Global markets were mixed overnight, as a fall in shares of Amazon and Facebook pulled the S&P 500 and Nasdaq indexes lower as investors looked ahead to major tech earnings including that of Apple to assess the impact of US-China trade tensions. Companies are halfway through with corporate earnings season and the slowdown in profit growth isn't as severe as analysts initially forecast.
Stock in Focus: Metro Performance Glass (MPG:NZX)
Metro Performance Glass (MPG) shares slid lower after another subdued earnings guidance announcement for the 2020 financial year failed to inspire investors.
MPG expects group operating earnings (EBIT) for the 2020 financial year to be between $25m to $27m, up slightly from the $25.2m reported in the 2019 financial year, providing no real surprises surrounding the commentary around the basis of their guidance. At the same time MPG expect to further reduce net debt by $15m over the 2020 financial year as they aim to reduce their net debt to operating earnings (EBITDA) multiple of ~1.5x, before reintroducing their dividend possibly within the 2021 financial year.
Management appear hopeful on an Australian turnaround given the opportunity in the Australian market if double glazing uptake increases to similar levels to what is being experienced in New Zealand. We continue to believe there is still a chance of a turnaround, particularly given the bar has been set very low and there is a lot of negativity priced MPG at the moment, meaning it would take very little to see a significant upswing in share price – albeit we caution investors it does come a considerable amount of risk.
We currently have a BUY (High-Risk) rating on MPG.
Members should look out for a full update on MPG to be released in tomorrows weekly report.
Australia & New Zealand Market Movers
The Australian market was higher on Monday (ASX 200 index +0.48%) as a tech driven rally pushed the local sharemarket to around three points shy of the high reached more than 11½ years ago. Dairy companies on both sides of the Tasman got a boost from Bubs' June quarter update, which showed the formula maker more than doubled revenue to A$18.5 million.
Crown Resorts shares fell following a report in The Age and The Sydney Morning Herald newspapers over the weekend that alleged links between organised crime and the junket operators that bring Chinese gamblers to Crown’s Australian casinos.
The New Zealand market started the week off higher (NZX 50 index +0.40%) as A2 Milk and Synlait Milk were buoyed by a strong June quarter for infant formula maker Bubs Australia. Ebos Group led the market higher on a light volume. Air New Zealand rose after its latest operating figures showed a reasonable 1.6% increase in unit passenger revenue per available seat kilometre – known as RASK – in June from a year earlier.
3 Things Markets Will be Watching this Week
- US Corporate earnings season continues this week with major companies such as Apple set to report earnings numbers.
- The big event for the week will be the US Federal Reserve's interest rate decision on Thursday morning (AU/NZ time).
- Important monthly US manufacturing data and employment figures are released at the end of the week.
Have a Great Day,