Good Evening,

Welcome to the ASX News Daily Recap.

Lost track of what happened on the market today?

Don’t stress. We’re here to catch you up.

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

1. 🏠REA's Market Update

2. 🎲Star Group Tax Break

3. 👕Mixed Retail Results 

4. 💲Cettire’s Big Sale

5. ⛓️Coinbase Launches Blockchain

The Recap

Housing Listings Dip
Retail Rollercoaster Beings

A quieter trading day with less market volatility, as the ASX200 finished Friday down -0.23% to 7,310. Despite the drop, it was a positive week overall, with the ASX200 up 0.39%.

Retail earnings were mixed today. Nick Scali shares rose after reporting earnings growth of 26.1%, with revenue up 15.1%. On the other side of the coin, Baby Bunting saw profits cut in half, although it still finished the trading day higher.

Both retailers did warn of slowing earnings in July and August, reporting that sales were down in the early stages of the new financial year compared to last year. Both companies failed to provide earnings guidance for FY24. Something to keep on when other retailers report next week

REA Group - the owner of realestate.com.au, reported declining earnings due to a double-digit drop in property listings. We take a closer look at REA Group later.

European natural gas prices fell overnight as the looming threat of a strike by workers at three Chevron/Woodside LNG plants lingers on. Energy (-1.93%) fell the most of the eight sectors to finish in the red. Whilst Discretionary (+0.83%) and Health Care (+0.33%) finished higher.

Strap in, as the next two weeks will be filled with earnings reports, guidance forecasts, dividends, missed estimates, and who knows what else. We ease into it on Monday, where we’re expecting the following companies to report: Argo Investments, Aurizon, Beach Energy, Carsales, Centuria Industrial REIT, JB Hi-Fi, Life360, Bendigo & Adelaide Bank, GPT Group, Lendlease.

ASX200 Stock Snapshot

Wall Street

A directionless session on Wall Street, as the CPI read for July, met expectations. July CPI% was 3.2% Y/Y, in line with estimates of 3.3% and 0.3% above June’s figure.

Economists are tipping that the Federal Reserve will keep rates on hold when they meet in September. Still, the consensus is that policy will remain tight to keep inflation under control.

The July CPI% showed some signs of sticky inflation, excluding food and energy; core CPI% was up 4.7% Y/Y, far above the Federal Reserve’s 2% target.

The S&P500 finished +0.03% higher, whilst the NASDAQ was up 0.12%. Nvidia fell again, losing 0.39%. General Motors and Ford Motor dropped on concerns that demands from union leaders could send the automakers’ labour costs soaring.

Weekly jobless claims were the other key data point reported overnight, climbing by 21,000 for the last week to 248,000, above estimates of 230,000.

Walt Disney shares rose 4.8% after reporting earnings on Wednesday, where it said it would increase prices for its ad-free subscriptions, reduce capital spend and outlay for movies and TV shows.

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Markets

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Quick Singles

🪃 Local News

• Pacific Smiles Group announced the resignation of MD & CEO Phil McKenzie, effective the end of August. Mr Paul Robertson has been appointed Interim Chief Executive Officer while the company searches for a replacement.

   

• Cettire CEO Dean Mintz sold approximately 33.3 million shares in the company for $3.00 yesterday after the company reported a bumper earnings result. Post the sale, Mr Mintz will retain a 37.2% shareholding.

• BlueScope announced a $415 million expansion of its coated metal products factory in Erskine Park, Sydney. The expansion is earmarked to be up and running by the end of 2025.

• Tabcorp has extended its agreement with Sportsbet by another ten years to 2036. The deal allows the online bookmaker to broadcast Sky Racing 1 and Sky Racing 2 vision live on their betting app and website.

• Despite Baby Bunting reporting a 1.7% increase in sales to $515.8 million, profit halved, with statutory NPAT of $9.9 million falling by a staggering 49.5% Y/Y. Cost Of Doing Business was up $16.5 million Y/Y. This was due to new and annualising stores, cost inflation and one-off establishment costs associated with launching a Marketplace in New Zealand. The company wants to cut costs by around $6 million - $8 million in FY24. Whilst no FY24 guidance was provided, comparable store sales were 9% lower during the last six weeks of trade than FY23.

• Charter Hall Social Infrastructure REIT, a landlord of social infrastructure and child care centres, reported a reduction in operating earnings of 5.9% to $59.2 million due to rising finance costs. Finance costs rose from $11.5 million to $28.5 million. A full-year dividend of 17.2c was issued, forecasted to drop to 16.0c in FY24.

