Good Evening,

Welcome to Equity Espresso. We’re here to catch you up on the day’s important stock market news in Australia and abroad. Here’s a sample of today’s top stories:

1. 🪙 Golds Aussie High

2. 👨‍💼 Insignia CEO Resigns

3. 📉 Liontown Back in Action

4. 📝 Analyst Report: Weebit Nano

5. 📈 10-Year Treasury Yield Brushes 5%

The Recap

ASX Falls As Gold &
Bond Yields Rise

Another down day for markets as the ASX200 index lost another 80.9 points or 1.16% today. After a solid start to the week, the index ended down 2% as October looks to follow in the footsteps of a negative September. Only three of the last ten trading weeks have been positive, as the tide appears to be turning in the second half of 2023.

Materials (-1.68%) and Telco (-1.43%) fell the most today, with BHP (-1.8%), Rio Tinto (-0.8%) and Telstra (-1.55%). Energy was the only sector to finish in the green, rising by 0.16% as Santos (+1.91%) shares finished higher.

The pressure on equity markets comes as the yield on the U.S.10-year Treasury note briefly touched 5% for the first time since 2007 overnight. It’s currently trading at around 4.94%.

Gold remains a haven, as the price rose to US$1,990/oz whilst setting an Australian gold price record of A$3,150 an ounce. Northern Star (+1.3%) and Evolution Mining (+2.2%) were some of the positive movers in the sector.

In company news, Liontown Resources sunk 30% after coming out of a trading halt today as it finalised a capital raise at $1.80 per share.
We took a closer look at the Liontown saga later in the newsletter.

Outlook

A quieter week on the economic front tonight, with U.K. retail sales being reported for September, which are expected to fall by 0.2% from August.

The S&P 500 (-0.16%) and NASDAQ (-0.33%) futures are again trading lower this afternoon, indicating another down night for the U.S. market.

Some of the larger global companies reporting overnight include Amercian Express and Dutch company Schlumberger N.V.

Economic Data

• U.S. sales of previously owned homes fell by 2% from August to a seasonally adjusted annualised rate of 3.96 million units in September, the lowest since October 2010.

• China held its benchmark lending rates at the monthly fixing on Friday, matching market expectations. The one-year loan prime rate (LPR) was kept at 3.45%, while the five-year LPR was unchanged at 4.20%.

Wall Street

The S&P 500 (-0.85%) and NASDAQ (-0.96%) finished lower again on Thursday as 10-year U.S. Treasury yields reached a 16-year high after U.S. Federal Reserve Chairman Jerome Powell said that additional interest rate hikes could be warranted given economic resiliency and labour market tightness.

Quarterly Earnings:

• Blackstone shares dropped 7.9% following a weaker-than-expected Q3 report. The investment firm reported 94 cents EPS and revenue of $2.32 billion. This was below estimates of $1.01 EPS and $2.51 billion in revenue.

• AT&T rose 6.4% after a Q3 earnings beat. The Telco giant reported EPS of 64 cents on $30.4 billion in revenue, ahead of estimates of 62 cents per share and $30.19 billion.

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Quick Singles

🪃 Local News

• Get more than just a VPN. Shield your devices, guard your identity, and browse with peace of mind. Your online journey is now safer than ever with Surfshark One. Save 82% with the Equity Espresso subscriber deal!

• ASIC has banned former PWC partner Peter Collins from providing financial services for eight years. ASIC found that Mr Collins had “disclosed confidential information he obtained in his roles as a tax advisor to the Commonwealth Treasury and the Australian Board of Taxation”.

• The Albanese Government has directed the Australian Competition and Consumer Commission (ACCC) to monitor domestic air passenger services to ensure an even playing field between airlines.

• The Queensland government is looking to intervene in an imminent legal battle to ensure ANZ's $4.9 billion deal to buy Suncorp Bank gets over the line.

🌏 Around The Globe

• Amazon has begun delivering prescription medicine by drones in Texas as it continues to expand its nonhuman delivery service.

• Costco’s CEO, Craig Jelinek, will step down in January after 11 years at the helm; the current president, Ron Vachris, will succeed him.

• Tesla said that the first deliveries of the Cybertruck will take place on November 30 at its’ Gigafactory in Austin, Texas. Tesla aims to produce 250,000 Cybertrucks per year after 2024.

• Nokia said it will cut up to 14,000 jobs to reduce costs after weaker demand for next-generation 5G equipment lowered third-quarter sales.

• United Airlines is experimenting with a new boarding process. Economy-class passengers with window seats will now be the first to board, followed by aisle and middle seats. This change is expected to reduce the time needed for boarding by up to two minutes per flight.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Sector

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

Atlas Anteria (ALX) reported a weighted average traffic increase of 2.3% for Q3, as toll revenue increased by 6.1%. The largest traffic and revenue increase came from the company Warnow Tunnel in Germany.

AMA Group (AMA) reported an operating cash flow loss of ($6.7m) during Q1 of FY24, which it said was expected. Revenue for the quarter was $235.3m, up 16% from the pcp.

