Good Evening,

Welcome to Equity Espresso.

We’re here to catch you up on the day’s stock market news in Australia and abroad.

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

1. 🏠️ Housing Prices Continue to Climb

2. 💵 Hancock Ups Liontown Stakes

3. 🔽 Coronado's Downgrade

4. 📞 Telco Three-Way Dance

5. 🛑 U.S. Shutdown Dodged

The Recap

Markets Start October Lower.
House Prices Continue to Rise

A quieter trading session with lower trading volume as NSW and QLD enjoyed their respective public holidays after Victoria had their turn on Friday. The ASX200 index kicked off October by trading down by as much as 30 points before finishing the day 15.4 points or 0.2% lower to close at 7,027.50.

October has historically been a positive month for the ASX200 index, trading higher 65% of the time since 1992, with an average return of 0.82%. ⬇️ 

Eight of the 11 sectors on the index finished lower, with Healthcare (-1.34%) the biggest faller as CSL continues its downward momentum, shedding another 1.7% to close at a 4-year low of $246.36. ResMed (-2.8%) also fell after U.S. broker Wolfe Research downgraded the company to “peer performer” (Neutral) from outperformer over the weekend.

Chinese markets are closed this week as the country starts its most extended holiday break of the year - Golden Week. Economists are hoping consumer spending during the period will help boost its economy.

Syrah Resources was the big mover on the index today, rising 13% after UBS published a report on Friday saying it expects the spot price of graphite to increase by more than 50% in the coming years. Syrah was also busy fighting back against an Australian Financial Review article, with the publisher stating that Syrah “continues to mine and stockpile rather than sell output”. Syrah said in an announcement today that natural graphite sales and shipments were completed during the September quarter, with further information to be provided in the company quarterly update on October 17

The price of Bitcoin shot up around 3.5% this morning and is currently trading at $US27,950.

Outlook

The S&P 500 (+0.35%) and NASDAQ (+0.52%) futures indexes are trading higher this afternoon after a deal was reached over the weekend to avoid a government shutdown. Federal Reserve chief Jerome Powell speaks later in the session, which will have traders hanging on his every word.

Economic Data

The RBA meets tomorrow to decide on the next move for interest rates. No surprises are expected, with the cash price all but certain to remain at 4.10%. The November meeting is a little more up in the air, with economists mixed on what the RBA will or should do. Building data will also be released tomorrow, followed by retail sales on Friday.

In the U.S., it’s a busier economic week, with PMI data dropping early in the week, followed by a swath of employment and payroll data from Wednesday onwards.

Meanwhile, Eurozone unemployment will drop tonight, while the U.K. will report PMI data later in the week.

Wall Street

Wall Street ended September posting its biggest monthly loss since December 2022, as reality seemingly set in that the Federal Reserve’s rate hiking might have more steam left in it. U.S. Treasury yields rose to fresh 16-year highs during the month, which caused a sell-off in equity markets. Energy was the only sector that ended the month higher, as Crude Oil prices soared, edging closer to $US100/barrel.

Nike stock jumped 6.6% on Friday despite a mixed Q1 report. The company reported earnings of 94c per share and $12.94 billion in revenue. Analysts estimates were 75c per share and $12.98 million in revenue. Nike also reiterated mid-single-digit full-year revenue growth guidance.

Carnival Cruises fell almost 5% on Friday after forecasting a loss of 10c - 18c per share for Q4 - expected to be worse than the estimated 10c per share. Carnival reported adjusted earnings of 86c per share on revenue of $6.85 billion for Q3, beating earnings estimates of 75c per share and $6.69 billion in revenue.

Quick Singles

🪃 Local News

• Australian Housing prices continued to strengthen during September, with the national average dwelling value increasing by 0.8% to $740,668. All capital cities rose except Hobart, with Sydney (+1.0%), Brisbane (+1.3%) and Adelaide (+1.7%) leading the way. Australia's housing market is now only 1% below the previous high in April 2022.

• Victoria’s new premier Premier, Jacinta Allan, unveiled her new cabinet in Melbourne this morning. Changes include the new Deputy Premier Ben Carroll becoming the Education Minister and Harriet Shing becoming the Housing Minister. Tim Pallas will retain his treasury portfolio.

🌏 Around The Globe

• What might have been - In 2020, there were discussions about the possibility of Microsoft selling Bing to Apple. The deal would have involved Bing becoming the default search engine on Apple devices, replacing Google. However, these talks were only exploratory and did not move forward.

• A U.S. government shutdown was averted over the weekend after Congress passed a stopgap funding measure, with President Biden signing the bill late Saturday night with 3 hours to spare. The stopgap measures give the government a 47-day extension to finalise the funding legislation. Congress might be the only group that makes high-school students look prepared.

• One-time meme stock Gamestop has appointed executive chairman and largest investor Ryan Cohen as its Chief Executive Officer, who will commence in the position effective immediately. Cohen is known for co-founding pet food retailer Chewy.com.

• Evergrande chairman Hui Ka Yan is under police surveillance, suspected of “committing crimes”, according to the company.

• Indonesia is banning e-commerce transactions on social media platforms to protect offline merchants and marketplaces, adding that predatory pricing on social media platforms threatens small and medium-sized enterprises.

• OpenAI is teaming up with Jony Ive, Apple's former VP of Industrial Design, to create the "iPhone of AI," backed by Softbank CEO Masayoshi Son's reported $1B investment.

₿ Crypto Corner

• Sam Bankman-Fried has lost another bid to be released from a Brooklyn federal jail days before he goes on trial, which starts October 3.

