Markets Hope for Hikes to Ease | De.Mem 

24 January 2023

New Zealand Market Movers 

The New Zealand market (NZX 50 Index, -0.2%) edged down on Monday on very light trading. Serko (+8.7%) jumped after upgrading its revenue guidance for the 2023 financial year. Total income is now expected to be in the range of $42 million to $47 million, up from 2022’s $18.9 million. Genesis Energy (+1.3%) advanced after announcing that customer numbers had increased by 2.5% compared to this time last year, to 481,000. 

Australia Market Movers 

The Australian market (ASX 200 Index, +0.1%) edged up slightly on gains in tech (+1.3%) offsetting losses in Utilities (-0.5%) and Healthcare (-0.2%). 

According to UBS, food prices at Australian supermarkets Woolworths and Coles rose an average +9.2% in October-December 2022 year-over-year up from the +8.2% recorded in the previous three months. 

Europe Market Movers  

European markets (Stoxx 600 Index, +0.5%) advanced to start the week with tech stocks (+2.2%) leading gains.  

Economists surveyed by Consensus Economics are now predicting the Euro Area will avoid recession this year, and forecasts growth of +0.1% in 2023.

US Market Movers 

US markets (S&P 500 Index +1.2%) rose as markets anticipate a less aggressive rate hikes by the Fed. 

Semiconductor stocks were a winner on the day, Advanced Micro Devices (+9.2%), Qualcomm (+6.6%), and Nvidia (+7.6%) up strongly, as well as Tesla (+7.7%) and Apple (+2.4%) register healthy gains on the day on hopes China reopening would boost business operations. 

Stock in Focus: De.Mem (DEM.ASX) 

Wastewater treatment company De.mem shares jumped +25% yesterday after revealing their fourth quarter operations. Cash receipts came in at $6.7m for the quarter, and $22.9m for the year, both at record highs with 15 consecutive quarters of cash receipt growth. Recurring revenue growth was also strong for the year up +41% from the previous year to $19.5m (on the top end of guidance) and representing 85% of total cash receipts at higher margins. 

This resulted in operating cashflow earnings of $203,000, looking ahead the company expects to maintain strong top line revenue growth and now increase its focus on profitability.  

We still maintain a favourable view on De.mem over the medium to long-term earnings, and this result of profitability has helped build some confidence for investors. We are confident De.mem can continue top line growth at a healthy double-digit level and for that reason we remain BUY rated. 

 
What Markets will be Watching this Week (UTC +13) 

Monday 
NZ Westpac Consumer Confidence DEC 

Tuesday 
NZ Balance of Trade NOV  

NZ ANZ Business Confidence DEC 

AU RBA Minutes of Dec Policy Meeting 

Earnings From Microsoft. Johnson & Johnson, 

Auckland International Airport Monthly Traffic Update 

Wednesday 
EU Consumer Confidence DEC 

CPI (Inflation) data for Australia and New Zealand 

Earnings from Tesla 

Quarterly updates from Fortescue, Woodside Energy and Mineral Resources 

Thursday 
GB GDP Growth Rate YoY Final Q3 

Bank of Canada Interest rate decision 

Earnings from Visa, LMVH, Mastercard 

Friday 
US Chicago Fed National Activity Index NOV 

US fourth Quarter GDP 

Earnings from ResMed 

Saturday 
US Durable Goods Orders MoM NOV 

US markets (S&P 500 Index +1.2%) rose as markets anticipate a less aggressive rate hikes by the Fed.  Semiconductor stocks were a winner on the day, Advanced Micro Devices (+9.2%), Qualcomm (+6.6%), and Nvidia (+7.6%), as well as Tesla (+7.7%) and Apple (+2.4%) register healthy gains on the day on China reopening would boost business operations.

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