Good Evening,

Welcome to Equity Espresso's Daily Recap. So much for a quiet Friday to ease into the weekend; we got Macquarie dropping earnings, Qantas shareholders voting no and a court verdict in the crypto world. Let’s jump in.

The Recap

Make that four in a row for the ASX200 index, closing the day 1.1% higher to 6,978.2, with all 11 sectors finishing in the green. For the week, the ASX200 index rose by over 2% to break a 2-week losing streak, making it the best-performing week since August.

In a fiery Qantas AGM today, 82.98% of shareholders voted against the company’s remuneration report, with outgoing chairman Richard Goyder saying it was a clear message from shareholders. Chairman Goyder was quizzed by a shareholder on his and the board’s ethics, specifically around the timing of former CEO Alan Joyce’s selling of shares and what the company knew about the ACCC’s impending allegations. The AFR reported that QANTAS had received two information notices when Joyce sold $17 million worth of shares. Goyder shut down the claims, refusing to discuss the question in detail. Directors Todd Sampson and Belinda Hutchinson were re-elected by shareholders.

Block (SQ2) shares were the big mover on the ASX today, rising by 25% after it reported earnings overnight in the U.S., beating revenue and earnings expectations and upgrading its full-year EBITDA guidance to between $1.66 billion and $1.68 billion.

Macquarie Bank started the day in red before ending the session up 1.8% after the company reported a 39% drop in half-year profit to $1.4 billion with an interim dividend of $2.55 per share. Despite the weak result, the company will buy back $2.0 billion shares.

The other big news today was that FTX founder Sam Bankman-Fried (SBF) was found guilty of stealing customers’ funds from his cryptocurrency exchange, FTX. SBF was convicted on all seven counts, including money laundering and fraud, in which he was accused of stealing US$8 billion from customers on the FTX trading platform. SBF will sentenced on March 28 next year and faces decades in prison.

Economic Data

• U.S. Nonfarm Labour Costs fell by 0.8% in Q3, which missed expectations of a 0.7% increase after a 3.2% rise in Q2.

• U.S. Employment Benefits rose by 5,000 to 217,000 for the week ending October 28, above estimates of 210,000, the highest mark in two months.

• The Bank of England held its interest rates at 15-year highs of 5.25% for the second consecutive month during its November meeting.

Wall Street

Another positive night on Wall Street to continue the upward momentum, with the S&P 500 (+1.89%) and NASDAQ (+1.78%) finishing the day higher as markets continue to bank that the Federal Reserve is done with its rate hiking.

In earnings news, Apple reported its fourth straight year-over-year quarterly sales drop, the first time since 2001; however, this was in line with analysts’ expectations, with a slight beat on revenue and earnings. Every hardware segment of the business declined in sales except for the iPhone, with the largest drops in the iPad and Mac segments. The highlight was the stronger-than-expected 16% jump in online services revenue.

Apple Earnings Breakdown vs. Estimates

• EPS: $1.46 per share, vs. $1.39 per share

• Revenue: $89.50 billion, vs. $89.28 billion

  • iPhone: $43.81 billion, vs. $43.81 billion

  • Mac: $7.61 billion vs. $8.63 billion

  • iPad: $6.44 billion, vs. $6.07 billion

  • Wearables: $9.32 billion, vs. $9.43 billion

  • Services: $22.31 billion, vs. $21.35 billion

• Gross Margin: 45.2% vs. 44.5%

Starbucks shares rose as it reported a jump in traffic and an 8% increase in sales from its North American stores. Atlassian stock tumbled in after-hours trade as it recorded its fifth consecutive quarter of slowing revenue growth.

Outlook

The positive run on Wall Street might hit a roadblock tonight, with the NASDAQ futures currently down 0.23%, while the S&P 500 is 0.05% lower.

A stack of U.S. employment data gets reported tonight, including Hourly Earnings, Non-FarmPpayrolls and the Unemployment Rate.

Berkshire Hathaway, Enbridge, Sempra and Dominion Energy are just some of the companies set to report earnings overnight.

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Quick Singles

🪃 Local News

• Justice James Russell has delayed a ruling on whether Qantas acted lawfully when it dismissed health and safety representative Theo Seremitidis for demanding better protective gear for cleaning planes flying back from COVID-19-affected areas.

• Investors are urging Australia to raise its climate targets to attract global capital and compete with countries like the US, UK, and EU in the green industry revolution, emphasising the need for clear and long-term policies and plans to decarbonise the economy.

🌏 Around The Globe

• Japanese Prime Minister Fumio Kishida said the government will spend over 17 trillion yen (US$113 billion) on measures to cushion the economic blow from inflation. To fund this, a supplemental budget of 13.1 trillion yen will be created, bringing the total package size to 21.8 trillion yen, including local government spending and state-backed loans.

