Issue 178 | September 2018

Article

WA Index

Issue 178 | September 2018

Welcome to the 178th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The Deloitte WA Index remained consistent during August as the market capitalisation of Western Australian listed companies increased slightly by 0.1 per cent to close the month at AU$191.8bn.

Download the list of WA’s top 100 listed companies, as of 31 August, explore the sections below and if you don’t currently receive our WA Index, please register to be added to our distribution list.

Highlights:

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

As of 31 August 2018

Performance of WA Index and global indices

Select above image to enhance the Performance of WA Index and global indices
Select above image to enhance the Performance of WA Index and global indices

WA Index movement - Strength in the face of adversity

Select above image to enhance the WA Index movement
Select above image to enhance the WA Index movement

The Deloitte WA Index remained consistent during August as the market capitalisation of Western Australian listed companies increased slightly by 0.1 per cent to close the month at AU$191.8bn. 

Major index players in August:

  • Wesfarmers Limited’s market capitalisation increased $2.2bn through the month to close at $58.4bn. The share price was buoyed by the release of full year results mid-month, announcing group revenues of $66.9bn and EBIT of $4.4bn – with EBIT being up 4.5 per cent from FY17. A further rally in the share price was evidenced following announcements surrounding the sale of various investments and operations in the period. This included 40 per cent of its interest in Bengalla JV for a pre-tax profit of $670m, 13.2 per cent of its interest in Quadrant Energy to Santos for US$170m, and the sale of its Kmart Tyre and Auto operations for $350m
  • Seven West Media Limited has continued strong growth in 2018 with a 21.1 per cent market capitalisation increase in August, closing for the month at $1.5bn. This movement reflected the announcement of financial results for the year, which highlighted an underlying EBIT of $235.6m, a reduction in group costs of $21m and a net profit after tax of $142.5 million. Highlights of the results included a resurgence in ratings performance, and a significant reduction in net debt to below $635m. The announcement of an extension of a supply agreement for programming with Prime Media Group during the month also proved popular with investors
  • Emeco Holdings Limited boosted its market capitalisation a further 6.9 per cent in August to $1.1bn. This continued positive momentum, driven by the reporting of group operating revenues of $381m (up 64% from FY17), and the first operating net profit since FY13. The return to profitability has been attributed to enhanced scale and capabilities obtained through growth in Australia, the successful expansion of Force Workshops and synergies gained from the Matilda acquisition.

Key commodities surveyed during August:

  • Copper has dipped below US$6,000/mt for the first time since May 2017. The 5 per cent decrease in August is attributable to US-China trade tensions, amidst protectionist tariff moves by the US. These moves have undercut expectations of a quick recovery in the price of the metal
  • Cobalt prices have been on a downward slide since May, recording a further decrease of 7 per cent since July 2018. Cheap selling from China and weak summer demand have placed such pressures on the price of cobalt. Consumers have since been purchasing only their minimum required volumes, however this summer lull is expected to shortly come to an end. These sentiments are based on enquiries for large volumes beginning to apply upward pressure to pricesand premiums for lower-grades of Cobalt
  • Nickel prices have declined 9 per cent to US$12,708/mt, in respect of negative sentiment in the market, fuelled by increasing global trade tensions. The London Metals Exchange [LME] has reported high stock levels of Nickel, contributing to lower prices – these inventory levels have however been steadily declining. There have also been demand-side factors impacting prices, with growing uncertainty over the health of the Chinese economy threatening the continuity of such demand for the metal
  • LNG: August saw an increase of 18 per cent in the Asian LNG spot rates, from $10 to $12/MMBTU. The primary drivers of LNG have been the restocking of depleted inventories of South Korean and Japanese Utilities after an unseasonably cold winter. This is linked to Japanese imports of 8.7m tonnes during August - being reported as the highest monthly demand in 5 years. Long loading delays from the Brunei LNG plant constricted supply briefly with tankers being delayed for up to a week, this contributed to the upwards price pressure
  • Iron Ore has seen a marginal 2 per cent drop to $66 per tonne. The falling price reflected lower Chinese demand & depleted inventories as well as uncertainty over tariffs imposed on steel imports – a recurring theme across commodity markets this month
  • Zinc decreased by 8per cent from 2,676 U$/MT to 2,462 U$MT, contributing to a now 20 per cent decline in this calendar year. The threat of an escalation in trade wars, an appreciating US dollar and fears of a global slowdown have dragged base metals lower in 2018. Zinc has been most impacted through its link with the steel industry (65 per cent of zinc is used in steel), that has been influenced by trade tariffs.
Key commodities surveyed during August
Click on image to enlarge

The equity markets surveyed posted positive growth during August.

equity markets surveyed posted positive growth during August
Click on image to enlarge

Global indices surveyed showed positive growth through August, with the S&P leading the way with the a 3.6 per cent gain. Global stock markets have continued to bolster through US and Chinese trade discussions, and a falling US dollar has boosted growth by attracting international investors to the market. Crude oil has been driving global market conditions and dealers have recently displayed optimism regarding the outcomes of trade talks held at OPEC levelin recent months. Loose monetary conditions in the US have only propelled the bull market and this growth has flowed through to other major indices.

Performance of WA Index and global indices

Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

Select above image to enhance the Top performers of the month
Select above image to enhance the Top performers of the month

The top Deloitte WA Index Movers and Shakers in August included:

  • Seafarms Group Limited’s market capitalisation increased by $106m (77.7 per cent) to $241.71m in August 2018. A $25m equity raise from Nippon Suisan Kaisha Limited for the expansion of Project Sea Dragon, its world-class breeding program, was placed during the month. Capital was also committed to its highly successful founder stock centre in Exmouth
  • Fleetwood Corp Limited saw a market capitalisation increase of $82.3m (59.2 per cent) to finish the month at $221.3m. This result has come about through the acquisition of the assets of Northern RV (NRV) and 100 per cent shares in Modular Building Systems for $10m and $34m, respectively. Fleetwood also sold their Coromal and Windsor Caravan brands to Apollo Tourism & Leisure Limited for $1m
  • ResApp Health Limited’s market capitalisation increased by $36m (39.3 per cent) to $128.5m, primarily due to enrolments in, and successful completion of, its Breathe Easy study. Investors were also pleased with the announcement of a partnership with Lockheed Martin to develop audio signatures and algorithms to support the health of United States military personnel.
WA Top performers

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If you don’t currently receive our WA Index, you can register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

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