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. 🛒 Instacart Soars on Debut

2. ↘️ U.S. Housing’s 3-Year Low

3. ✈️ Sydney Airport's New Captain

4. 🧥 Kathmandu’s Warm Winter Woes

5. 🏠️ Booking in Victoria? Brace for the Airbnb Tax

The Recap

ASX Dips Again:
All Eyes on Next Fed Move

Another day of red for the Aussie market as investors show signs of caution ahead of critical interest rate decisions for the Bank of England, Bank of Japan and U.S. Federal Reserve. The ASX200 index ended Wednesday 33.3 points. lower to 7,163.3.

Seven of the 11 sectors finished the day lower, with Energy (-1.81%), Tech (-1.27%) and Materials (-1.17%) the worst hit. Discretionary (+0.39%) led the way of the four sectors to finish higher.

QANTAS remains in the news after paying former CEO Alan Joyce a $21.4 million salary in FY23 but withholding a portion pending the finalisation of its ACCC case. Qantas shares ended the day 2.20% lower, marking a 13.9% drop in the last month.

KMD Brands (formerly Kathmandu) and Sims reported earnings today for the period ending July 31.

The Iron Ore price fell slightly today but continues to defy consensus, with futures prices trading at US$122.00 per tonne for October contracts. According to the Bank of America, a pick-up in buying from Chinese steel mills bolstering inventories from record low levels has helped support the price.

Economic News

• The National Bank of China maintained its benchmark lending rate at 3.45% as expected. This decision was made as recent economic indicators suggest that the economy is stabilising and the yuan is weakening, which lessens the need for immediate monetary intervention. Economic data indicates that the Chinese economy is recovering after a sharp slowdown, and the yuan's depreciation has reduced the pressure on authorities to lower interest rates to support growth.

• Canada’s inflation rate rose to 4.0% in August from 3.3% in July due to higher gasoline prices. This may lead to the central bank raising interest rates again, after 10 hikes since last year's March.

• U.S. New Housing starts hit a three-year low for August, with a 4.3% drop from July, well down on expectations. The positive news was that Building Permits were 7% higher than last month.

U.S. New Housing Starts - By Month

ASX200 Stock Snapshot

Wall Street

U.S. markets fell again on Tuesday, with a risk-off sentiment taking hold before the Federal Reserve meets tonight to decide its next interest rate move. The S&P500 (-0.22%) and NASDAQ (-0.23%) finished lower as market caution remains. However, the consensus is that rates will remain on hold, with the November meeting appearing less certain.

Nine of the 11 sectors on the S&P500 finished lower, with Energy (-0.83%) and Discretionary (-0.65%) falling the most. IT Services (+0.64%) was the biggest gainer on the day.

Instacart roared out the gates as it debuted on the public markets on Tuesday, with the stock climbing over 12%, closing at $33.70. The company had priced its initial public offering at $30 a share, the high end of the expected $28 to $30 range. Apoorva Mehta, one of the co-founders of Instacart, has earned a $1.1 billion fortune after Instacart’s successful IPO. Mehta resigned as the CEO in August 2021 and gave up his position as executive chairman on the board during the IPO process.

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Quick Singles

🪃 Local News

• Ingham workers are planning a 24-hour strike this Friday due to ongoing pay disputes since the beginning of the year.

• Scott Charlton, the outgoing CEO of Transurban, has been appointed as the new CEO of Sydney Airport. He will begin his role on December 1, taking over from Geoff Culbert. Charlton will leave Transurban a month earlier than planned to start his new position. Sydney Airport was delisted from the ASX last year after being acquired for $23.6 billion by IFM Investors and New York-based Global Infrastructure Partners.

• Sigma Healthcare reported NPAT for the half-year ending July 31 of $11.2 million, a big improvement from the ($1.5 million) loss last year. Sigma said the rise in profit resulted from driving operational improvement, simplifying its business and executing on its strategy.

• Sims has finalised the terms to sell its 50% stake in LMS Energy, valuing its holding at $272.1 million, which is expected to be completed in the second quarter of FY24. “The funds generated from the sale will be allocated to strengthen the core metal business to create sustainable, long-term value for our shareholders,” said Sims CEO Alistair Field.

• The former CEO of Qantas, Alan Joyce, was paid $21.4 million when he left the company. However, $2.2 million of that pay is now in jeopardy as the board has decided to withhold short-term bonuses until the Australian Competition and Consumer Commission's investigation into the airline is completed.

• Victoria will become the first state in Australia to introduce an Airbnb levy, with a 7.5% charge on short-term accommodation as part of a long-term plan to increase housing supply and improve affordability. Among the initiatives is a target to build 800,000 new homes over ten years – 80,000 annually – in partnership with the housing industry.

🌏 Around The Globe

• The Wall Street Journal reported that Tesla and Saudi Arabia are in early talks to develop an Electric Vehicle factory. However, Elon Musk denied this, saying on X, “Yet another utterly false article from WSJ.”

• Brazil is urging affluent nations to fund the global shift towards sustainable energy since these nations require more ambitious pledges to compensate for their dependence on harmful energy sources. According to Alexandre Silveira, Brazil's Minister of Mines and Energy, developing countries cannot finance an energy transformation similar to those of Europe and the United States and thus require aid from developed nations.

• Disney stock slumped 3.3% after revealing plans to nearly double its spending on its parks and cruise businesses to roughly $60 billion.

• The United Auto Workers' strike against the Detroit Three automakers has entered its fourth day. Both sides are working to agree to a deal to prevent costly disruptions to additional plants. Negotiators from the union and General Motors, Ford, and Stellantis representatives are scheduled to resume talks.

• Starting in October, TikTok will require most U.S. employees to work in the office three times a week. The company has introduced an app that tracks badge swipes and absences to monitor employee attendance.

