Equity markets across Asia were mixed overnight with investors sitting on the sidelines as they continue to digest the impact of the coronavirus outbreak, with the Chinese government pledging to support its economy with potential corporate tax cuts. European Markets closed higher, led by modest gains from carmakers and HSBC ahead of its earnings, while the US markets were closed as the country celebrated President's Day.
Stock in Focus: CSL Limited (CSL:ASX)
CSL shares have broken into new all-time again highs, and it has now become our top performing pick in our Australian portfolio. This comes after the global biotech giant reported its half year results last week and upgraded its 2020 full year profit guidance to be between US$2.11 billion and US$2.17 billion, up another +3% from its previous guidance. The upgrade is driven by better business expectations in the second half, with stronger demand for CSL therapies products, and a one-off sales boost from the transition to new distribution model in China.
CSL reported net profit after tax (NPAT) of US$1.248 billion for the first half of the 2020 financial year which was up +8% (+11% on constant currency basis). This on the back of +11% revenue growth (under constant current), driven by strong sales across key immunoglobulin and Idelvion, while costs were higher than expected driven by higher research & development spend and general business expansion to fuel future top-line revenue growth.
Members should look out for a full update on CSL to be released in our weekly update.
We currently have a BUY rating on CSL.
Australia & New Zealand Market Movers
The Australian market closed a touch lower on Monday (ASX 200 Index -0.1%) dragged down the banks, which pulled back slightly after a strong 5-day run following better than expected earnings from CBA and NAB. On the flipside, shares in QBE Insurance Group were 4.3% per cent higher after it published its full-year results and Brambles closed +3.9% higher following its first half results release. So far it has been a good reporting season, with investors mulling over the impacts of the Coronavirus noting the outlook statements have been generally positive.
The New Zealand market rose slightly yesterday (NZX50 +0.3%) led by A2 Milk (up +2.3%) and Fisher and Paykel Limited (up +2.2%) as the exporters benefitted from a weaker kiwi dollar. The market continues to remain more focused on earnings season as Heartland Group Holdings were up ahead of its earnings result today, while Fletcher Building and Spark New Zealand were both unchanged before they report tomorrow.
3 Things Markets Will be Watching this Week
- Local earnings season continues across Australia & New Zealand this week.
- Minutes from the last US Federal Reserve meeting are released.
- US housing data and the latest employment picture in Australia.
Have a Great Day,