BlueScope Steel (BSL) downgraded underlying EBIT guidance for H1 to be between $620 million and $670 million. Prior guidance was set at $700 million to $770 million, with the downgrade coming due to softer steel prices.

Genex Power (GNX) has secured a 10-year power purchase agreement with Energy Australia for Queensland's 258MW Kidston Stage 3 Wind project.

Insignia Financial (IFL) announced that CEO Renato Mota will resign effective February 2024.

Lynas Resources (LYC) reported reduced revenue during Q1 of $128.1 million - down from $163.8 million in the PCP. The Rare Earth (REO) miner produced 3,609 REOt - down from 4,475 REOt last quarter.

Paladin Energy (PDN) reported that its Langer Heinrich Mine remains on track and within budget for production by Q1 next year. The company held cash at the end of September of US$99.8 million.

 📱 Post of The Day

Deep Dive

The Liontown Saga:
A Recap

Liontown Resources recommenced trading on the ASX today, falling 31% to close at $1.90 after finalising funding for its Kathleen Valley mine production, which is on track to commence production in mid-2024.
The Funding Package is broken down as follows:

• $376million institutional placement at $1.80 per share to raise

• $760million debt funding package.

• Existing retail shareholders can participate in a share purchase plan to raise a further $45 million.

It has been a whirlwind year for Liontown shareholders, fronted with multiple takeover bids from North American Lithium giant Albemarle, who withdrew their offer this week as Gina Reinhart upped her stake in Liontown during September/October.

A Recap of the key events:

1. March 28: Liontown shares shot up from $1.54 to $2.55 after it told the market that it had rejected Albemarle’s bid to acquire them for $2.50 per share.

2. September 4: Liontown receives a revised offer of $3.00 per share, which it recommends shareholders accept. Liontown share price rises to $2.90.

3. September 11: Liontown grants Albemarle the opportunity to commence due diligence, which it expects to take four weeks.

4. September 12: A notice to the market that Gina Rineharts Hancock Prospecting had become a substantial shareholder of Liontown - owning 7.72%.

5. September 25 - October 11: Hancock proceeds to add over 268 million shares in six instalments to take their stake from 7.72% to 19.90%.

6. October 12: Liontown grants Albemarle a seven-day extension to conduct due diligence.

7. October 16: Albemarle withdraws its proposal due to the growing complexities of executing the transaction. Liontown goes into a trading halt.

8. October 20: Comes out of a trading halt; stock price sinks 30% as it finalises funding arrangements, including an equity raise at $1.80 per share.

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Analyst Report

Weebit Nano - Buy

Code: WBT | Market Cap: $622m | Current Price: $3.32 | Price Target: $9.56
Sector: Technology | Broker: Pitt Street Research

Weebit Nano Limited uses Resistive RAM (ReRAM) technology to develop a non-volatile memory utilising fabrication factory materials. Several companies are developing Non-Volatile Memory (NVM) technologies that offer superior performance, with Weebit Nano being one of the most advanced.
Its’ technology is now commercially available and has passed several technological milestones.

Weebit announced its newest partner in South Korea - fab DB HiTek.
DB HiTek is one of the world's top-10 foundries and is South Korea's second-largest foundry after Samsung. The company provides services to chip giants such as Intel, Sony and Mitsubishi, to name a few. The agreement between WBT and DB HiTek provides for WBT’s ReRAM to be licensed by DB HiTek and integrated as embedded non-volatile memory (NVM) in DB HiTek’s SoCs (System-on-aChip).

The broker has reiterated their valuation of $9.56 per share. They are optimistic that the gap between the company's current price and its’ target can close soon now that WBT has secured a second commercial deal and is close to reporting its first revenues.
The broker also believes that Weebit could attract the attention of Integrated Device manufacturers, such as Intel, STMicro and Texas Instruments, and fabless chip companies like Qualcomm, Broadcom, and NVIDIA.

You can read the report in full here.

Daily Quiz

❓️ Test Your Knowledge

Yesterday’s Daily Quiz Question. Which of these private companies is estimated to have the highest valuation?

Answer: ByteDance. The owner of TikTok is estimated to be valued at around US$223.3bn - well ahead of the field. OpenAI (Chat-GPT) was the most popular answer on the poll and is currently seeking a valuation of around $86 billion. Space X is behind Byte Dance at US$150m. Aussie-founded company Canva is valued at approximately US$25.5bn.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of October 16

📊 Broker Ratings

What do the brokers have to say?'

1. Liontown Resources (LTR) - Upgrade to Neutral from Sell (Citi)

2. Nick Scali (NCK) - Upgrade to Outperform from Neutral (Macquarie)

3. Netwealth Group (NWL) - Downgrade to Sell from Neutral (Citi)

4. Sims (SGM) - Downgrade to Underweight from Equal-weight (Morgan Stanley)

👨‍💼 Director Transactions

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

💲Dividends

Companies trading ex-dividend today

1. Kelly Partners (KPG) - $0.0044

2. Sandon Capital Investments (SNC) - $0.0275

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.