Good Evening,

Welcome to Equity Espresso's Daily Recap. Finally, there was some green on the board for Aussie investors, as we were starting to feel a little left out. Commonwealth Bank was the latest of the big banks to provide an earnings update today as global markets await the U.S. CPI data tonight. Let’s jump in.

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The Recap

After a disappointing start to the week yesterday, markets bounced back, with the ASX200 index finishing Tuesday’s session 57.9 points or 0.83% higher to cross back up above the 7,000 line at 7,006.70. Energy (+2.5%) stocks led the session as the Crude Oil price climbed to US$78/bbl, with Woodside Energy (+2.6%), Santos (+2.5%) and Whitehaven Coal (+2.2%) all higher.

The Tech (+1.42%) and Materials (+1.46%) sectors were the other big movers, as Iron Ore prices continued their recent climb to trade at US$130.50/t.

All eyes tonight will be on the U.S. Inflation data for October, which drops at 12:30 am (AEDST) Wednesday morning, as an early clue on the Fed’s next move on interest rates. Economists are predicting a 3.3% inflation read after September's 3.7% rise, with market consensus believing the Fed will hold interest rates when it meets in December - at least for now.

Brookfield and EIG’s proposed takeover of Origin Energy looks more uncertain by the day. Australian Super increased its stake in Origin from 15.03% to 16.50% as it plans to vote against the takeover deal. For the takeover to be approved, at least 75% of shareholders must vote in favour.

Economic Data

• The Westpac-Melbourne Institute Consumer Sentiment index fell by 2.6% to 79.9 in November, from 82 last month after a 79.7 read in September.

• The NAB Business Confidence fell by 2 points during November however, business conditions saw a slight improvement, rising from 12 to 13.

• India inflation fell to 4.87% in October, the lowest in four months, down from 5.02% in September but above forecasts of 4.80%.

• Chinese banks extended CNY 738.4 billion in new yuan loans in October, compared to CNY 2,310 billion in September. Loans usually fall in October due to seasonal factors, with this year's figures above CNY 615.2 billion in 2022 and forecasts of CNY 665 billion.

Wall Street

Investors took a wait-and-see approach on Monday, with the impending release of Consumer Price Index data on Tuesday expected to fall to 3.3% for October. The S&P 500 ended Monday’s session down 0.08%, whilst the NASDAQ dropped by 0.22%.

Tesla stock rose by 4.2% after it revealed its order terms for cybertruck purchases, which stipulate that buyers won’t sell the vehicle within the first year of ownership without permission from Tesla. Boeing (+4.0%) was another big mover on Monday after Emirates announced a $52 billion order for 95 Bowing aircraft, while China is considering ending its freeze on buying Boeing’s 737 Max planes. Tyson Foods dropped by 2.8% after missing Q4 revenue estimates, as the company saw a year-on-year decline in beef and pork sale volumes.

Outlook

Locally, Wage Price Index data for Q3 drops tomorrow, followed by employment data on Thursday. Chinese data dropping tomorrow could also be a market mover, with Fixed Asset Investment, Industrial production and the Unemployment rate all set to be reported tomorrow.

We also get weekly Crude Oil Stock data in the U.S. tomorrow in addition to the Headline and Core CPI figures.

A cautious start to U.S. markets looks to be on the cards, with the S&P500 (+0.02%) and NASDAQ (+0.13%) futures markets trading marginally higher.

Home Depot is the biggest company to report tonight. Sea Limited, Tencent Music, Vipshop Holdings and Aramark are also set to drop earnings.

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Quick Singles

🪃 Local News

• Virgin cabin crew workers are expected to take strike action, which could ground services nationwide. Virgin staff in the Transport Workers Union say they’re seeking better pay, job security and safer working conditions.

• Immigration minister Andrew Giles has revealed that 80 people have so far been released from immigration detention after the high court ruled it was unlawful to hold those with no realistic prospect of deportation.

• The Australian Financial Review reported that Coca-Cola is in a $173.8 million battle with the Australian Tax Office, which alleges that profits had been diverted offshore via favourable deals in 2018 and 2019.

🌏 Around The Globe

• Honda Motors will give its U.S. production workers an 11% pay hike starting in January, in line with the wage increase negotiation by the United Auto Workers with automakers Ford, GM, and Stellantis.

• The latest Marvel movie, "The Marvels," has made box-office history, but not in a good way. The 33rd instalment in the franchise only managed to bring in $47 million domestically during its opening weekend, the lowest ever for an MCU movie.

