USDJPY > BOJ to intervene?
USDJPY rallying at 13-month high, extending on it’s rally, which flirts with the 152 level. This rally is being primarily driven by the rising US yields and persistent concerns for inflation via FED chair Powell. The Yen’s weakness could only now be tempered by intervention warnings or actions from the BOJ. Investors are peeled on notes from the Ministry of Finance as officials are prioritising slowing down the jawboning volatility, however, delayed reactions and actions are offering a perfect catalyst for the US Dollar wrecking ball to destroy stops to the upside. Traders could find near terms support around 151.20, however, it’s a buyers market at the moment, with new entrants looking for any potential buy price to take this move further.
NZ/AU
ANZ > We are turning sell-rated on the bank — net interest margin dropped from 1.75% in the first half of the yr to 1.65% in the second half of the yr, while we think the 2000 mortgage delinquencies the bank is reporting seems quite low out of 1 million home owning customers — don’t really buy it, especially when 90 day delinquencies have increased 4 bps to 64 bps. We also found CEO Shayne Elliot’s comments re customers to be a little out of touch — “They’re actually muddling through pretty well,” he said. “Now it’s dreadful for the 2000, and we’ll do everything we can to help them through. But in the scheme of things, it’s relatively modest.”
“Muddling through” might describe baking a cake, or a walk through a park on a rainy day. We’re not sure if “muddling through” applies to people in a cost of living crisis. Also noting increased staff expenses are a 9% drag, while we note cash earnings declined from $1.03 billion in the first half to $848 million in the second. Prefer owning Westpac, Macquarie in Aus. ANZ stock is down +3.00% following the announcement.
Sanford > Fiona Mackenzie stepping down, another director gone — only three directors left, including the CEO. We don’t have any insight here. More questions than answers…
Infratil > Result due Thursday, expecting to see data center comments, Longroad valuation increase, margin improvements at One NZ, and the cost of interest on debt…we continue to be buy rated…
Moo-ving > Bids were due in for Synlait’s Dairyworks last week, with offers reportedly from Adamantem Capital, Allegro Funds, Anchorage Capital Partners and CPE Capital. Synlait remains a hard sell on out list, as does A2…both commodity players with little point of difference.
Germany — canary in the coal mine?
We found the following charts from today’s FT to be interesting, given the ECB cash rate is the same across the Eurozone. Germany is diverging regardless, with its house prices dropping markedly.
It’s also reflected in the drop in German building permits, which have fallen off a cliff, too.
We wonder if this is the “canary in the coal mine” for the EU — is Germany the “general taking the troops down with him”?
Diageo > Middling result from the drinks group, with the CEO admitting there is an inventory problem in LATAM — long supply chains, elections, etc. Profits at the co have more than doubled in the last two years, but supply chain issues meant the stock dropped ~15%. We think the co. is going cheap at 18x earnings — this is a good buying opportunity. Its brands remain stalwarts – good brands like Guinness, Johnny Walker, etc. Diageo’s numbers were much better than the ones at Pernod Ricard (US down 8% in Jul-Sep), Rémy Cointreau (global down 17% in Jul-Sep), etc. Retain buy.
Roblox > Revisiting this (it was a previous favourite, a while ago — that line from Wall Street — but I’ve been burned on tips before…). Revisiting it feels like revisiting an old flame — mixed feelings. Revenue still growing in the double digits:
But the key metric — bookings (payment and pre-payment users have made in-game) — has “normalised” and sits quite flat at ~$800mn.
No formal view on this but it’s a good read on how the almighty parental dollar is spending — and it’s still spending quite well. Daily Active Users continues to grow (70 million a day!) but the challenge is extracting more revenue from them — that’s where the service appears to have stalled.