Reporting Season Kicks Off - Discretionary Falls

What made the news today?

• Dan Murphy sales keep Endeavour strong

• Rhianna Royalties

• JB Hi-Fi falls short of expectations.

• Impairment charges send two stocks nosediving.

Reporting season got into full swing today as a number of companies issued earnings today in a busy week on the calendar. The ASX 200 ended the day down 15.90 points, a fall of 0.21% loss, to close Monday at 7,417.80. Aurizon, JB-HiFi, Star City and Endeavor Group were just some of the companies on the ASX to report today earnings today.

There weren't many winners from a sector viewpoint, with eight of eleven markets trading in the red today. The biggest fall come from the Consumer Discretionary sector, which fell by 1.40%, after a disappointing update from JB-HiFi. Following closely was Tech (-0.58%) and Health Care (-0.45%). The Energy industry had the best performance, gaining 1.78% on the day after Russia announced plans to cut oil production. Woodside (+2.12%) and Santos (+1.73%) both traded higher today with micro-caps Helios Energy (+6.06%) MMA Offshore up (+4.0%), and Horizon Oil up (+3.13%) also gaining today.

The biggest drops today on the ASX200 came from Star Entertainment Group and Imugene, both falling by 20.80% and 10.34% respectively.

Quick Singles

• Lendlease Group (ASX: LLC) share price dropped by 7% to $7.69 after the company released a disappointing first-half results with a statutory loss after tax of $141m.

• Aurizon Holdings (ASX: AZJ) shares are down 7.5% to $3.45 due to a 34% decline in profitability for the first half of FY23 despite an increase sales.

• Lynas Corporation (ASX:LYC) shares dropped 4.8% to $8.36 on rumors that the Malaysian government may require the company to make its plant radiation-free, which might impede its activities in the nation.

• Audinate Group (ASX: AD8) share price increased by 10% to $7.89 after a reporting a record half with a revenue increase of 39% to $30.8million and Net Loss after tax of $0.4m, an improvement from a $2.1m in the same half last year.

• Carsales.com (ASX: CAR) share price increased by 0.6% to $22.68 following the release of its half-year results for the period ending 31 December. CAR reported adjusted revenue $332m - a 37% increase and Adj. NPAT of $122m - a 37% increase.

Charts and Numbers

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Top Story

Signs of Pullback in Consumer Spending Emerge at JB Hi-Fi as Interest Rates Rise

One of Australia's largest retailers, JB Hi-Fi, has reported slower sales since the start of 2023, as the economy enters an "uncertain" period after nine consecutive interest rate rises. The CEO of JB Hi-Fi, Terry Smart, stated that customers are being more cautious than they were last year. Despite this, sales still grew by 8.6% to $5.3 billion for the six months to December 31st, driven by increased spending during Black Friday and the pre-Christmas period. However, in January, sales grew only 2.5% at JB Hi-Fi's 199 Australian stores and were stagnant at The Good Guys.

An analysis by Macquarie brokers shows that younger consumers are expected to continue spending, making the picture complicated for the Reserve Bank as it tries to slow down inflation. The bank's analysts wrote in a note dated February 10th that the year-on-year improvement in foot traffic at major youth apparel retailers is supportive of the hypothesis of youths being relatively resilient.

JB Hi-Fi shares fell 5.1% to close at $44.25 on Monday, despite the company reporting record earnings in its December half. The business reported an 8.6% increase in sales to $5.28 billion and earnings before income and taxes grew 14% to $479.2 million. However, online sales declined sharply during the latest half, falling 34.8% to $537.3 million. Group CEO Terry Smart said that sales growth is starting to "moderate" from an elevated level as seen in the first half, but the business is well placed to adapt to any changes in the retail environment.

The first signs of a pullback in consumer spending have emerged at JB Hi-Fi as the economy enters an uncertain period, but younger consumers are expected to continue spending, making the picture complicated for the Reserve Bank. Despite this, JB Hi-Fi reported record earnings in its December half and the CEO stated that the business is well placed to adapt to any changes in the retail environment.

Movers and Shakers

✅Biggest Winners

Endeavour Groups (ASX: EDV) share price rose by 4.1% to $7.10 following the release of the beverages giant's half-year report. Endeavour reported a 2.5% increase in revenue to $6.5 billion and a 17% increase in net income to $364 million.

Insurance Australia Group (ASX: IAG) share price increased by 4.5% to $4.92 following the release of the insurance giant's half-year results. IAG reported a 7.5% increase in total written premiums to $7.06 billion and a 171% increase in net income after taxes to $468 million.

❌ Biggest Losers 

Appen Ltd (ASX: APX) shares were down 15.4% to $2.81. The artificial intelligence data services company revealed in an update to the market that it expects to report full-year revenue at the high end of its guidance range but EBITDA at the low end. Appen also disclosed a $204.3 million non-cash, pre-tax impairment charge related to its new markets business.

Star Entertainment Group Ltd (ASX: SGR) share price plummeted by a whopping 20.8% to $1.49. Star disclosed that competition in Sydney was hindering its performance, which is anticipated to result in a slight drop in first-half revenue compared to pre-COVID levels. This is also anticipated to weigh on the company's annual profitability.

Crypto Corner

Rihanna's 'Bitch Better Have My Money' Royalties Sell Out in Minutes as NFTs

Singer Rihanna's hit song "Bitch Better Have My Money" has made headlines once again, this time for its innovative use of non-fungible tokens (NFTs). The song's producer, Jamil "Deputy" Pierre, has collaborated with European crypto startup AnotherBlock to sell a fraction of his streaming rights to the song through 300 NFTs. Each NFT was sold for $210, giving the collector ownership of 0.0033% of the song's streaming royalties.

The NFTs sold out rapidly, bringing in $63,000 in revenue for AnotherBlock. Holders will receive their first royalty payouts on February 16, and can expect returns of between 6.1% and 6.8% in the first year. The success of "Bitch Better Have My Money" has caused the value of AnotherBlock's music rights catalog to jump by 16% since its first launch in August.

The use of NFTs in the music industry is becoming increasingly popular as artists seek to monetize their work. The Chainsmokers and Diplo are among the musicians who have already tokenized their music. Other platforms, including Royal, Sound.xyz, and Catalog, are also gaining popularity for selling song rights as NFTs.

The drop of the "Bitch Better Have My Money" NFTs comes ahead of Rihanna's much-anticipated performance at the Super Bowl halftime show. The singer, who has not performed on stage in seven years, is expected to further boost the popularity of NFTs in the music industry.

Economic Outlook

A busy week on the economic calendar with the US CPI read on Tuesday the big item investors will be watching with housing data the other key metrics. Australia reports employment figures on Thursday, unemployment is expected to come in at 3.5%

• AU Consumer Sentiment

• AU NAB Business Confidence

15th February

• US CPI YoY (est. 6.2%)

16th February

• US Retail Sales MoM (est. 1.6%)

• US Capacity Utilization (est. 79.1%)

• US Industrial Output (est. 0.5%)

• AU Employment (est. 20K)

• AU Unemployment (est. 3.5%)

17th February

• US Jobless Claims (est. 200k)

• US Housing Starts number (est. 1.36M)

• US Building Permits (est. 1.35M)

• US Producer Prices (est. 4.9%)

• US PPI Inflation (est. 5.4%)