Good Evening,

Welcome to Equity Espresso's Daily Recap. Markets continue their upward momentum as attention shifts to the RBA tomorrow. For readers in Melbourne, enjoy your public holiday. Markets remain open, so it’s business as usual for the rest of us.

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The Recap

The ASX200 index danced around the 7,000 mark for most of the day before closing higher for the fifth straight day, gaining 19.2 points or 0.28% to 6,997.4. All eyes will be on the Reserve Bank (RBA) tomorrow as it decides what to do with interest rates amidst a stubbornly high inflation rate, where its widely tipped rates will lift by 25 basis points to 4.35%.

Seven sectors finished the day higher, with Health Care (+1.5%) leading the way as CSL (+1.7%), ResMed (+3.1%) and Sonic Healthcare (+0.6%) all finished in the green. Discretionary (+0.5%) was the next best-performing sector. Energy (-0.9%) stocks continue their recent downtrend, falling by 0.97% today. WTI crude futures rose to around $81 per barrel after Saudi Arabia and Russia announced they would stick to extra voluntary oil output cuts until the end of the year.

Westpac (WBC) was the company in focus today. It finished the session 1.9% higher after it reported a 26% jump in full-year net profit to $7.2 billion, upping its final dividend to $0.72 while announcing a $1.5 billion share buyback. The company said the second half of the year presented a more challenging environment, which it expects to continue into 2024. Westpac noted that hardship levels are below those seen during COVID and have yet to see a significant increase. NAB is the next bank to report, due this Thursday.

Want markets to go up? Easy, just ban short selling. That’s what happened in South Korea, whose regulator imposed a full-on short-selling today for about eight months. Authorises said the ban was needed to stop the illegal use of trading tactics by hedge funds and other investors. South Korea’s KOSPI index traded 4.0% higher on Monday.

Gold miners were some of the better performers today despite the gold price trading below the US$2,000 mark, currently at US$1,987.00. Northern Star Resources (+3.1%), Evolution Mining (+5.1%) and De Grey Mining (+7.4%) were some of the big movers today.

Economic Data

• The U.S. Non-Farm payrolls rose by 150k jobs in October, about half of the 297k reported in September, and below market forecasts of 180k.

• The U.S. ISM Services PMI fell to 51.8 in October, the lowest in five months and way below forecasts of 53. Slower increases were seen for business activity/production.

• The Unemployment rate in the U.S. increased to 3.9% in October, slightly exceeding market expectations and September’s figure of 3.8%, marking the highest jobless rate since January 2022,

Wall Street

U.S. markets ended Friday on another positive note, with the S&P 500 (+0.9%) and NASDAQ (+1.4%) both making gains as the benchmark 10-year treasury yields fell as low as 4.484%, the lowest point since September 26.

Berkshire Hathaway (BRK) was the largest company to report earnings on Friday, and as always, there were some eye-catching numbers:

• Operating earnings grew by 40.6% to $10.8 billion.

• Cash on hand of $157.2 billion.

• Short-term treasuries yielding at least 5%, totalling $126.4 billion.

• Share buybacks during the quarter of $1.1 billion

• Investment losses were $24.1 billion thanks to a large writedown in its stake in Apple. Apple shares were down 11.7% during the qtr.

Outlook

Locally, the main focus for the week will, unsurprisingly, be the RBA meeting tomorrow. Final Building Approval (permit) data gets reported for September on Wednesday after preliminary numbers showed a 4.6% drop.

In the U.S., Trade Balance data and weekly jobless claims are some of the key reporting items for the week. Meanwhile, Fed Chair Jerome Powell is speaking at the Jacques Polak Annual Research Conference in Washington, D.C.

Can the winning streak continue? The futures markets are indicating an ever-so-slightly positive start to the trading session in the U.S. The S&P 500 (+0.05%) and NASDAQ (+0.01%) are both currently higher.

Some of the companies to report tonight include Ryanair Holdings, Vertex Pharmaceuticals, Itau Unibanco Banco and NXP Semiconductors.

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Quick Singles

🪃 Local News

• Australia's Prime Minister, Anthony Albanese, spoke at China's largest trade fair, emphasising the importance of free and fair trade. He expressed confidence that China will lift the remaining sanctions it has imposed on Australian exports.

• ASIC has commenced civil penalty proceedings in the Federal court against TelstraSuper, claiming it failed more than 200 times to respond to customer complaints quickly enough. ASIC alleges that 40% of Telstra Super’s responses to complainants during the relevant period did not comply with its own dispute resolution procedures.

• Australia’s Treasurer, Jim Chalmers, plans to appoint a new Reserve Bank of Australia deputy governor by December 5, following Michele Bullock's appointment as RBA governor.

🌏 Around The Globe

• Uber and Lyft have agreed to pay $328 million to settle a dispute over taxes and fees that were improperly placed on New York drivers, with the money being distributed to current and former drivers while also establishing a minimum wage and sick leave for drivers across the state.

• Delta Air Lines is laying off corporate workers as part of cost-cutting measures in response to higher fuel and labour expenses. The decision comes after a reduced profit outlook due to an anticipated $400 million surge in fuel costs in the latter half of the year.

• Six Flags and Cedar Flair have agreed to merge, creating an $8 billion theme park giant with 27 theme parks, 15 water parks, nine hotels and resorts, and other properties in the U.S., Canada, and Mexico.

• Shipping giant Maersk, responsible for transporting goods for major retailers like Walmart and Nike, reported a significant decline in Q3 profit and revenue, leading to a decision to cut at least 10,000 jobs. Profits fell due to overcapacity, rising costs, and weaker prices.

