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13 November 2018 05:48 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average25,38725,989-602.00-2.320.19
S&P 5002,7262,781-55.00-1.97-1.48
NASDAQ7,2017,407-206.00-2.78-3.95
FTSE 100 Index7,0537,105-52.00-0.740.82
DAX 3011,32511,529-204.00-1.77-1.72
CAC 40 Index5,0595,107-48.00-0.93-0.72
Nikkei 225 (Japan)22,27022,25020.000.09-1.87
HKSE25,63325,60231.000.12-0.65
SSE Composite Index2,6312,59932.001.220.91
S&P/TSX Composite Index15,15615,274-118.00-0.77-1.67
NZ 508,8588,957-99.00-1.110.16
US Volatility (Vix)20
Overseas Market Report

US sharemarkets fell on Monday with technology stocks leading the declines. Shares in Apple fell by 5% after two suppliers cut forecasts for iPhone sales. Shares in Goldman Sachs fell by 7.5%after Malaysia sought a refund for fees paid for a transaction. Shares in General Electric lost 6.9% after the company said it would sell assets to reduce debt levels. At the close of trade the Dow Jones ended the session near its lows, down 602 points or 2.3%.The S&P500 index was down by 2.0% and the Nasdaq index was down by 206 points or 2.8%.

Global oil prices were modestly lower on Monday. OPEC oil producers mulled potential production cuts. But US President Donald Trump tweeted this morning "Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" On Sunday Saudi Arabia said it would cut shipments by half a million barrels per day in December due to lower seasonal demand. Brent crude fell by US6 cents or 0.1% to US$70.12 a barrel and the US Nymex price fell by US26 cents or 0.4% to US$59.93 a barrel. In after-hours trade Nymex was trading near US$59 a barrel.

Base metal prices fell by up to 2.5% on the London Metals Exchange on Monday with lead down the most. Although other metals lost up to 0.9% and copper ended only 0.1% lower.

The gold futures price fell by US$5.10 an ounce or 0.4% to $1,203.50 an ounce. The spot gold price was trading nearUS$1,201 an ounce in late US trade. Iron ore fell by US50 cents or0.6% to US$76.75 a tonne.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent69.2770.18-0.91-1.30-13.88
Oil - West Texas crude59.0160.19-1.18-1.96-17.28
Gold Spot $/OZ1,201.001,210.00-9.20-0.76-1.42
Silver Spot $/OZ14.0014.20-0.20-1.09-4.16
Iron Ore74.2074.100.100.199.60
Thermal Coal Newcastle105.90105.90-0.10-0.05-3.07
Coking Coal FOB ECP AUS0.000.000.000.000.00
Aluminium ($US/t)1,9301,946-16.00-0.84-5.11
Copper Mar-18 ($US/lb)2.672.67-1.60-0.61-4.73
Lead ($US/t)1,9081,956-49.00-2.49-7.77
Nickel ($US/t)11,32011,397-77.00-0.68-10.01
Zinc ($US/t)2,5632,586-23.00-0.89-4.21
Tin ($US/t)19,29419,189105.000.550.95
Uranium ($US/lb)29.0029.000.000.005.82
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords6,0276,01116.000.270.34
S&P/ASX 2005,9415,92219.000.330.77
ASX 24 Futures5,866
Australian Market Report

Monday 13 November - close. The local sharemarket has recovered early losses, with gains from energy, mining, telco retail and health care stocks outweighing losses in the financial and IT sectors. The ASX 200 closed at the day’s highs, up 19 points or0.3% to 5,941.

Ashanti Headlines

AuMake International Ltd (AU8.ASX, 26cps, m.cap A$73.3m with 271.5m SOI, Cash $10.7m, Consumer Discretionary)

Ashanti Capital was pleased to recently host AuMake International (ASX.AU8) Executives Keong Chan (Exec Chairman) and Peter Zhao (CFO) on a Domestic and Asian Non-deal Roadshow. The AU8 story was incredibly well received, our key takeaways from the roadshow can be seen below;

  • One year on - Investors were very positive on the progress made since listing just over a year ago. This coincides with a growing confidence in board and management as they executed their strategy and delivered a series of impressive quarterlies.
  • September Qtr - investors impressed by the 1Q19 numbers - QoQ sales up 43%, gross profit up 63% and OEM sales up 47%. Underlying operating costs remained stable. 
  • Sophisticated knowledge base - Investors were well versed in the ‘daigou’, their influence, the size of the market and the current regulatory environment.  
  • Tourism (I) - investors were keen to know more of the impacts of Chinese Tourists on the AU8 business. Tourists currently make up ~50% of AU8 customers and there is an opportunity for this to increase. Tourism is a lucrative market for AU8 as they are a captive audience, buy high value, low-volume products and are looking to purchase lesser known brands that are unavailable in China.  
  • Tourism (II) - investors were surprised by the size of the tourism market and the spending power of pre-organised Chinese tour groups (think Junket operators that significantly increased casino earnings). AU8 are continuing to asses potential synergies with tour group operators. 
  • Understanding the model - Investors are starting to see the potential power of the business model (owning the distribution channels and being able to influence the end-consumer) with applications in cross-border commerce (daigou) and tourism. 
  • Scale - AU8 has become the dominant player in the Sydney market and investors see no reason this cannot be replicated in other Chinese heavy communities and tourist destinations.
  • Emergence of online - online sales accounted for 30% of the Sep-Q and the online community is growing at 1,000 members per week. Online and repeat customers increase margins and also increase the sales potential of bricks and mortar storefronts.  
  • Regulatory changes in China- e-commerce and cross-border policies will make consumers and suppliers even more reliant on Australian based daigou distribution (very positive read-through for AU8). 

In brief, we were taken back by the calibre of investors that made the time to catch up with AU8 (ie - funds and main-land ‘strategics’ who do not normally take an interest in ~A$100M companies) and the level of knowledge on the Sino-Australian consumer sector. Investors were enthusiastic on the business model and interested to understand how AU8 can significantly increase the scale of the business.

Please contact the desk on +61 8 6169 2668 should you wish to discuss further.


Have a question? admin@ashanticapital.com.au

ERA Communications