Good Evening,

Welcome to Equity Espresso’s Daily Recap. It was a slow start to the week as markets await the CPI data release on Wednesday, which will start the will they or won’t they discussion until the RBA meets next week to decide on what to do with interest rates. Let’s jump in.

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The Recap

Markets started the day briskly this morning, with the ASX200 index trading in the green before taking an afternoon siesta, ending the day down 53.2 pts. or -0.76% to 6,987.60.

10 of the 11 sectors finished lower, with Real Estate (-1.34%), Discretionary (-1.26%) and Materials (-1.13%) the largest fallers, while Tech (+0.45%) rose largely thanks to two positive broker notes for WiseTech, which finished the day 1.56% higher.

Oil prices steadied, with Brent Crude trading at $US81/bbl after a three-day fall, on signs that OPEC+ may deepen production cuts when it meets this Thursday.

Gold remained above US$2,000/oz on Monday, hitting its highest levels in over six months as prices continue to benefit from U.S. dollar weakness with markets.

Adore Beauty shares moved 20% higher after it said it knocked up a cash offer from THG Plc. for $1.25 to $1.30. Could we be in for another takeover saga? Adore Beauty shares are down around 85% since its IPO in October 2020 at $6.92 per share, closing today at $1.115.

Economic Data

• Canada's Preliminary Retail Sales advanced by 0.8% in October, the sharpest growth rate in six months.

• The German Business Climate Indicator rose for the second consecutive month to 87.3 in November 2023, slightly below the market consensus of 87.5.

• China's Industrial Firms earned CNY 6,115.42 billion in profits in the first ten months of 2023, marking a 7.8% YoY decline, slower than the 9% slump in the previous period.

Wall Street

A quieter Friday session on Wall Street post the Thanksgiving holiday, with the S&P 500 (+0.06%) rising marginally, while the NASDAQ (-0.11%) was slightly lower. It marked the fourth straight week of gains for both key indices as markets put the rate hikes in the rearview mirror.

Nvidia shares fell 1.9% after reports that the chipmaker notified its China clients that it would delay exports of a new artificial intelligence chip till next year to comply with U.S. export restrictions.

Outlook

Some of the companies out with earnings tomorrow include Collins Foods, Plenti Group, Aroa Biosurgery, and Gentrack Group. This week is slightly busier for data as we get October Retail Sales tomorrow, followed by CPI and Construction data on Wednesday.

Over in the U.S., monthly building permits and new home sales data for October drop tonight.

Early signs indicate a slow start to the week in the U.S., with S&P 500 (-0.32%) and NASDAQ (-0.48%) futures both lower. Cybersecurity company Zscaler is the largest company of note to set report earnings tonight.

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Quick Singles

🪃 Local News

• Two of Australia’s largest superannuation companies, IFM Investors and Aware Super, have pledged to invest $19 billion into the U.K. and European markets as they look to explore overseas opportunities.

• The Secretary of the Department of Home Affairs, Michael Pezzullo, has been terminated after leaked conversations revealed the extent of his attempts to influence government policy and decisions.

• The Australian government plans to introduce new legislation to empower the central bank's independent expert members to set interest rates through a specialist monetary policy board. The proposed reforms will have a separate RBA board for the day-to-day operations, fewer policy meetings, and a more straightforward dual mandate of price stability and full employment. These changes will make the RBA more aligned with other major central banks.

• The Australian branch of HSBC is planning to become the first major bank in Australia to offer venture debt products. Venture debt is a type of loan provided to high-growth venture-backed startups. Rather than an equity investment, venture debt allows entrepreneurs to raise capital without setting a valuation or diluting their ownership stake.

• Liberal MP Andrew Bragg is proposing home borrowers be allowed to shift their superannuation balances into mortgage offset accounts to reduce the sting of interest rate rises.

🌏 Around The Globe

• According to a report from Adobe Analytics, Black Friday generated $9.8 billion in U.S. online sales - 7.5% from a year ago. Impulse purchases may have played a role in the Black Friday growth since $5.3 billion of the online sales came from mobile shopping.

• ByteDance plans to wind down its leading gaming brand, Nuverse, in a major withdrawal from the sector after failing to make headway.

• SpaceX plans to sell shares next month in a deal that prices them around the same level as summer 2023. It was reported earlier this month that Musk was discussing a possible IPO for as early as late 2024, which he has denied

• Amazon workers walked out across Europe on Black Friday at multiple locations in protest against the U.S. e-commerce giant's working practices.