• Worldcoin's Orb technology (yes, it’s still a thing) has attracted over 200,000 Chileans, just over 1% of the country’s population, to scan their eyeballs in exchange for WLD tokens. Some participants earned over $US150.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

ASX News

ASX Company Announcements

DeGrey Mining rose 0.4% to $1.12 after finalising its $300 million capital raise at $1.05 per share.

Galileo Mining (GAL) surged 39% after announcing its maiden Mineral Resource Estimate for the Callisto deposit within the company’s 100% owned Norseman project, which includes Cold, Copper and Nickel deposits.

Gina Rineharts Hancock Prospecting has increased its stake in Lithium producer Liowntown Resources (LTR), adding 36.8m shares to take their ownership to 12.36%.

Monadelphous (MND) will buy structural concrete business Melchor Contracting in a deal expected to be finalised during the financial year's first half. Melchor employs around 300 people and generates annual revenue of $100 million. Monadelphous will make an initial cash payment of $10 million to acquire Melchor Contracting, followed by a purchase price adjustment in accordance with the final working capital position at completion.

Pacific Edge (PEB) dropped 12% after flagging new proposed changes to U.S. Food and Drug Administration (FDA) guidelines for its bladder cancer diagnostic device, Cxbladder. The proposed changes would require Pacific Edge to present evidence to the FDA that their tests were “safe and effective for their intended use”, in addition to the current regulatory requirements.

PolyNovo (PNV) announced it has received $US10 million in additional funding from the Biomedical Advanced Research and Development Authority (BARDA) for the Pivotal Trial program of NovoSorb® BTM. This brings BARDA's total funding commitment to $US25 million.

Telco provider Superloop (SLC) confirmed today that its $2.85 per share bid for Symbio (SYM) lapsed on September 29. This came after the Telcom provider received a Friday afternoon offer from Aussie Broadband (ABB), who made a counter bid of cash and ABB shares valued at $3.15 per share.
Investors of Symbio will evaluate the two bids in the upcoming days. Aussie Broadband's offer includes a higher cash component and fewer due diligence requirements than Superloop. However, Superloop may offer better synergies and have a higher likelihood of being included in an index. Symbio shares were the big winner, closing the day 15% higher to $3.03

Post of The Day

An article covering critical components in an EV vs. Gas Car.

Deep Dive

Coronado Global Resources:
An Overview Amid Revised Forecasts

Coronado Global Resources (ASX: CRN) is a prominent metallurgical coal producer, marketer, and exporter. Established in 2011, Coronado maintains an expansive portfolio of mines and developmental projects. Its operations stretch from Queensland, Australia, to Pennsylvania, Virginia, and West Virginia in the United States. Coronado serves global customers across five continents, delivering a variety of high-grade coals.

Production Downgrade

Coronado announced a downgrade to its production guidance today for FY23, citing adverse geological conditions at the Buchanan mine and unforeseen downtime at the Curragh mining complex. Coronado does not expect a material cash impact in FY23 despite the downgrade due to these changes. The change in guidance is as follows:

Mining costs per tonne are expected to increase due to the lower production guidance and elevated inflation levels affecting the whole industry. However, capital expenditure is expected to fall below previous estimates.

Sev.en Global Investments Recent Acquisition

Sev.en Global Investments (SGI) has taken a significant step in consolidating its position in the metallurgical coal industry. The company signed a binding agreement to acquire a majority stake of 51% in Coronado on September 26. The acquisition marks SGI's third significant investment in Australia's fossil fuel sector, with previous purchases including the Vales Point coal power plant and royalties from two Queensland coal mines.

Future Prospects

Coronado is projecting a production increase of more than 28% by 2025. This is due to the expectation of maintaining its operating assets for over 20 years, to which they have access to over 2 billion tonnes of met coal resources. Coronado has ambitious plans to grow to 20.5Mtpa by 2025, and they will be supported in this endeavour by the Curragh North Underground project in Australia (13.5Mtpa) and Buchanan in the US (7Mtpa).

The index FOB price for premium low-vol coal currently stands at around $325/metric tonne, up 35% in the last two months, driven by demand from India. Analysts from AME Research forecast a 226% growth in India's met coal demand by 2040. Below is a one-year price chart of the Metcoal price:

Current Valuation

Coronado reported a 25% revenue drop and a 64% net profit decline in its half-year earnings vs. FY22, as the price of Metcoal fell 37% during the period. Inflationary pressures impacted profit throughout the period. Coronado currently has a market cap of $3.1 billion with a net cash position of approximately $300 million by the end of June.

Coronado shares ended the day down 4.3% to $1.86

Daily Quiz

Test Your Knowledge

Last Week’s Daily Quiz Question. Who wins the AFL and NRL grand final?

Answer: It was not a great weekend for those in Brisbane, with both teams losing over the weekend as Collingwood and Penrith took home the chocolates in their respective nail-biters. The football aficionados who voted last week were on the money, with Collingwood (71%) and Penrith (62%) winning their respective polls.

A Little Extra

📉 Going Down?

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

1. Pilbara Minerals (PLS) - 11.84%

2. Genesis Minerals (GMD) - 9.96%

3. Flight Centre (FLT) - 9.55%

4. Syrah Resources (SYR) - 8.87%

5. IDP Education (IEL) - 8.77%

6. Core Lithium (CXO) - 8.73%

7. Sayona Mining (SYA) - 8.60%

8. Select Harvests (SHV) - 8.16%

9. Elders Limited (ELD) - 7.79%

10. Appen (APX) - 7.67%

📊Broker Ratings

What do the brokers have to say?

1. Liontown Resources (LTR) rated as Neutral (Citi). Target Price: $3.00 a share

2. Westpac (WBC) rated as Equal-Weight (Morgan Stanley). Target price lowered to $20.60

👨‍💼 Director Transactions

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

💲Dividends

Companies trading ex-dividend today

📅 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.