• According to local media reports, Nvidia plans to release three new chips for China weeks after the U.S. blocked it from selling two high-end artificial intelligence (A.I.) chips and one of its top gaming chips to Chinese firms.

• Google reportedly pays Apple 36% of search ad revenue from Safari browser, as disclosed during an antitrust trial by a University of Chicago professor.

• Chinese chipmaker Yangtze Memory Technologies has filed a lawsuit against U.S. rival Micron Technology, alleging infringement of eight patents.

• Amazon Games is cutting over 180 jobs and shutting down parts of the business that focus on streaming and supporting third-party games.

Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

Sector

ETF Watch

ASX News

🗞️ Company Announcements

• ALS Ltd (ALS) reported a 9.4% drop in statutory Net Profit to $134 million during the first half of FY23, weighed down by its Nuvisan business and the sales of the Asset Care business. ALS expects NPAT to fall by 1% for FY24 to between $310 million and $325 million.

• Catapult (CAT) increased revenue by 21% to US$49.8 million, with annualised contract value rising to US$79.7 million. Catapult also improved its Free Cash Flow during the half to US$1.4 million, from (US$13.4 million) in the pcp.

• Commonwealth Bank (CBA) released a trading update today, reporting a 1% lift in cash profits to $2.5 billion in the quarter. The bank’s home loan balance fell by $4.5 billion as its margins were squeezed with more competition for high-yielding deposits.

• Michael Hill International (MHJ) gave a trading update at its AGM today, reporting a 2% lift in sales for the first 19 weeks of FY24; however, gross margin continues to come under pressure due to elevated diamond and gold prices.

• OFX Group (OFX) reported a 9.4% lift in Net Operating income during the first half of FY24, despite a 3.5% fall in turnover to $19.2 billion. OFX expects H2FY24 to be stronger than the first half of the year, taking into account a $3.7 million escrow payment.

• Telix Pharmaceuticals (TLX) will acquire QSAM Biosciences and its key asset, CycloSam. QSAM develops therapeutic radiopharmaceuticals for primary and metastatic bone cancer.

• Telstra Group (TLS) maintained its FY24 guidance while announcing that five new major routes will be built for the company’s Intercity Fibre project. Underlying earnings are expected to be between $8.2 billion and $8.4 billion, with total income between $22.8 billion and 24.8 billion.

Social Media

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Broker Research

Prescient Therapeutics

Code: PTX | Market Cap: $45.1m  | Current Price: $0.074
Price Target: $0.11 | Sector: Healthcare | Broker: Pitt Street Research

Overview

Prescient Therapeutics is a drug developer focused on cancer treatment with its lead compound, a small molecule called PTX-100, which is potentially a significant future treatment for T-cell lymphoma.

Prescient also has two cell therapy platform technologies: OmniCAR, which allows next-generation CAR-T (Chimeric Antigen Receptor T-cell therapy) products to be developed, and CellPryme, which allows enhanced adoptive cell therapy performance.

PTX-100 is a small molecule that can attack cancer by disrupting a cellular signalling pathway called 'Ras'. This drug is now in a Phase 1b expansion cohort study in T-cell lymphomas.

Broker Highlights

• The broker believes the current Prescient share price is undervalued, with a potential near-term payday with PTX-100. The current market cap does not begin to account for the market opportunity should the drug get through clinical trials.

• Prescient can be close to having a PTX-100 as a marketed drug within three years. Data to date shows that PTX-100 markedly exceeds the standard of care in cancer indications where that standard of care is less than optimal. The broker believes that once the current Phase 1 is completed, only a single Phase 2 might be required by the FDA.

Recommendation

The broker has a base case share price of $0.116 and a bull case of $0.163. The valuation is based on the sum of the NPV of PTX-100 and CellPryme and the company’s net cash position.

You can access the full version of the report here.

Daily Quiz

❓️ Test Your Knowledge

Yesterdays Question. Tulip Mania, one of the first recorded financial bubbles, occurred in which country during the 17th century?

Answer: Netherlands Tulip mania was a period during the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels. The major acceleration started in 1634 and then dramatically collapsed in February 1637

A lot of you know your bubbles. 74% of responders got that question correct.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of November 7

📊 Broker Ratings

What do the brokers have to say?

1. ANZ Bank (ANZ) - Downgrade to Neutral from Buy (Citi)

2. ANZ Bank (ANZ) - Downgrade to Neutral from Buy (UBS)

3. FleetPartners Group (FPR) - Upgrade to Overweight from Equal-weight (Morgan Stanley)

Updated broker commentary for Elders & TPG Telecom

👨‍💼 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.