Australian Stocks: What Happened Today?

This story features WOOLWORTHS GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: WOW

The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Stephen Hogan, Senior Private Client Adviser, Equities/Derivatives

Australian Market

The Australian market (XJO) closed down 54.0 points or 1.05% to 5087.2 today. There was a steep sell off on the open, falling 59.1 points in 10 minutes. The low of the day was 5076.4, hit at 1:39pm with a small rally into the close. We had a very negative lead from the U.S. overnight as investors sold off broadly and moved into gold and bonds, in anticipation of what will unfold if the U.S. leads an attack on Syria. The Dow Jones fell -1.14%, the S&P 500 dropped -1.59% and the Nasdaq lost -2.16%. The best performing sector was Utilities, gaining 1.42%, while the worst sector was Metals and Mining, falling -2.15%.

In economic news, the ABS reported that the amount of construction work done in Australia fell 0.3% in the June quarter. Over the year to June, the volume of construction work done was down 0.9%. The ABS said total building work done in the June quarter, including homes and non-residential buildings like offices and shops fell 0.6% from the March quarter. Engineering work done, which includes mines, roads, bridges and the like, was down 0.2% in the quarter. 

The Australian government has sold $800 million of April 21, 2024 Treasury bonds for a weighted average yield of 3.9792%. The sale attracted bids totalling $1.370 billion, giving a coverage ratio of 1.71.

Housing affordability is 16.76% higher than it was a year ago, due to lower interest rates beginning to filter into the residential market. The HIA and Commonwealth Bank affordability report for the June quarter stated across the capital cities, housing affordability increased by 4.5% to 69.4. The strongest increases were seen in the more subdued dwelling price markets of Brisbane, Adelaide and Hobart, where affordability rose by around 10%. "These are certainly encouraging results for those entering the market at this time in the cycle," the report said.

Reporting season continues:

Woolworths Limited ((WOW)) reported a net profit of $2.26 billion for FY13, up 24.4% from last year. WOW's revenues rose 4.4% to $59.56 billion. The WOW food and liquour division posted a pre-tax profit of $3.2 billion, up from $2.9 billion in the previous year. Grant O'Brien, WOW boss said after unveiling that underlying net profit had risen 8% to $2.35 billion for FY13, that WOW had taken an important step forward in restoring the group to its historic profitability and that he was squarely focused on boosting earnings to at least 10 per cent growth year-on-year. O'Brien also mentioned that they had benefited from the disposal of Dick Smith electronics last year, stating that it was no longer a distraction to management as it rejuvenated its supermarkets division and acted to repair its loss making hardware chain Masters. WOW will pay out $2.2 billion to shareholders via dividends and other distribution, declaring its full-year dividend of $1.33 a share, up by 5.6%.

AGL Energy Limited ((AGK)) reported a net profit of $388.7 million for FY13, up from the $114.9 million net profit a year earlier. AGK's revenue rose to $9.7 billion, up 30.3% with the full integration of the Loy Yang power station. Earnings per share hit 70.7c up from 23.8c. AGK will pay a final dividend of 33c a share, raised from 32c.

Transfield Services Limited ((TSE)) reported a $249.99 million loss for FY13, down significantly from a net profit of $85 million in FY12. TSE was hit by impairment charges amid the downturn in mining sector demand and weakness in other key markets; however revenue rose to $3.45 billion from $3.14 billion. Without the impairments and other charges, the net profit was $62.5 million. In May, TSE halved its net profit before amortisation and impairments to $62-65 million, down from revised earlier guidance of a net profit of between $85-90 million (pre-amortisation and pre-impairments). TSE will not be paying a final dividend.

Wotif.com Limited ((WTF)) reported a net profit of $51 million for FY13, down 12% from last year after its under-performing business in Asia weighed on the online travel company's earnings. WTF warned in June that it would report a fall in profit this year due to its operations in Asia. WTF total revenue fell almost 1% to $147 million for the year to June, while costs increased by $9 million as the company spent more money on marketing and technology. The bottom-line profit includes $2.3 million in write offs. WTF will pay a dividend of 11.5c a share fully franked in October, down from 13.5c in the same period last year, with a total payout for the year of 23c.

Virtus Health Limited ((VRT)) reported a statutory next profit of $10.1 million, after listing on the ASX in June this year, down from $19.7 million last year. VRT said that most of the drop was due IPO listing costs, share based payments and debt restructure costs totalling around $19.1 million. VRT stated, "Based on the long term trend of women in Australia delaying the birth of children and the fertility rate among Australian women aged over 30 continuing to increase as a consequence of a range of social and economic demographic factors, Virtus expects that demand for assisted reproductive services and the associated diagnostic testing and day hospital procedures to continue to increase."

Sandfire Resources NL ((SFR)) reported maiden profit after income tax of $88 million, up more than 4 times last year. SFR sales revenues totalled $507 million. SFR will not be paying a dividend this year.

AUD is currently trading at $0.8904 down -$0.0078 against the USD.

Top Performers

Transfield Services Limited ((TSE)) up $0.09 or 11.11% to $0.90

Silver Lake Resources Limited ((SLR)) up $0.08 or 8.42% to $1.03

AGL Energy Limited ((AGK)) up $0.71 or 4.94% to $15.08

Ansell Limited ((ANN)) up $0.52 or 2.69% to $19.86

Medusa Mining Limited ((MML)) up $0.07 or 2.57% to $2.79

Bottom Performers

Billabong International Limited ((BBG)) down -$0.05 or -9.35% to $0.485

Discovery Metals Limited ((DML)) down -$0.015 or -7.89% to $0.175

Arrium Limited ((ARI)) down -$0.09 or -7.50% to $1.11

Linc Energy Limited ((LNC)) down -$0.11 or -6.75% to $1.52

Sirius Resources NL ((SIR)) down -$0.20 or -6.62% to $2.82

Our Comments

With tensions increasing in Syria, there is a possible chance it could spread through-out the Middle East. With global markets already nervous about the looming tapering of the Federal Reserve's QE3 bond buying program, this could add fuel to the fire.

(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)
 

Re-published with permission. Views expressed are not by association FNArena's (see our disclaimer).

Stephen Hogan is an Authorised Representative of Novus Capital. Authorised Representative No.345411 – http://www.stephenhogan.com.au

Novus Capital Limited ("Novus") is holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this e-mail or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.

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