Global markets were little changed overnight, with major US markets hovering at all-time highs, a day after the United States and Mexico reached an agreement to overhaul the North America Free Trade Agreement (NAFTA). Canada has also re-joined talks to stay in NAFTA, with a deal reportedly possible this week.
As we touched on yesterday, the news comes as a relief for investor concerns around a global trade war, lifting hopes that the current record bull-market has more room to run.
Local AU/NZ reporting season continues as investors focus on company profit announcements. It was another mixed day for stocks under our research coverage yesterday, with apple producer Scales providing a strong update, while star performer Tourism Holdings failed to impress the market. Caltex also released a weak result – we will provide full updates on all stocks released in our weekly report for members.
Stock on Focus: Tourism Holdings (THL:NZ)
Tourism Holdings was the worst performer on the NZX yesterday as it announced plans to step up investment in its TH2 joint venture with RV maker Thor Industries, which will hinder it from repeating another year of record profits.
Operating earnings rose 33% to $63.5 million on a 25% increase in revenue to $425.9 million for the financial year. We saw these as once again a solid set of numbers.
However, looking forward THL will invest around $15 million in TH2 this year, which will mean net profit will fall from 2018's record, with no explicit guidance provided.
We have had a positive view on THL for some time now as a key beneficiary of our tourism boom investment theme, and our view remains unchanged for medium-term investors.
We are currently have a BUY recommendation on THL.
Members should look out for a full update on THL to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market continued to rally on Tuesday (ASX 200 index +0.57%) buoyed by gains made by the major banks and resource stocks. Caltex Australia's bottom line net income for the 2018 financial year fell short of guidance it offered in June, causing its shares to tumble as it also reported a first-half dividend of 57¢ a share, down from 60¢. On the flip-side, shares in Blackmores have jumped as much as 11% after the vitamin maker reported a 19% lift in full-year profit on the back of strong demand from Asia and operational efficiencies.
The New Zealand market was slightly higher yesterday (NZX 50 index +0.08%) before the NZX system was down for most of the day due to operational issues. After the close of trading, NZX said normal trading will resume tomorrow with the problem resolved. In stock news, shares in Scales as it said it expects a good export apple season will deliver full-year operating earnings at the top of the company’s forecast range. The apple grower, food processor, and exporter reported a +22 percent increase in net profit to $34.8 million on the back of good growing conditions and better volumes through its logistics and pet food operations.
3 Things Markets Will be Watching this Week
1. Locally, investors in Australia and NZ will have a number of profit announcements to focus on as earnings season continues.
2. It is likely that attention shifts away from Australian politics and back to the global political stage.
3. US economic growth (GDP) data is released on Thursday, as well as core personal inflation figures.
Have a Great Day,
Team