Feb Rally Pauses | EBOS Delivers

19 February 2021

Global markets were mixed overnight with US markets (S&P 500 -0.03%) little changed as investors rotated out of technology shares and concerns about inflation added some pressure on stocks.

Technology shares led losses such as Apple Inc, PayPal Holdings Inc and Nvidia Corp, conversely, energy led gains as a halt in Texas oil production boosted crude prices. A surprisingly strong rebound in US retail sales for the month of January helped consumer discretionary stocks advance.

Closer to home, Auckland shifted down to Level 2 Covid-19 restrictions last night with the rest of NZ moving to Level 1, a better than feared result given recent lock downs were usually extended for longer. 



Healthcare company Ebos (EBO) delevered a solid result for the first half of the 2021 financial however shares were a touch lower yesterday (-0.2%) given its shares have rallied strongly lately.

Revenue was $4.7 billion, up +6.3% from last year and net profit after tax was up +13.7% from last year to $92.9m for the half.  It was  a strong result for both their Healthcare and Animal care segments delivering above market  growth.

We continue to remain BUY rated on EBOS as a quality defensive pharmaceutical wholesaler business with a track record of successful bolt-on acquisitions. 


Australia & New Zealand Market Movers

The Australian market was lower yesterday (ASX 200 index -0.5%) as the market digested a number of earnings announcements. 

BHP was up  (+3.4%) for a second straight session, following RIO's (+3.6%) result which generated net earnings of US$9.8 billion, up +22% from last year allowing them to pay an annual dividend of US$5.57 per share.

Westpac shares rose +4.6% after bank reported a strong recovery of its underlying profit in the first quarter of its 2021 financial year., 2021 first quarter cash earnings came in at $1.97 billion, +54% above the 2020 second half quarterly average. 

Treasury Wines rose +2.4% after reporting its half year result, despite a -24% decline in net profit after tax, due to weak sales in Asia that were better than what the market had feared.

Invocare shares were lower after announcing it will recognize a pre-tax significant item of $26.5m in its 2020 full year result due later this month.
The Tech sector including the buy now pay later  were hit hard, Appen down -9.2% after  a broker downgrade while Zip and Afterpay slipped -14% and 3.7% respectively. 

The New Zealand market was up on Wednesday (NZX 50 index  +0.5%) as earnings season gets into full swing. Contacte Enmergy sjhares bounced after returning form a trading halt. 

Fletcher Building rose +0.8%  after it reported first-half net profit up 48%, as it benefits from heightened construction activity and expected full year operating earnings (EBIT) to be between $610m and $660m. 

Stock market operator NZX climbed +0.5% after it beat its own guidance as it lifted operating earnings +9.7 percent to $34.4m in 2020.


3 Things Markets will be Watching this Week

  1. ​​​​​​​​​​Local COVID news-flow – a reminder that COVID news is still relevant on both sides of the Tasman, with both Victoria and Auckland entering fresh lockdowns. 
  2. The week ahead is dominated by corporate earnings. In NZ & Aussie. Contact Energy, Fletcher Building, EBOS, SkyCity and Auckland Airport are all scheduled to report. In Australia, key results include BHP, Treasury Wine, Rio Tinto, Wesfarmers, Fortescue, CSL, Crown, Woodside, and QBE. In addition, NAB hands in its quarterly report on Tues, with Westpac on Wed, and ANZ on Thu. 
  3. In Australia, the latest employment data is due along with retail sales and minutes from last month’s RBA meeting. 
Global markets were mixed overnight with US markets (S&P 500 -0.03%) little changed as investors rotated out of technology shares and concerns about inflation added some pressure on stocks.

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