• Construction of Germany’s Elbtower skyscraper in Hamburg is said to have abruptly halted as Signa, the developer, failed to make payments to its builder.

• According to CNN Business, U.S. banks have experienced deposit delays due to processing errors at the Clearing House, affecting less than 1% of daily ACH volume. A manual error caused the issue and is unrelated to cybersecurity.

• Saudi Arabia and Russia will continue their additional voluntary oil cuts until the end of the year, aiming to support oil market stability amidst concerns over demand and economic growth, with a review scheduled next month.

Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

Sector

ETF Watch

ASX News

🗞️ Company Announcements

• Chrysos (C79) has gone into a trading halt pending a capital raise announcement.

• Magellan (MFG) reported total Funds Under Management (FUM) of A$34.3 billion as of October, with total net outflows of $0.8 billion, comprising net retail outflows of $0.3 billion and net institutional outflows of $0.5 billion.

• Goodman Group (GMG) provided a Q1 operational update today, reaffirming its FY24 EPS share growth of 9%, with $12.7 billion in development work and 99% occupancy.

• Immutep (IMM) has declared the completion of the safety lead-in phase of its AIPAC-300 trial, affirming that the combination of 90mg eftilagimod alpha (efti) and paclitaxel is well-tolerated without any safety issues in metastatic breast cancer patient.

• Imugene (IMU) has provided an update on its Phase 1 MAST trial, receiving positive early response data for its cancer-killing virus, CF33-hNIS (VAXINIA), when used alone and in combination with pembrolizumab.

• Mayne Pharma (MYX) announced that it has been granted a new patent by the U.S. Patent and Trademark Office for its NEXTSTELLIS contraceptive pill.

• Origin Energy’s (ORG) largest shareholder, Australian Super, has increased its ownership from 13.6% to 15.0%. Origin remains subject to a $9.53 takeover offer from Brookfield and EIG, which Australian Super has flagged it will vote against.

• Star Entertainment (SGR) announced the sale of the Sheraton Grand Mirage Resort Gold Coast to entities owned by Karedis and Laundy families for $192 million, with an expected net proceeds of approximately $60 million.

• Weebit Nano (WBT) has received its first IP licensing revenue of US$100,000 for its embedded Resistive Random-Access Memory (ReRAM) technology.

• Westpac (WBC) reported a 26% jump in Net Income to $7.2 billion for the full year ending September 30, lifting its final dividend to $0.72 per share along with announcing a share buyback of $1.5 billion. Westpac increased its margins by two bps in a period of what it described as intense mortgage competition. Westpac expects a challenging environment to continue into 2024, as it experienced in the second half of 2023.

• Whispir (WSP) has received an all-cash offer of $0.48 per share from Soprano Design Technology - representing a 58.3% premium to Whispir’s closing price on Friday, November 3. Whispir said in a statement this afternoon that it will provide a further announcement once it has evaluated and assessed the terms of the offer by Soprano

Social Media

 📱 Post of The Day

Technical Analysis

Chart Watch

A short-term bullish chart to keep an eye on - Macquarie Group (MQG)

Notes

• The share price reacted strongly after finding support at $160.

• On a daily time frame, an engulfing candle has formed.

• A bullish divergence on the RSI and OBV is playing out.

• A slight gap in price is yet to be filled between $165 - $168.

Newsletter Recommendation

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Analyst Report

Peninsula Energy

Code: PEN | Market Cap: $160.0m  | Current Price: $0.13
Price Target: $0.27 | Sector: Energy | Broker: Shaw & Partners

Overview

Peninsula Energy (ASX: PEN) is a uranium explorer and developer with deposits in the United States, with its flagship Lance Uranium project located in Wyoming.

Quarterly Highlights

Peninsula recently published its activities report for the September quarter.
The report highlights that the company has revised its strategy for the Lance Uranium Projects after the decision by the Uranium Energy Corp (UEC) not to extend the resin processing contract.

As a result, Peninsula will now proceed with a more extensive and accelerated production plan that includes a fully integrated processing plant. Additionally, the company has announced the establishment of the Dagger Uranium Project, located approximately 20km northeast of its Lance Uranium Project.

The company announced a revised processing plan which includes:

• First production in Dec-24 and ramping up to 1.8Mlb steady state by 2029.

• Remaining capex to the first production of US$53.4m, with a further US$17.4m required to reach total production rates. The peak funding requirement for breakeven cash flow is US$95m.

• C1 operating costs of US$21.69/lb and AISC of US$42.46/lb.

Recommendation

The brokers retain a BUY recommendation and price target of A$0.27 per share, set at a 30% premium to the broker’s estimated DCF, in line with the uranium sector coverage.

The broker sees similarities with Boss Energy, with both companies operating in first-world jurisdictions, yet Peninsula has an Enterprise Valuation of 1/10th of Boss Energy.

You can download a copy of the full report here.

Daily Quiz

❓️ Test Your Knowledge

Last Week’s Question. What does the RBA do with interest rates next Tuesday? The tribe has spoken, here’s the verdict:

• Cut 25bps (22%)

• Hold (27%)

• Raise 25bps (39%)

• Raise 50bps (12%)

By this time tomorrow, we’ll know if the majority vote was the right one.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of October 31

📊 Broker Ratings

What do the brokers have to say?

1. Woodside Energy (WDS) - Upgrade to Neutral from Sell (Citi)

Updated broker ratings for Imdex and Macquarie Bank 

👨‍💼 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.