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Fortescue's Executive Carousel: CFO Exits & ASX's Top 5 Stocks in August

The market finished the week positively despite the ASX200 losing 27pt., closing at 7,278.30. This week saw the end of earnings season as Spring commences!

September 01, 2023 • Estimated Reading Time: 12 minutes

Good Evening,

Welcome to Equity Espresso

We’re here to catch you up on all the day’s news both in Oz and abroad.

Here’s a sample of what you may have missed today:

  1. 👩🏻‍💼 Fortescue CFO Exit

  2. 💲 Solomon Lew Ups The Ante

  3. ⚖️ Europe’s Inflation Puzzle

  4. 💰 Bitcoin ETF Decision Delayed

  5. ✅ Who Were The Best Performers in August

The Recap

Fortescue Loses Another As

The ASX Finishes Lower

The market finished the week positively despite the ASX200 losing 27pt., closing at 7,278.30. This week saw the end of earnings season as Spring commences.

Eight of the 11 sectors finished lower, with Health Care (-1.42%) losing the most as CSL (-1.2%) and Cochlear (-1.1%) both fell. Utilities (-0.92%) and Real Estate (-0.86%) also finished the day in the red.

Energy (+1.59%) stocks were the big winners today as Woodside (+1.5%) and Santos (+1.8%) both rose. Santos finalised the sale of a 2.6% stake in its PNG liquefied natural gas project to PNG oil company Kumul Petroleum for $US1.4 billion

In today’s deep dive, we take a look at 5 stocks that had big moves in August.

Cryptocurrency investors will need to continue to be patient. The U.S. SEC has delayed its decision on whether it will approve the copious amounts of spot bitcoin ETF applications until October. The price of Bitcoin fell over 4% overnight and was trading at a tad above US$26,000.

ASX200 Stock Snapshot
Wall Street

A mixed night on Wall Street, as the Nasdaq (+0.11%) was slightly higher, while the Dow (-0.48%) and the S&P500 (-0.16%) were in the red as growth stocks continued to outperform the market. The annual Core PCE Price Index, the Federal Reserve's preferred gauge of inflation, rose 4.2%, a slightly stronger pace than the 4.1% increase recorded in June

Seven out of 11 sectors finished lower in the S&P500, with Healthcare (-1.21%) and Utilities (-1.03%), leading the losses. The growth sectors, included Consumer Discretionary, Technology, and Communication Services as Energy stocks also finished in the green due to a jump in oil prices.

Economic News

  • According to the ABS, new loan commitments for housing in Australia dropped by 1.2% in July. Owner-occupied loans saw a decrease of 1.9%, while investor loans only dropped by 0.1%. Personal credit demand, on the other hand, increased by 4.7%. However, business construction loans plummeted by 21.5% and the purchase of commercial property decreased by 5.1%.

  • The CBA lowered its 2023 GDP forecast for China from 5.4% to 5% but raised its 2024 growth projections to 5.3% from 5.0%.

  • Chinese factory activity unexpectedly grew in August, with the Caixin PMI read for August of 51.0 being expectations of 49.3 and above last month’s result of 49.2.

  • Inflation in the Eurozone was higher than expected this month, but the cost of underlying goods decreased, leaving analysts split on what the ECB’s next move will be. The overall inflation rate for the 20 countries that share the euro remained at 5.3% in August, instead of dropping to 5.1% as anticipated. This was due to the sharp increase in energy costs, according to data from Eurostat released on Thursday.

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Quick Singles

🪃 Local News

  • Fortescue announced that CFO Christine Morris has resigned, making it the 11th major executive change in less than three years. Apple Paget, who joined the company nine months ago as Group Manager of Finance & Tax, has been appointed acting CFO.

  • Myer has confirmed that Solomon Lew’s Premier Investments has lifted its stake in the retailer to 28.79%. Lew paid more than $16.2 million via his entity Metal Grove Pty Ltd for another 3% stake in Myer.

  • Orora provided an update on its potential acquisition of Saverglass SAS, saying that while it has made progress over the last few days, it is not in a position to announce a material transaction. Orora’s shares remain suspended.

  • Santos has finally closed the sale of a minority interest in its Papua New Guinea LNG venture to PNG’s national oil company.

  • PointsBet received $175 million as the first payment for selling its American business to Fanatics, in a $225 million deal. PointsBet plans to distribute $458 million in capital to its shareholders, with the initial payment of $315.4 million expected to be made on September 4.

🌏 Around The Globe

  • U.S. health officials are requesting that marijuana be reclassified as a Schedule III substance, which would make it similar to pain medications and testosterone. This would not legalise the drug, but it would ease some of the challenges faced by the cannabis industry such as being excluded from banks.

  • OpenAI is reportedly on track to generate more than $1 billion in revenue over the next 12 months.

  • Two e-commerce giants, Amazon and Shopify, have struck a deal that will allow merchants who pay for Shopify’s e-commerce tools to use Amazon logistics networks.

  • Chinese property developer Country Garden warned that it may default after reporting a first-half loss of nearly $7bn.

  • According to the Wall Street Journal, merchants will soon have to pay increased fees to accept credit cards from customers of both Visa and Mastercard.

  • German headline inflation came in at 6.1% YoY in August, only marginally down from 6.2% in July, leaving the European Central Bank in a precarious position.

₿ Crypto Corner

  • PancakeSwap, the top decentralised exchange on Binance Smart Chain, is now expanding to Base, a layer-2 network incubated by Coinbase on Ethereum. It will be joining other major DeFi platforms like Uniswap, SushiSwap, and 1inch.

