positive Singles - For people with HIV/AIDS or other STDs, that app is, in fact, real.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of October 26

📊 Broker Ratings

What do the brokers have to say?

1. Cedar Woods Properties (CWP) - Upgrade to Buy from Hold (Bell Potter)

2. Dicker Data (DDR) - Downgrade to Neutral from Buy (UBS)

3. Inghams Group (ING) -Downgrade to Hold from Buy (Bell Potter)

4. Nickel Industries (NIC) - Upgrade to Buy, High Risk from Neutral, High-Risk (Citi)

5. Pantoro (PNR) - Downgrade to Sell from Buy (Bell Potter)

6. Vicinity Centres (VCX) - Upgrade to Neutral from Sell (UBS)

👨‍💼 Director Transactions

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

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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.