₿ Crypto Corner

• Blockchain researchers suspect North Korean hackers to be behind a $70 million theft from crypto exchange CoinEx.

• Mark Cuban lost approximately $870,000 worth of tokens due to a phishing scam he fell victim to.

• The Japanese government has introduced a fresh policy to promote start-ups and adopt cryptocurrencies. The latest regulations allow start-ups to offer cryptocurrencies instead of stocks when receiving investment from investment funds.

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Markets

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Newsletter Recommendation

Movers and Shakers

✅ Biggest Gainers

Sezzle (SZL) saw its share price spike 21% today after an August business update, reporting a 44.3% YoY increase in Total Income to US$14.0 million (A$21.6 million) during the month - an 11.7% increase from July.

Sezzle reported that it had exceeded 210,000 subscribers as of September 19.

For August, Sezzle recorded GAAP Net Income and Adjusted EBITDA (a non-GAAP measure) of $0.6 million and $2.4 million, respectively. This is up from $0.1 million and $2.1 million, respectively, in July.

Total Income as a percentage of Underlying Merchant Sales (UMS) increased 188 bps YoY to 8.7%.

🔻Biggest Fallers

Uranium explorer Alligator Energy's (AGE) share price fell by 21% today after coming out of a trading halt after completing an Institutional capital raise of $25.5 million at $0.052 per share.

The funds will be used to enhance work programs at the company’s Samphire Uranium project during 2024, with upcoming activities including a feasibility study and mining lease application.

Retail shareholders will be offered a share purchase plan to raise approximately $3 million for $0.052 per share. The AGE share price closed at $0.052.

Post of The Day

Deep Dive

KMD Brands Hits $1.1 Billion Sales
Amidst Challenges

KMD Brands reported a record-breaking sales figure of $1.1 billion for the financial year ending July 31 2023. This impressive 12.6% increase from the previous year saw all brands under the KMD umbrella, including Rip Curl and Oboz, achieving record sales.

The Group's CEO and Managing Director, Michael Daly, highlighted that this achievement came in the first year of uninterrupted trade post-pandemic, marking a significant milestone for the Group.

Financial Highlights

• Group Sales: +12.6% to $1.1 billion

• Gross Margin: +20bps to 59.1%

• Underlying EBITDA: +151% to $105.9 million

• Underlying NPAT: +8.6% to $43.3 million

KMD said the positive result was underpinned by strong omnichannel sales growth from all brands. Retail store sales increased by 17.5% as customers returned to shopping in stores.

Despite the overall positive performance, the fourth quarter presented challenges for Kathmandu, one of the brands under KMD.

Kathmandu faced increased cost-of-living pressures, leading to a softening consumer sentiment. Additionally, Australia experienced its warmest winter on record, affecting sales, especially compared to the previous year's best-ever winter trade season. However, Kathmandu still reported a sales growth of 10.6%, with Australia and New Zealand sales growing by 7.0% and 13.1%, respectively.

KMD Brand shares ended the day 4.5% lower to $0.735

What The?

Hide and Seek with a F-35 Jet

The U.S. military has had a challenging week after an F-35 Lightning II jet went missing over South Carolina. The pilot, encountering complications, made the critical decision to eject from the aircraft. He successfully parachuted into North Charleston and was promptly taken to a local hospital, where he was reportedly in stable condition.

The immediate concern shifted to locating the missing jet, a state-of-the-art military equipment. Based on the aircraft's last known trajectory, the search was concentrated around Lake Moultrie and Lake Marion. The F-35, known for its advanced stealth capabilities, proved challenging to locate. Former President Donald Trump had once commented on the F-35's near-invisibility features, and this incident inadvertently highlighted those capabilities.

After an exhaustive search, debris from the aircraft was eventually located northeast of Joint Base Charleston. The incident raised concerns and questions about the protocols and technologies to track such advanced aircraft. Rep. Nancy Mace voiced the concerns of many, asking, "How in the hell do you lose an F-35?" ⬇️ 

The F-35, manufactured by Lockheed Martin, is known as the world's most advanced fighter jet. With a hefty price tag of about $155 million, searching for the missing one was urgent. The Marine Corps responded cautiously by implementing a two-day stand-down for all aviation units to review safety protocols after the incident.

This event highlights the significance of constantly improving tracking and safety technologies for military equipment. While the successful retrieval of the pilot and the discovery of the wreckage provides a sense of closure, it also serves as a reminder of the difficulties involved in managing sophisticated military assets.

Daily Quiz

Test Your Knowledge

Last Week’s Daily Quiz Question. Which of these is the oldest car brand?

Answer: Peugeot. It was founded in 1803 by Jean-Pierre and Jean-Frédéric Peugeot and was originally a family-run grain mill, manufacturing saws, steel strips and springs for watchmaking before turning to bikes in 1830 and cars in 1882. Well done to the 45% who got this correct.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of September 14

1. Pilbara Minerals (PLS) - 10.71%

2. Syrah Resources (SYR) - 9.85%

3. Flight Centre (FLT) - 9.33%

4. Elders Limited (ELD) - 9.02%

5. Core Lithium (CXO) - 8.24%

6. Select Harvests (SHV) - 7.62%

7. IDP Education (IEL) - 7.51%

8. Mesoblast (MSB) - 7.31%

9. Brainchip (BRN) - 7.30%

10. Sayona Mining (SYA) - 7.12%

📊Broker Ratings

What do the brokers have to say?

1. New Hope (NHC) - Downgraded to Sell from Neutral (Citi). Target Price $5.50

2. New Hope (NHC) - rated as Underperform (Macquarie). Target Price $4.20

👨‍💼 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.