• Reuters reported that a Canadian start-up, run from a private home, was chosen by the Democratic Republic of Congo for a technically complex project to extract methane from the deep waters of a volatile lake.

• Grand Canyon University, a large private Christian University in Arizona, is being fined $37.7 million for deceiving students about doctoral degree costs.

• Match Group, the owner of popular dating apps like Tinder, has settled an antitrust lawsuit against Google’s app store. This will allow Match Group to offer alternative payment options to users for in-app content without being restricted to Google’s payment channels.

• LinkedIn premium subscribers will soon have access to an AI-powered job coach that can provide personalised job recommendations and insights, as well as summaries of posts in their feeds.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

Sector

ASX News

🗞️ Company Announcements

• Aussie Broadband (ABB) has completed a $120 million institutional placement, with the funds intended to strengthen its balance sheet for capital investment, potential mergers and acquisitions, and the proposed Symbio transaction. Eligible shareholders will have the opportunity to participate in a Share Purchase Plan (SPP) aiming to raise an additional $15-$20 million.

• EarlyPay (EPY) has agreed to acquire selected assets of Timelio Pty Ltd for approximately $3 million, adding around $35 million in Funds in Use (FIU) in the invoice finance product and $5 million in trade finance. The acquisition is expected to be EPS accretive and provide strategic benefits to Early Pay.

• Delta Lithium (DLI) has received approval for its Mining proposal and mine closure plan for its operations in the Mt Ida Lithium project. The approval will enable the company to commence open pit mining operations and further de-risk the development of the concentrate project.

• Landlease Group (LLC) and Google will end their agreement to help develop the internet giant’s four major districts in the San Francisco Bay Area. The project was first announced in July 2019 and had an estimated value of $US15 billion ($23.3 billion).

• Internal Diagnostics (IDX) achieved revenue growth in Q1 FY24, but higher labour costs impacted operating EBITDA margin. IDX plans to accelerate productivity initiatives to improve performance in the second half of FY24.

• Race Oncology (RAC) went into a trading halt today to allow the company time to analyse and interpret data from an investigator-initiated Phase 2 human clinical trial involving their head asset, bisantrene, in patients with Acute Myeloid leukemia.

• Tietto Minerals (TIE) board of directors have told shareholders not to accept Zhaojins Capital's takeover offer of the West African gold producer at $0.58 per share. The board believes the offer undervalues the company and is opportunistic in timing as it was made before Tietto’s improving performance and a forthcoming feasibility study on a potential second mine.

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Analyst Report

Chrysos Corporation

Code: C79 | Market Cap: $737.8m  | Current Price: $6.85
Price Target: $7.50 | Sector: Technology | Broker: Shaw & Partners

Chrysos (ASX: C79)

Overview

Chrysos Corporation (ASX: C79) engages in the development and supply of mining technology. It offers PhotonAssay, a technology for analysing gold, silver, copper, and other elements.

Product Highlights

Chrysos Corporation announced a global partnership with Barrick Gold and MSALABS. The broker believes this agreement validates C79’s technology and improves visibility on their near-term targets.

The partnership agreement covers C79’s Photon Assay technology to Barrick’s mine sites with lab operator MSALABS. Three units will be deployed at the Nevada Gold Mines complex, with a further 10 to be deployed at other projects by the end of 2025.

Barrick is one of the world’s biggest gold miners, producing 4.1 million ounces from 13 gold mines in 2022. The broker believes that the company is indicating that C79’s Photon Assay technology is the way forward. Compared to fire assay methods, it is faster, safer, more precise, and eco-friendly.

Additionally, the fact that they are starting with NGM, the largest gold mining complex in the world, and expanding across four continents demonstrates their growing trust in the technology and its ability to perform well across a variety of other bodies.

Valuation

The broker reiterated their Buy rating and increased their price target to $7.50 from $6.90. C79 is trading on a FY24 EV/Revenue multiple of 11.3x. The broker’s price target implies a 14.4x

You can download a copy of the full report here.

Daily Quiz

🔮 Crystal Ball

Yesterday’s Daily Quiz Question. Which company’s share price fell the most during October?

Answer: Liontown Resources (LTR). For regular readers of the newsletter, this should come as no surprise. After Albemarle backed out of a proposed takeover offer, Liontown’s share price plunged, ending the month down 45%

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of October 30

📊 Broker Ratings

What do the brokers have to say?

1. Alcidion Group (ALC ) - Downgrade to Hold from Buy (Bell Potter)

2. Bravura Solutions (BVS) - Upgrade to Neutral from Underperform (Macquarie)

3. CSR - Upgrade to Neutral from Underperform (Macquarie)

4. CSR - Upgrade to Add from Hold (Morgans)

5. Helia Group (HLI) - Upgrade to Neutral from Underperform (Macquarie)

👨‍💼 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.