• Vietnam is set to approve a top-up tax for multinationals, which will raise the effective rate of the corporate levy to 15% from January.

Markets

ASX Company Movers

Commodity Prices

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

• Aeries Resources (AIS) announced a $30 million capital raise via an Institutional placement at a share price of $0.11, with the funds to be used to provide working capital.

• Adore Beauty (ABY) has rejected a takeover proposal from London-based e-commerce company THG plc. for $1.25 - $1.30 per share, saying the bid undervalued the company. Adore Beauty shares rose by 19% to close at $1.115.

• Dusk Group (DSK) provided a trading update at its AGM today, where it said total sales for the first 20 weeks of FY24 were down 11.3% on the pcp, with in-store sales down 12.3% and online sales up 8.0%.

• Healius (HLS) chairwoman Jenny McDonalds will not stand for re-election at the company’s AGM. “I believe it is important for the company to have a chair who has the full support of shareholders, and therefore I have taken the decision to step down and not to seek re-election in the best interest of the company,” Macdonald said.

• IGO Ltd (IGO) confirmed today that ex-Rio Tinto Aluminium Chief Executive Ivan Vella will commence as the company’s Managing Director and Chief Executive Officer on December 11.

• InvoCare (IVC) was removed from the ASX today after TPG Capital acquired it for $1.8 billion. Australia’s largest funerals and crematoria group operates several national and regional brands, including White Lady and Simplicity.

• MedAdvisor (MDR) provided a trading update, saying group operating revenue will increase by 10-15% from the pcp. to between $70.5 million and $73.5 million.

• Perseus Mining (PRU) has acquired a 15.03% interest in gold miner developer OreCorp, whose key project is the Nyanzaga Gold Project in Tanzania.

• QBE Insurance (QBE) provided a Q3 market update, where it said it expects gross written premium growth of around 10% and an operating ratio of about 94.5%.

• Smartpay Holdings (SMP) reported a 33% increase in revenue in its first half report issued today while also recording a normalised Profit Before Tax of $4.8 million - a 68% increase on the pcp. Smartpay increased their Australian transacting terminal fleet to 17,700 terminals as of the end of September - up 13% from March 31.

Social Media

 📱 Post of The Day

According to a survey from the National Opinion Research Center (NORC), self-reported “happiness levels” across age groups rarely align.

Americans between 50 and 64 were the least likely to say they were “very happy”. Conversely, 31% of adults aged 35-49 said they felt “very happy” last year, with the youngest and oldest cohorts falling somewhere in between.

This chart was provided by Chartr. You can sign up for their content here.

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Broker Research

Technology One

Code: TNE | Market Cap: $4.98bn  | Current Price: $16.07
Price Target: $17.30 | Sector: Information Technology | Broker: Shaw & Partners

Overview

Technology One Limited provides integrated enterprise business software solutions to customers worldwide. The company operates through its Software and Consulting segments.

The company released its full-year FY23 results on November 21.

FY23 Result Highlights

• Revenue was 3% better than expected but offset by its cost base, which was 6% higher.

• The company pulled forward its +$500 million Annual Recurring Revenue (ARR) target to FY25 (from FY26) and said it was on track to reach $1 billion ARR by 2030

• Growth in the U.K. of 51% YoY was a highlight and should support incremental new ARR of between $12.0 - $13.0 million.

• The broker estimates new customers contributed over $11.0million

Recommendation 

After the result, The broker upgraded its FY24 revenue and cost forecasts and increased its price target to $17.30 from $15.70. The improved price target is mainly due to the roll-forward of its ARR target and higher revenue in the long term. The broker rates as a Hold today.

You can access the full broker report here.

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Daily Quiz

❓️ Test Your Knowledge

Last Week’s Question. Which bank warned its employees this week that their bonuses were at risk if they didn't work in the office at least 50% of the time?

Answer: ANZ (28%). ANZ told their staff last week that their annual bonuses could be at risk if they fail to spend at least 50% of their scheduled working hours in the office. CBA (35%) was the most popular answer, followed by ANZ.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of November 20

📊 Broker Ratings

What do the brokers have to say?

1. Healius (HLS) - Upgrade to Equal-Weight from Underweight (Morgan Stanley)

👨‍💼 Director Transactions

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

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.