Good Evening,

Welcome to Equity Espresso’s Daily Recap. Global markets appear to be putting this rate-hike cycle in the rear review mirror, with Equity markets, Gold and Bitcoin all continuing their upswing. Meanwhile, locally, Origin Energy shareholders got the chance to vote on the Brookfield consortium’s $20 billion takeover offer. Let’s jump in.

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The Recap

Markets started the new week positively, hitting an 11-week high, with the ASX 200 gaining 51.5 pts or 0.73% to finish at 7,124.7. It was a risk-on type of day, with nine sectors finishing the day higher, led by Technology (+1.90%) and Real Estate (1.55%), whilst Utilities (-2.52%) fell and Energy (-1.26%) stocks continued their recent downtrend.

The long-running proposed takeover of Origin Energy failed to garner enough votes for approval at a shareholder vote today. Only 66.97% of the shareholders voted in favour of the $20 billion deal, below the required 75% mark. Origin Energy's shares were trading 3.9% lower this morning, with the company going into a trading halt before the vote.

The price of Gold jumped more than 3% to above $US2,100 on Monday, hitting all-time highs amid growing expectations that the U.S. Federal Reserve will hold interest rates steady at this month’s meeting and could start cutting rates next year. While the digital haven, Bitcoin crossed $US40,000 for the first time since April 2022, continuing its recent uptrend. Northern Star (+3.7%), Evolution Mining (+2.4%), Sandfire Resources (+2.5%) and Perseus Mining (+4.6%) were some of the gold miners that saw significant gains today.

The 28th annual United Nations (UN) climate meeting - COP28, kicked off last week, where governments discussed how to limit and prepare for future climate change. A pledge to triple nuclear generation capacity by 2050 from a base year of 2020 was signed by 22 countries, including the U.S., Canada, Japan, France, the U.K., and the UAE. Uranium companies Paladin Energy (+1.9%), Deep Yellow (+6.4%) and Lotus Resources (+6.9%) all finished the day higher.

Brent Crude prices rose toward $US80/bbl after a six-week run of losses on the possibility that U.S. sanctions on Venezuelan supply could be tightened up again. The White House said it was evaluating possible consequences after President Nicolás Maduro missed a November deadline to release detained Americans.

Economic Data

• The value of new loans for owner-occupied homes in Australia increased by 5.6% to $17.23 billion in October 2023, from a 0.1% decline in September, beating market forecasts by 0.8%.

• Corporate profits in Australia fell by 1.3% QoQ in Q3, softer than a 12.1% plunge in Q2 and market forecasts of a 0.3% drop.

• Canada’s unemployment rate rose to 5.8% in November 2023, up from 5.7% in October, in line with market expectations, marking the highest rate since January 2022.

• The U.S. ISM Manufacturing PMI was unchanged at 46.7 in November 2023, below forecasts of 47.6, continuing to point to contraction in the manufacturing sector.

Wall Street

The S&P 500 closed at its highest point of 2023, rising by 0.59% as the market shifts from rate hikes to when the Fed Reserve will begin cutting rates. The rebound in November came following three straight months of declines. The NASDAQ (+0.55%) also rose, while the Russell 2000 jumped by almost 3%.

Outlook

The Reserve Bank of Australia meets tomorrow, where it's widely expected that interest rates will remain on hold at 4.35% following October's lower-than-expected inflation. Q3 GDP will be reported on Wednesday, which is expected to decline to a 1.7% YoY rise, following a 2.1% growth in Q2. Thursday sees the October Trade Balance and Building Approvals data released.

U.S. Factory orders for October get reported overnight, while in China, Services and Composite PMI data for November gets released tomorrow.

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🪃 Local News

• The U.S. Department of Energy has released a draft guide that could result in Australian miners losing out on green energy subsidies due to the high ownership levels of foreign entities of concern. The guide defines this as any company with over 25% shareholder ownership from China, North Korea, Iran, or Russia.

• Coles and Woolworths will face a parliamentary inquiry over claims of profiteering. A senate inquiry will investigate their market power and pricing decisions amid concerns they have profited during an inflationary period marked by fast-rising food costs.

• ANZ and Suncorp kicked off nine days of tribunal hearings in an attempt to convince the Australian Competition Tribunal that the proposed $4.9 billion bid by ANZ for Suncorp’s banking arm should go ahead.

🌏 Around The Globe

• Alaska Air announced it will buy rival Hawaiian Airlines for $1.9 billion. The deal, forecast to take between nine and 18 months, will see both companies keep their brand names.

