WA Index

Article

WA Index

Issue 187 | September 2019

Welcome to the 187th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies decreased by 5% to close the month of August at $171.9bn. The Index was hit hard by a sharp retraction in iron ore prices this month and the top movers and shakers emerged off the back of positive newsflow this reporting season.


 Download the list of WA’s top 100 listed companies, as of 31 August 2019, explore the sections below and if you do not 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 2019

Commodity review

Commodity and Precious Metal Prices
Select above image to enhance the Commodity and Precious Metal Prices

  • Cobalt prices increased 26% from US$25,600 to US$32,000 for the month of August, after markets reacted to an anticipated supply disruption following Glencore announcing that the Mutanda mine is to be placed in care and maintenance if not economically viable for continued production.
  • Nickel prices have risen 25% from US$14,500/MT to US$18,000/MT. The price increase comes following the export ban placed by the Indonesian government. The ban is planned to come into effect in October 2019, three years earlier than initially expected. Indonesia is a major nickel producer, contributing 27% of global nickel production.
  • Silver increased 12% from US$16.40/oz to US$18.40/oz. Historically, silver prices tend to move in line with Gold prices, following a time lag. Gold prices have been on the rise following the US-China trade disputes, as investors are more attracted to safe-haven metal investments.
  • LNG rose by 11% from a closing price of US$4.25/mmbtu to US$4.70/mmbtu. The value has increased as Europe has taken advantage of the lower oil prices and have imported higher levels of LNG, with storage comparatively fuller than this time last year in anticipation for the approaching heating season.
  • Coking Coal prices have decreased from AU$171/MT to AU$153/MT, representing an 11% decrease over the month. As coking coal is one of the key ingredients of steel production, tension building from the US-China trade war and slowing economic growth in China has negatively disrupted the demand for steel, and thus the production.
  • Iron ore prices declined 29% from US$121/MT to US$86/MT, making it the largest decline of iron ore prices since the global shortage caused by the Brazilian tailings dam disaster. Economic growth in China has been slow, with the lowest industrial activity since 2002 largely affecting the construction sector and thus the demand for steel. Decreasing steel production, supply recovery and increasing iron ore stock piles in the ports of China have led to the retraction in iron ore prices.

Performance of WA Index and global indices

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

Global indices displayed negative growth during the month of August, the result of further trade tensions arising following the G7 summit held in France. The most significant decrease was the FTSE 100, dropping 5.0% as a result of the ongoing trade disputes and concerns over Brexit. Further impacts were caused by oil price declines this month, with Royal Dutch Shell experiencing its largest share price decline since 2008.

This decrease in oil prices comes after China’s retaliation of the tariffs placed on US$75 billion worth of US products, including crude oil. These trade tensions and tariffs also negatively impacted US S&P 500 index and other indices. The All Ordinaries fell -2.9% with the worst performing sectors being mining and energy, driven on iron ore and oil price movements.

WA Index movement

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

Top performers of the month

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

  • Austal Ltd continued its trajectory over the past year with 5.4% growth in market capitalisation to $1,488m at 31 August. Austal’s positive earnings release included revenues up 33% to $1.852bn, EBIT up 46% to $92.8m and NPAT up 64% to $61.4m. Growth was bolstered by the strength of new USA vessel orders, and expansion of commercial shipbuilding.
  • BWP Trust’s market capitalisation climbed 3.7% to $2,505m for the month of August. This was sparked by the release of its full-year results, which included total year on year income growth of 1.9% to $156.3m. This was in part driven be decreasing finance costs, down 8.8% from the previous year due to lower cost of debt and lower borrowings. BWP’s growth comes despite concerns about the company’s shrinking property portfolio, as the number of warehouses under management went down to 75 from 79 in previous year.
  • Independence Group grew its market capitalisation by $36m to $3,212m at August close. This growth was on the back of the release of strong full year results for the 30 June year end, with the company reporting a record net profit after tax of $79m (up 44% from the previous year), net cash position of $263m and a record $59m dividend declared. This strong performance was underpinned by an increases in nickel and gold prices partnered with low cost of production and high-grade ores.

Major index players in August 2019
Select above image to enhance the Major index players in August 2019

The top Deloitte WA Index Movers and Shakers in August 2019 were:

  • OreCorp Limited’s market capitalisation increased by 78% through August to reach $116m. The company announced the successful raising of $13.3m from the placement of 53.1m fully paid ordinary shares at 25 cents per share. Proceeds are for the acquisition of Nyanzaga Gold Project and to undertake further work on the Hobbes Project, as well as other business development and working capital requirements.
  • Capricorn Metals market capitalisation rose 70% to $293m following the announcement to raise $65 million to accelerate the development at Karlawinda. This successful placement holds the key to unlock a $107 million debt and hedging facility from Macquarie Bank to fund the rest of the project. The Company subsequently completed gold hedging for Karlawinda in the month with 200,000oz hedged at A$2,249/oz to help underpin project development.
  • Spectrum Metals market capitalisation increased 61% to $152m for August. This was driven by the $7.3m million allotment of shares during the month. This cash inflow will primarily be used to fund aggressive exploration of the Penny West gold project in Western Australia following recently returned high grade gold results at Penny North.

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

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.

Did you find this useful?