Global markets were mixed overnight, swinging between gains & losses as recessionary fears and simmering US-China trade tensions offset upbeat retail sales data. Stocks sold off after China said it would retaliate against fresh tariffs before bouncing back after official comments struck a more conciliatory tone.
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Stock in Focus: SkyCity Entertainment (SKC:NZX / SKC:ASX)
SkyCity Entertainment has announced a small increase in underlying earnings and signalled growth in the current year. The casino operator reported an in-line with expectations 1.9% lift in normalised earnings, which smooths out the impact of big wins by its high rollers.
Better corporate costs and the VIP business were positive drivers of the result. The main Auckland site showed mixed signs, with gaming machine revenue growth of +7.4% highlighting pleasing momentum in that business, albeit a combination of lower win rates and some cannibalisation from tables to EGMs saw lighter main gaming floor revenue growth.
SkyCity isn’t yet seeing the impact of a slowdown in tourism but chief executive Graeme Stephens says he's braced for the challenge. We continue to remain positive on the medium term outlook for tourism.
We currently have a BUY recommendation on SKC.
Members should look out for a full update on SKC to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian market tumbled on Thursday (ASX 200 index -2.85%) as the market lost $60bn in value, the worst day in 18 months. A number of stocks under our research coverage reported earnings yesterday which we touch on below (we will send out full updates in our weekly report).
For the 12 months ended June 30, Treasury Wine Estates reported a 17% increase in net sales revenue to $2,831.6 million. In constant currency net sales revenue lifted 12% on the prior corresponding period, representing the strongest organic growth rate in the company’s history. Thie saw TWE shares make gains on a rough day for the market.
Woodside Petroleum fell 6% after its profits took a hit on the back of outages which impacted production at its Pluto liquefied natural gas plant.
QBE's first-half profit has risen 29%t to $US479 million ($A709 million) after an average 4.7% increase in premiums helped lower the insurance giant's attritional claims ratio.
A generally positive set of numbers for funeral services company InvoCare were not enough to meet expectations for a company that is still priced at a high valuation.
The New Zealand market sold off yesterday (NZX 50 index -1.34%) following a global rout as investors fretted over the prospect of a worldwide recession in the wake of bond market pricing. Heartland Group was among the few local stocks in positive territory after reporting solid earnings growth. Heartland announced a 9% lift in annual profit as its reverse mortgage, business and motor lending businesses improved lending.
3 Things Markets Will be Watching this Week
- Australasian earnings season kicks into full gear this week with a number of companies set to make profit announcements.
- Employment data in Australia will be released on Thursday.
- US inflation data is published Wednesday morning NZ/AU time.
Have a Great Day,