Australia Stock Market Report – CBA, AGL, Orora shares & more

Australia Stock Market Report - CBA AGL Orora shares and more

Market Commentary and Stock Tips - 11th August 2017

Highlights

CBA, the good, the bad, and the not so ugly – This week was an impressive curtain raiser to the reporting season – driverless cars, not problem for CarSales.com – guess who is not complaining about high gas prices? – James Hardie drops the hardie plank

CBA - CBA - CBA in the money laundry

The media is full of how CBA has fallen foul of the gate keeper of money laundering, called AUSTRAC (Australian Transaction Reports and Analysis Centre).  So let’s cut through reams of paper and media time devoted to the alleged breaches by CBA (to make timely reports to the gate keeper).  It appears to me that in this matter the CBA has certainly been negligent, but not malevolent, no malice aforethought as lawyers would say.  So in all this, one possible scenario might be that the CBA accept responsibility without culpability ---thereby paving the way for this matter to be settled sooner rather than later--- with a possible fine around the $100-$500 million mark.  Talk of a $1 trillion fine ($1000 million dollars) is fanciful.  A fine of anything like that would mean that I, and many others perhaps, may leave for the Bahamas or an idyllic Pacific Island. 

CBA out of the laundry into the real world

In a case of almost exquisite timing CBA delivered its scheduled annual financial report on Wednesday, which was unarguably impressive.  Profits were up better than most expected, dividends were not cut, not even maintained, but actually up 4% to $2.30 for the half year. This brings its yearly dividend to $4.48, equivalent to a 5.5% fully franked dividend yield.  Nice work if you can it and its outlook statement is quietly upbeat.

My View: Reserved for clients

Energy bills up - not a problem for AGL

This energy business which links the Loy Yang generator, the windmills at Warrnambool and your kitchen oven, delivered a most impressive result.  Profits up strongly and dividends up 21% compared with last year. Not only that, but its outlook is expected to see profit growth of 17% next year. 

My View: Reserved for clients

CarSales.com - It’s not just a noun, it’s a thriving business. 

CarSales.com is the major player in the automobile buying and selling market place these days.  It dominates the market, not only because it’s got the right name, but because it is a smart operator.  Its profits were up strongly and it provides a fully franked dividend yield of 3.6%.  And its outlook is positive

My View: Reserved for clients

“Why is it so?” Professor Julius Sumner Miller ABC TV star of the 60’s

Why it is that business confidence and business conditions are at levels not seen since the onset of the Global Financial Crises of 2008, while consumer’s confidence is down in the mouth – (according to survey results from the National Bank and Westpac revile this week).  My answer: - business is recognising that the economy is not falling in a hole, inflation and interest rates are at record low levels and unemployment is steadily decaling.

But on the other hand consumers are heavily impacted by high energy prices, and the political shengs in Canberra.  But as with most things there is always a glimmer of light on the horizon.  Hopefully by Christmas gay marriage will be a matter confined to the history books rather than a topic of current conversation.  

Employment – the future is getting brighter

A harbinger of employment and unemployment trends is the ANZ job advertisement series that showed a continued strengthening in July.  This result now portends a further fall in the official unemployment figures due to be released next week.  Such an outcome will be beneficial for the economy generally and the share market in particular.

Stop Press

James Hardie – disappointing result – investors could consider looking elsewhere.

Transurban – great result, dividend yield 5% partially franked

NAB A workmanlike trading result

Orora – very good result

AMP – a generally pedestrian result

IOOF – a very good result, with a dividend yield of 5%

Magellan Financial Group – reasonable result, dividend yield of 3.5%

Conclusion

So far the reporting is proving much better than many expected, but next week is the big one, with Telstra; ASX; CSL; Computer Share; Seek; Wesfarmers; Tatts; and Cochlear due to report.  I expect most of these reports to be at least as good as what some analysists expect.

Stock Tips

Reserved for clients

australian stock market report

Next Week

Tuesday: Motor Vehicle Sales

Wednesday: Wage price index

Thursday: Labor force and average weekly earnings

In the U.S.

A plethora of economic data including on Manufacturing; Housing; and Consumer sentiments.

 

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About Michael Heffernan

+61 (3) 8633 9925 Email Profile

Michael Heffernan has over 30 years’ experience in the finance and securities industry and is currently a Senior Client Advisor and Economist with a leading Australian Sharebroker Phillip Capital after having been Chief Economist/Lawyer with the Australian Stock Exchange for 13 years, and an Economist with Commonwealth Department of Employment and Industrial Relations for 11 years.

Most recently Michael topped the poll of the Australian Newspaper's Criterion column of his expert tipsters for 2014 with an average increase of 26% over the year. Also Michael was named Stock Picker of the year 2013 and 2016 at the Australian Stockbrokers Foundation Annual Awards Charity Dinner.

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