  • The total value deposited into DeFi contracts on the Coinbase-incubated Base network reached a new all-time high of $301.2 million, rising 53% overnight, according to DeFiLlama data.

Markets

Index & Commodity Prices
Bond Prices
ASX By Sector
ETF Watch

Movers and Shakers

✅ Biggest Gainers

Ainsworth Game Technology (AGI) shares rose 8.8% to $1.04 after it posted half-year earnings after the market closed yesterday. AGI reported NPBT (excl. currency impacts & one-off items) of $23.3 million, an increase of 24% from the PCP.

AGI attributed the successful year to improvements in its product performance across global markets, as revenue increased by 20% during the year to $143.6 million.

International markets saw strong momentum in trading, resulting in revenue increasing by 29%. North American revenue was $68.5 million, an increase of 13% and representing 54% of total international revenue as the number of machines expanded by 20% to 3,073.

🔻Biggest Fallers

29Metals (29M) fell 5.1% to $0.83 after the company completed the institutional component of its full underwritten 1 for 2.20 entitlement offer, which will raise approximately $122 million. The offer price of the placement is $0.69 which 29M said was:

  • 5.6% discount to TERP of $0.731 based on the last closing price on August 29; and

  • 8.0% discount to the last closing price of $0.750 on August 29.

The company will also conduct a retail entitlement offer, which is expected to raise approximately $29 million.

The offer will open on September 6, closing on September 25.

Deep Dive

Biggest Movers in August

We take a look 5 of the biggest movers during August

  1. 4DS Memory (4DS): +346%, Market Cap: $252.2m. The biggest mover of the month. 4DS announced successful results from their Fourth Platform Lot analysis, which exceeded expectations. 4DS integrated their ReRAM memory cells into a megabit array, showcasing consistent speeds akin to DRAM and enduring over 2 billion cycles.

  2. Wildcat Resources (WC8): +108%, Market Cap $246.2m. The mining explorer didn’t report any price-sensitive news throughout the month; however, saw its share price increase double. In the last update on August 23 (non-price sensitive) it announced that two Reverse circulation rigs were drilling at its Tabba Tabba Lithium-Tantalum project in Pilbara W.A.

  3. Bravura Solutions (BVS) +51%, Market Cap $351.9m. A turnaround of sorts for the administration and management software company, whose share price is still well down from all-time highs of $3.90 back in August 2021. Bravura shares shot up 42% on the days of its earnings release as it set out a plan to have a positive cash EBITDA run rate by the end of FY24.

  4. Audinate Group (AD8): +50%, Market Cap $1.1bn. Shot up this month on the back of a strong full-year earnings report as it continues to trade at an all-time high share price. Audinate reported NPBT of $1.4 million, a big turnaround from the $4.4 million loss in FY22. Revenue shot up over 40% to $69.7million.

  5. Azure Minerals (AZS): +24%, Market Cap $1.2bn. All the price action took place early in the month after Azure announced drilling results at the company’s 60% owned Andover Lithium Project located in the West Pilbara region of Western Australia. Azure said it had intersected the thickest zones of lithium mineralisation to date – reflecting some of the best lithium drill intersections globally.

Daily Quiz

Test Your Knowledge

Do you know your U.S. companies?

Yesterday’s Daily Quiz Question: In what year was QANTAS founded?

Answer: 1925! Well done to the 39% of people who got this correct.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of August 25

  1. Flight Centre (FLT) - 10.36%

  2. Syrah Resources (SYR) - 9.51%

  3. Pilbara Resources (PLS) - 9.27%

  4. Elders Limited (ELD) - 9.01%

  5. Lake Resources (LKE) - 8.53%

  6. JB Hi-Fi (JBH) - 8.38%

  7. IDP Education (IEL) - 8.20%

  8. Brainchip (BRN) - 7.84%

  9. 29Metals (29M) - 7.46% 

  10. Mesoblast (MSB) - 7.40%

📊Broker Ratings

What do the brokers have to say?

  1. Atlas Arteria (ALX) - Upgrade to Add from Hold (Morgans)

  2. Austal (ASB) -Downgrade to Neutral from Outperform (Macquarie)

  3. Costa Group (CGC) - Upgrade to Outperform from Neutral (Macquarie)

  4. Harvey Norman (HVN) - Upgrade to Buy from Neutral (Citi)

  5. Sandfire Resources (SFR) - Downgrade to Hold from Add (Morgans)

💲Dividends

Companies trading ex-dividend today

  1. Ampol (ALD) $0.95

  2. Eagers Automotive (APE) $0.24

  3. Big River Industries (BRI) $0.085

  4. Coles Group (COL) $0.3

  5. Cyclopharm (CYC) $0.005

  6. FENIX Resources (FEX) $0.02

  7. Gold Road Resources (GOR) $0.012

  8. Hitech Group Australia (HIT) $0.05

  9. Infomedia (IFM) $0.018

  10. Iluka Resources (ILU) $0.03

  11. Johns LYNG Group (JLG) $0.045

  12. Orora (ORA) $0.09

  13. Prime Financial Group (PFG) $0.008

  14. Partners Group Global Income Fund (PGG) $0.014

  15. QANTM Intellectual Property (QIP) $0.035

  16. Silk Logistics Holdings (SLH) $0.031

  17. Soco Corporation (SOC) $0.005

  18. Solvar (SVR) $0.09

  19. Southern Cross Media Group (SXL) $0.022

  20. SYMBIO Holdings (SYM) $0.017

  21. Zimplats Holdings (ZIM) $1.441

📅 Economic Calendar

Data to keep an eye on this week

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.