• China Evergrande Group has been given more time to negotiate a restructuring deal with its creditors. The company faces the possibility of being wound up, but a Hong Kong court postponed its decision until January 29.

• Pharmaceutical giant AbbVie will buy cancer drug maker ImmunoGen for $10.1 billion in a deal expected to close in 2024.

• Meta will reportedly launch its social app Threads in Europe this month. Meta may offer a view-only mode to comply with regulations, allowing users without profiles to browse posts.

• Detroit has rolled out the nation’s first wireless-charging public roadway for electric vehicles beneath a street. The copper inductive charging coils allow vehicles with receivers to charge their batteries while driving, idling or parking above the coils.

• OpenAI has rehired Sam Altman as CEO while also assembling a new board of directors, which includes a seat for Microsoft as a non-voting member.

• Novo Nordisk is suing two compounding pharmacies in Florida for allegedly selling impure and “potentially unsafe” drugs claiming to contain semaglutide, the active ingredient in weight loss drug Wegovy and diabetes medication Ozempic.

Markets

ASX Company Movers

Commodity Prices

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

• Aussie Broadband (ABB) raised ~$20 million from a Share Purchase Plan, which the company said was oversubscribed. The funds come in addition to the $120 million raised from institutional investors.

• Incitec Pivot (IPL) announced that it completed the sale of its ammonia manufacturing facility to CF Industries Holdings on December 1. Incitec plans to return up to $1.0 billion to shareholders through share buybacks and dividends.

• Liontown Resources (LTR) has secured an agreement with the Mid-West Ports Authority, which will facilitate the export of lithium spodumene concentrate from its Kathleen Valley project.

• Metcash (MTS) reported a 1.3% lift in revenue to $7.8 billion for the six months ending October, with statutory profit increasing by 12.2% to $141.0 million. Metcash declared a fully franked interim dividend of $0.11 per share.

• Mesoblast (MSB) announced a placement offer to raise $97.0 million at $0.30 per share - a 25.9% discount to the last closing price on November 30.

• Orora Ltd (ORA) confirmed that it completed the acquisition of French glassmaker Saverglass. Orora also announced the appointment of a new non-executive director, Claude-Alan Tordy, based in France.

• Tower Limited (TWR) - will undertake a strategic review of its ownership structure. Tower lists Bain Capital as a 20% stakeholder in the company.

Social Media

 📱 Post of The Day

Broker Research

Cobram Estate Olives

Code: CBO | Market Cap: $582.0m  | Current Price: $1.40
Price Target: $1.75 | Sector: Consumer Staples | Broker: Shaw & Partners

Overview

Cobram Estate Olives is a food and agribusiness company and Australia’s largest olive oil producer. Cobram has around 35% of the retail market share in Australia.

Cobram Estate Highlights

• Cobram has extensive olive groves in Australia that surpass all competitors. However, only 60% of its olive trees are mature and fully bearing. This leaves further opportunity for growth as Cobram olive groves yield more significant quantities.

• There is a global shortage of olive oil after two short seasons in Spain, causing European imports to push prices higher. Cobram raised prices by around 12% in October 2023.

• Cobram has taken its Cobram Estate brand and olive farming practices to California, which has grown sales over the last eight years to over $40 million.

Recommendation 

The broker initiates coverage of Cobram with a Buy rating and a price target of $1.75. The emerging U.S. olive oil operation presents strong growth prospects, with management’s ambition to double sales over five years. The broker’s EBITDA projection for FY24 of $43 million is slightly higher than consensus estimates ($41m).

You can access the Cobram Estate Olives Research Report here.

Daily Quiz

❓️ Test Your Knowledge

Last Week’s Question. With respect to stock markets, what does "Window Dressing" refer to?

Answer: A short-term strategy used by fund managers to make their financial reports and portfolios look more appealing to clients. The practice is usually done towards the end of the month when fund managers will buy into better-performing stocks before reporting their monthly holdings. The goal is to attract more people and money, hopefully boosting the next reporting period's bottom line.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of November 27

📊 Broker Ratings

What do the brokers have to say?

1. Coles Group (COL) - Upgrade to Equal-weight from Underweight (Morgan Stanley)

2. Endeavour Group (EDV) - Upgrade to Buy from Neutral (UBS)

3. Universal Store (UNI) - Upgrade to Buy from Neutral (Citi)

You can access full broker notes for Premier Investments

👨‍💼 Director Transactions

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

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.