• Newcrest Mining reported an underlying profit for FY23 of $778 million, down by $94 million from last year due to lower copper prices, higher depreciation and higher operating costs. Total copper production rose by 10%, while gold production rose by 8%

🌏 Around The Globe

• Chinese tech giant Alibaba had its largest quarterly increase since September 2021, growing revenue by 14% Y/Y in the June qtr. Net Income was also up 51% from the prior qtr. Alibabas’ U.S. listing ended the day 4% higher on Thursday.

• The U.S. Supreme Court has rejected Epic Games’ request to make Apple loosen its App Store rules, limiting how app developers direct their users to alternate payment methods. Currenlty, developers are slugged a 30% fee for apps and in-app purchases.

• Package delivery company UPS will pay its drivers an average salary of $170k, including benefits at the end of a 5-year contract covering 340,000 workers.

• WeWork has appointed four corporate bankruptcy experts to its board after casting doubt on its ability to stay in business.

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Deep Dive

REA Group Resliant
Amongst Falling Listings

REA Group reported FY23 earnings today, which landed where the market expected. Falling property listings make it a challenging environment to navigate for Australia’s largest online property listing platform. REA shares ended the day flat at $158.60.

FFY23 Financial Highlights

• Net Profit - $372m, down 9% YoY

• Revenue - $1,183m, up 1% YoY

• Operating costs - +7% due to investments in India

• EPS - $2.82, down 9% YoY

• Full Year Dividend -$1.58/share, down 4% YoY

Australian revenue was down 1% to $1,104m due to a challenging market and lower listings. The company highlighted a 46% rise in revenue from India, totalling $78.8m.

Approximately 12.1 million people visited each month on average during FY 2023, representing 61% of Australia’s adult population. Furthermore, there were 120.6 million average monthly visits, 3.3 times more than the nearest competitor each month.

Australian operating costs rose by only 1% to $414m, mainly driven by containing employee cost growth to 1%, with measures to slow down hiring and lower incentives offset by salary inflation. Marketing costs were also 8% lower. The Indian segment reported higher expenses due to continued investments in human resources, marketing, and other revenue-related costs.

The company saw a 12% drop in national real estate listings in Australia for FY23, hampered its growth. Sydney listings dropped by 18%, whilst Melbourne fell by 15%:

Movers and Shakers

✅ Biggest Gainers

• Nick Scali (NCK) rose 13% after reporting a 15% Y/Y increase in revenue to $507.7 million, with more deliveries and a reduction in the order bank as lead times returned to normal. Gross Margin improved by 280bps to 63.5%, thanks to the Plush acquisition, which was finalised on November-21. Underlying NPAT was 26% higher to $101.1 million. One to keep an eye on was the H2 performance, with written sales orders down 16.2% Y/Y. July 2023, orders of $39.7 million are down 8.1% Y/Y. No further FY24 guidance was provided. The company declared a dividend per share 75c - up from 70c in FY22.

• Star City Entertainment (SGR) shot up 18% after getting welcomed news from the NSW government, which has backed away from increasing the casino duty tax rates from 20.91% to a proposed 60.7%. Under the new plan, Star will pay a transitional rate of 20.9 per cent from July 2023, rising in annual increments to 22.91 per cent from July 2027 onwards.

🔻Biggest Fallers

• A2 Milk (A2M) fell by 3% on the back of no news; however, a forecasted price announcement from Synlait Milk may have affected the share price. New Zealand-based dairy processor Synlait Milk announced that it had cut its forecast base milk price for the 2023 / 2024 season to $7.00/kgMS from $8.00/kgMS (Milk Solids). Synlait said that the reduction is due to dairy commodity prices declining, with whole milk powder and skim milk powder prices falling by over 10% to the lowest levels in three years.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of 7th of August

1. Core Lithium (CXO) - 11.09%

2. Flight Centre (FLT) - 10.12%

3. IDP Education (IEL) - 9.48%

4. JB Hi-Fi (JBH) - 8.00%

5. Syrah Resources (SYR) - 7.94%

6. Select Harvest (SHV) - 7.87%

7. Pilbara Resources (PLS) - 7.69%

8. Brainchip (BRN) - 7.41%

9. Lake Resources (LKE) - 7.07%

10. Mesoblast (MSB) - 7.06%

📊Broker Ratings

What do the brokers have to say?

• Coronado Global Resources (CRN) - Upgrade to Accumulate from Hold (Ord Minnett). Target Price $1.70.

📅 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.