A Record August | Delegat Climbs Higher

2 September 2020

Global markets were lower overnight (S&P 500 index -0.2%), and despite the dip recorded one of its best August gains in three decades. Declines were lead by the major banks all falling over -2%, following lower treasury yields and Federal Reserve announcing rates won't go up just because unemployment  goes down.
Technology names continue to trade higher, led by Apple and Tesla following  their respective stock splits.

Another month saw markets continue to reach new heights. In New Zealand, the NZX added +1.8% and is +3.9% year to date. However, 60% of index still negative year to date and the average stock return is -7%. Off-shore continues to soar with the US +7.4% (best August since 1986), and the Australian market gained +2.8%.

Delegat Group (DGL:NZX)
Shares in Delegat Group continue to climb higher after another solid result for its 2020 financial year operating net profit after tax rose +20% from last year to $60.8m. This was on the back of record case sales of 3.277m, which was up +9% for the year as well as favourable margins and currency movements. 

More importantly sales guidance for the next three year continues to remain solid with operating net profit after tax for 2021 financial year expected to be between $60m to $65m, with a slightly weaker recovery in the hospitality sector anticipated over the next 6-12 months. 

We continue to remain BUY rated on DGL as a quality business with a strong track record


Australia & New Zealand Market Movers

The Australian market slipped on Monday (ASX 200 Index -0.2%) but despite the fall capped off its best August since 2009 on Monday. 

Energy stocks led the gains as the price of crude oil edged higher, while healthcare stocks led the falls. The big banks also helped pull the index lower, with Commonwealth Bank falling by -1.2% and ANZ losing -0.7% as investors prepare for the RBA interest rate announcement.

The New Zealand market (NZX50 Index -1.3%) fell yesterday as a stronger NZ dollar impacted its two biggest companies A2 Milk (-3.7%) and Fisher and Paykel Healthcare (-2.2%).

Meridian Energy led the market lower, -4.5% followed by Mercury NZ, -4.1%, as investors looked to take profits given their recent rally and lack of news flow. 

Abano Healthcare shares surged up +39% yesterday after its board confirmed  the backing a new $4.45 per share scheme of arrangement from BGH Capital, with a clause that the  price could fall to as low as $3.70 if another outbreak were to occur in New Zealand and Australia.


3 Things Markets Will be Watching this Week

  1. ​​​​​​​​​​​​​​​COVID-19 related news-flow remains key, with second wave and lockdown headlines, while US Congress debate what an extension of stimulus will look like.
  2. With reporting season all but over, focus in the week ahead returns to macro data including monthly employment figures (nonfarm payrolls) and ISM manufacturing data in the US
  3. The RBA also meets on Tuesday.
Global markets were lower overnight (S&P 500 index -0.2%), and despite the dip recorded one of its best August gains in three decades.

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