Markets Live: Macquarie at 4 month high

Finance lending dropped 4.4 per cent between November and December to $32 billion, the lowest level in three years, according to the Bureau of Statistics. This is driven by a 6.4 per cent drop in mortgages for owner occupiers and 4.6 per cent drop in lending for investment properties.

Compared to 2017, lending for owner-occupied homes is down 16.2 per cent and for investment properties is down 27.8 per cent. Loans for first home buyers are down 12.6 per cent compared to December 2017.

«The slowdown in lending for investor dwellings this month continues the steady decline over the past two years, with the value of new investor loan commitments down [by] around 40 per cent from the peak at the start of 2017,» ABC chief economist Bruce Hockman said in a press release.

«The slowdown in lending for owner occupier dwellings is more recent, with falls concentrated in the last half of 2018.»

Lending to businesses dropped 9.7 per cent on a seasonally adjusted basis.

The S&P/ASX 200 is 30 points higher at 6090, a rise of half a per cent. Trading volumes are moderate.

Leading the gains in the past hour is BHP, up 0.6 per cent to $36.26, Rio Tinto is up 0.1 per cent to $92.29, and Macquarie Group is up 3.2 per cent to a four-month high of $125.90. CSL is up nearly 2 per cent to $194.93.

The laggers today are Transurban, down 2.3 per cent to $12.18, South32 down 1.5 per cent to $3.64, and Computershare is down 2.2 per cent to $17.89.

We’ve got hold of Macquarie’s flash note on Transurban’s results. Shares are currently down 2.3 per cent at $12.17. The price had been at a 13-month high of $12.46 yesterday.

Macquarie analysts write that Transurban’s earnings before interest, tax, depreciation and amortisation (EBITDA), (ex transaction costs) was $1 billion, consistent with expectations. Sydney roads EBITDA is $418 million versus Macquarie’s expectations of $414 million. Traffic stabilised in the fourth quarter, with a better road performance from M7 offsetting WestConnex’s contribution (~$10m). M4 volume of 1.5 per cent may seem low but reflects the pace of the road ramp-up and the broad economy.

Citylink [in Melbourne] at $363 million was $10 million below expectation, with a soft fourth quarter traffic at 3.7 per cent along with lower fee revenue. This is a net disappointment.

Transurban Queensland performance $146 million was a little disappointing. Airportlink was the major variance, with costs materially higher than the same period in 2017. Traffic remains soft for the business, as the effect of road works still hampers Gateway and Logan Motorway. Free cashflow was $715 million well above our expectation of $656 million. 2018-19 was always a transition year. The result meets our expectation, but there are signs of a tough second half of 2018-19 traffic environment which will see some pressure on EBITDA growth.

Shareholders are scrambling to get out of medical equipment maker Paragon Care this morning after a trading update that has revenue of $119 million for the six months to December 2018, compared to a consensus estimate of $123 million. Shares are down 10.4 per cent to 51.75 cents this morning with huge parcels of shares being traded, mostly through CommSec.

«The continuing business is performing at or above expectations and expected to generate revenues of approximately $240 million and earnings of $28 million in 2018-19,» the company told the market this morning. Analysts were expecting revenue of $268 million with earnings of about $32 million.

I’ve got grape news! It’s been a good grape season, according to an update from Murray River Organics. The Menindee Seedless have been harvested and the Crimson Seedless will be next off the vine, followed by wine grapes and dried vine fruit.

«The growing season has been encouraging with vine canopy growth assisting in protecting the crop during the hot weather conditions.» Murray River Organics has about 70 per cent of this year’s water requirements secured and will buy the rest on market.

And the «Growing Together» program, which offers dried vine growers bonuses, is popular. Shares are slightly higher at 11.5 cents in morning trading. Last year the company went through significant changes, including a strategic review, a $30 million renounceable rights offer that saw Thorney Investment Group emerge with 30 per cent of shares, and the company embark on a three-year turnaround program.

Macquarie Group has reiterated its profit guidance for another record year after a «satisfactory» December quarter, and confirmed its chief executive has formally been classified a «suspect» by German authorities looking into an alleged tax fraud scandal. At an operational briefing for investors on Tuesday, chief executive Shemara Wikramanayake reaffirmed guidance for a lift in profit of up to 15 per cent, and updated the market on the German probe.

Ms Wikramanayake said authorities in Germany had formally classified 22 former and current bank employees as «persons of interest or suspects», including herself and predecessor Nicholas Moore. No bank staff had been interviewed yet, she said, noting the bank had previously said 30 executives would be classified as suspects. Macquarie Group shares are up 1.7 per cent to $124.07 against a 0.2 per cent rise in the S&P/ASX 200.

Read the full story from Clancy Yeates here

The S&P/ASX200 is rolling up and down this morning — it is now 14 points higher at 6074. In the last 15 minutes Bluescope Steel has made more gains, now up 2.3 per cent to $12.06 and CSL is up 1.5 per cent to $194.20.

Computershare went on wild ride this morning, but appears to be recovering now. Shares closed at $18.30 on Monday and dipped down to $17.39 in the first five minutes of trading today, but have since risen to $17.85. There isn’t any big news and the company has no released any announcements today, so the 93 cent drop remains a bit of a mystery.

Super Retail Group says it has provisional earnings of $124.5 million for the six months ending December 2018, an increase of nearly 10 per cent on the same period in 2017. Results will be confirmed this Friday. Shares are 15 cents higher at $8.03 this morning. However, this morning it also announced it underpaid store managers by around $32 million over the past six years by not applying overtime rates properly. Chief executive Peter Birtles was due to stand down as CEO on March 31, but he said he would bring his departure date forward to February 20 in recognition of the «significance of this underpayment».

On Tuesday, Super Retail said it would recognise about $32 million to cover the cost of paying back managers what they are owed, plus about $11 million to cover interest and payroll tax. The $43 million put aside to cover the backpayments represents about a third of its net profit last year ($128 million).

In today’s trading update all group segments generated increased earnings, and the 2018 period includes earnings from Macpac, which was acquired in March 2018. In a trading update, Super Retail Group said like for like sales in the start of 2019 were about 4 per cent higher at Supercheap Auto, 8 per cent higher at BCF and Rebel. However Macpac sales growth is 2 per cent lower «as the business is cycling a significant clearance program in the prior comparative period».

Australian packaging giant Amcor will sell off three manufacturing plants in the United Kingdom and Ireland under the terms of the European Union’s approval of the company’s $9 billion takeover of a major competitor. Melbourne-based Amcor, a global manufacturer of flexible and rigid packaging for products including food, drinks and cigarettes, is in the final stages of securing approvals from competition regulators across the world for the buyout of US-based Bemis, and, on Tuesday, announced it had received approval from the European Commission.
«A condition of this approval is an agreement to divest three Bemis plants located in the United Kingdom and Ireland,» the company said.
«Combined these plants generate approximately $US170 million of annual revenue from the sale of flexible packaging for certain healthcare products.
The company said the approval preserved Amcor’s European healthcare packaging business, «which is substantially larger and participates in attractive, high-value end markets».
Under the takeover, which is expected to be completed in the second quarter of 2019, Amcor will become the world’s largest manufacturer of plastic packaging. Amcor runs 200 manufacturing plants in 40 countries while the Wisconsin-based Bemis runs more than 50 plants in 12 countries.
The deal remains subject to regulatory approvals in Brazil and the United States, where the recent US government partial shutdown forced delays to the company’s anticipated timeframe. Amcor shares are 7 cents lower at $14.49 this morning.




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