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28 February 2019 08:18 AM
Overseas Market Report
Current Level
Previous
Change
Daily % Change
Monthly % Change
Dow Jones Industrial Average
25,985
26,058
-73.00
-0.28
3.94
S&P 500
2,792
2,794
-2.00
-0.05
3.26
NASDAQ
7,555
7,549
5.00
0.07
3.75
FTSE 100 Index
7,107
7,151
-44.00
-0.61
1.99
DAX 30
11,487
11,541
-53.00
-0.46
2.81
CAC 40 Index
5,225
5,239
-13.00
-0.26
4.66
Nikkei 225 (Japan)
21,557
21,449
107.00
0.50
3.77
HKSE
28,757
28,772
-15.00
-0.05
2.92
SSE Composite Index
2,954
2,942
12.00
0.42
14.29
S&P/TSX Composite Index
16,074
16,068
6.00
0.04
3.43
NZ 50
9,307
9,281
26.00
0.28
3.58
US Volatility (Vix)
15
Overseas Market Report
US sharemarkets were mixed on Wednesday. Investors digested new comments from the Federal Reserve chief. Also US trade representative Robert Lighthizer said the US and China still had hard work ahead to reach a trade deal. At the close of trade the Dow Jones index was down by 73 points or 0.3%. The S&P500 index lost 0.1%. But the Nasdaq index was up by 5 points or 0.1%.
Global oil prices were firmer on Wednesday. US crude oil inventories fell by 8.6 million barrels last week. Analysts had actually been tipping an increase of 2.8 million barrels. Reuters reported Saudi Energy Minister Khalid al-Falih as saying that OPEC and its partners were already "taking it easy" in response to a tweet from Trump on Monday, who told the group to "relax" on production cuts. Brent crude rose by US$1.18 or 1.8% to US$66.39 a barrel and the US Nymex price rose by US$1.44 or 2.6% to US$56.94 a barrel.
Base metal prices rose by up to 2.4% on Wednesday with lead up the most. Tin was the exception, down 0.4%.
The gold futures price fell by US$7.30 an ounce or 0.5% to $1,321.20 an ounce. The spot gold price was near US$1,320 an ounce in late US trade. Iron ore fell by US25 cents or 0.3% to US$83.30 a tonne.
Commodities
Current Level
Previous
Change
Daily % Change
Monthly % Change
Oil Brent
66.39
65.21
1.18
1.81
7.71
Oil - West Texas crude
56.96
56.94
0.02
0.04
5.89
Gold Spot $/OZ
1,321.00
1,320.00
0.70
0.05
-0.05
Silver Spot $/OZ
15.70
15.70
0.00
-0.01
-2.03
Iron Ore
82.60
84.40
-1.80
-2.18
14.30
Thermal Coal Newcastle
94.90
94.80
0.10
0.11
-3.90
Coking Coal FOB ECP AUS
0.00
0.00
0.00
0.00
0.00
Aluminium ($US/t)
1,896
1,885
11.00
0.60
-0.32
Copper Mar-18 ($US/lb)
2.97
2.96
0.90
0.30
6.59
Lead ($US/t)
2,130
2,080
51.00
2.43
1.16
Nickel ($US/t)
12,972
12,877
95.00
0.73
8.94
Zinc ($US/t)
2,776
2,765
11.00
0.38
3.47
Tin ($US/t)
21,680
21,770
-90.00
-0.41
4.16
Uranium ($US/lb)
28.00
28.00
0.00
0.54
-3.97
Australian Market Report
Current Level
Previous
Change
Daily % Change
Monthly % Change
ASX All Ords
6,228
6,234
-5.00
-0.08
4.90
S&P/ASX 200
6,144
6,150
-7.00
-0.11
4.76
ASX 24 Futures
6,124
Australian Market Report
Wednesday 27 February - close. Australian shares have finished higher on gains by the big miners and banks while investors took stock of several new earnings reports. The benchmark S&P/ASX200 index finished up 21.9 points, or 0.36 per cent, at 6,150.3 points at 1615 AEDT on Wednesday, while the broader All Ordinaries was up 24.6 points, or 0.4 per cent, at 6,233.6.
Ashanti Headlines
AuMake International Ltd (AU8.ASX, 23cps, m.cap A$62.4m with 271.5m SOI, Cash $8.0m, Consumer Discretionary)
1HFY19 Highlights
This morning AuMake (AU8.ASX) released their numbers from the 1H FY19, highlights include;
1H FY19 financial results compared to same period 1H FY18;
Total sales up 142% to $21.8m
Owned brand sales up 424% to $1.40m (compares favourably with peers in the space!)
Gross profit up 274% to $4.2m
Gross margin up 46% to 19.2% (21.25% gross margin for Dec 18 quarter)
Same store growth up 30% in sales and 71% in gross profit
Stabilisation of fixed operating expenses
Online revenue continues to contribute 30% of total sales
An impressive set of numbers from AU8, especially when comparing the growth of the business on pcp. Of particular interest to us was the stabilisation of costs and the ability of the company to significantly increase margin (+46% HoH). The company is now confident in the business model and, with increased scale, can generate long term profitability for shareholders.
HoH Highlights
Other Key Takeaways
Other points of interest from the release where;
AU8 averages a gross margin that is double that of industry peers (+20% v 10%). This is a result of AU8’s ability to sell OEM and lesser known brands.
AU8 estimate the size of the cross border retail market to be A$1.5- 2b per annum.
The company is now focused on expanding market share and continues to assess opportunities in tourism, complimentary businesses and China.
Trading conditions remain buoyant post Chinese New Year and implementation of new e-commerce legislation.
Of note in the Blackmores 1H result- despite slower than expected China sales, the company noted continued buying from Chinese consumers in Australia and sending back to China.
We will keep an eye on ongoing activity in China- relationship withJD.com is particularly interesting given references to Chemist Warehouse/T-Mall and Priceline/ Koala.com. Revenue is expected In 4Q of this FY.
Online activity continues to grow with +110,000 members and 30% of sales.
Strategic Outlook
There was clear messaging in the 1H result that the Company is now looking to increase the scale of the business and increase market share. This is a different rhetoric from the company, as for the last 6 months they have focussed on refining the business model and demonstrating the company’s ability to increase sales and margins.
AU8 is a rapidly growing business in the China-Australia cross border retail sector and we look forward to seeing what the business looks like in another 6 months’ time.
Please contact the Ashanti Desk if you would like to discuss the AuMake story in more detail - Steve Martin+61 8 6243 1884 | Duncan Relf +61 8 61692669
Ashanti Capital Pty Ltd, ABN 61 614 939 981, the holder of an Australian Financial Services License (AFSL) number 493204. Any advice included in this document is general advice only, based solely on consideration of the investment or trading merits of the financial product/s alone, without taking into account the investment objectives, financial situation and particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should consider carefully the appropriateness of the advice in light of his or her financial circumstances and obtain a copy of and consider the Product Disclosure Statement for that product before making any decision.
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This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Ashanti Capital.
Ashanti Capital and/or entities and persons connected with it may have an interest in the securities, the subject of the recommendations set out in this report. In addition, Ashanti Capital and/or its associates will receive commissions on any transaction involving the relevant securities.