The market is up 34. The SFE Futures were up 2 this morning.
The Dow Jones closed up 37 overnight. It was up 203 at best but closed near its lows. The S&P 500 finished slightly higher but is down 13% this month and remains on track to record it worst August since 1998. Goldman Sachs cut their 2011 forecasts for US economic growth on signs that the recovery had lost momentum. The oil price was up 2.3% to $84.12 on reports the Libya’s leader Gaddafi was on the verge of being overthrown. Gold hit another record – up $39.70 to $US1,900 and yields on 10 year Treasuries have hit a 50 year low. Metals mostly fell overnight and the Aussie dollar increased to 103.93c from 103.72c.
In the news today…
- Foster’s Group (FGL) reported net profit from continuing operations of $494.9m, down 8.7% from a year ago, after sales of beer in Australia declined. In an attempt to fight off bidder SABMiller, they announced a $500m share buyback. FGL up 1.5% to 497c.
- Monadelphous Group (MND) reported full-year net profit up 14% on year to $95.1m, which exceeded company guidance and was in line with analysts’ forecasts. They declared a 55c dividend. Patersons has initially described the result as strong. MND up 5.3% to 1825c.
- Origin Energy (ORG) reported a 15% rise in underlying profit to $673m which was 1% above consensus estimates and in line with their own guidance. The result has been initially described as solid and good by a few brokers. Revenue increased 21% and declared a final dividend of 25c. ORG up 2.9% to 1387c.
- Flight Centre (FLT) made a FY net profit of $139.8m, flat on last year and expects a 10% rise in underlying growth this year. They declared a final dividend of 48c, full franked, up from 44c last year. FLT up 2% to 1834c.
- Seek Ltd (SEK) announced a 9% rise in FY net profit to $97.7m, revenues increased 22% to $343.1m, giving them a 28% profit margin. Declared a final dividend of 7.5c, up from 6.7c. SEK down 3.2% to 539c.
- Oil Search (OSH) has posted a 117% jump in first half net profit to $110.868 thanks to higher oil prices. They confirmed guidance of full year production. The result was slightly ahead of consensus expectations. OSH confirmed its full year guidance.
- Consolidated Media (CMJ) has reported a 74% fall in full year net profit to $101.74m, but says the result was impacted by the sale of the company’s stake in Seek (SEK). Operating profit improved 5.8% on the prior year amid larger contributions from its investments. CMJ up 5.1%.
- Sonic Healthcare (SHL) reported full year profit of $294.5m, up just 0.4% on the prior year. SHL down 5% to 1091c.
- Computershare (CPU) will buy Melbourne-based Serviceworks Group for an initial consideration of $54.3m, and Colorado based Specialized Loan Servicing for $US113.6m. CPU up 3% to 717c.
Challenger Financial Services (CGF) reported their full year result yesterday. According to a few brokers, investors turn to annuities as a safer investment when the outlook is uncertain. CGF seems to be a broker favourite at the moment, plenty of target price upgrades.
- GSJB Were — Hold — 570c target price (25% above the current share price) — They say CGF is one of the few financial stocks whose growth will actually benefit from weak equity markets / ongoing investor caution. They note that is contrast to 2007-08, it now has a healthy capital buffer to absorb the associated volatility in the market.
- Citi — Hold — 535c target price (19% above the current share price) — They say CGF’s house of boutique strategy continues to progress.
- RBS — upped to Buy from Hold — target price upped to 530c from 520c (13% above the current share price) — The result was good and growth expectations for FY12 are also impressive. They are very bullish.
- UBS — upped to Buy from Neutral — upped target price to 525c from 505c (12% above the current share price) — CGF trades on 9x PE, 1.3x P/B with 16.7% ROE forecast on a FY12e basis. They believe that CGF can deliver at least 6-8% EBIT growth in Fy12e.
- Credit Suisse — Outperform — target price upped to 590c from 575c (26% above the current share price) – Solid result highlighted by the benefit of a buyback.
- JP Morgan — Overweight — upped target price to 539c from 536c (15% above the current share price) – The result was pretty much in line with expectation.
- Macquarie Equities — Outperform — target price upped to 578c from 569c (24% above the current share price) – The annuity division was the key driver behind the stock.
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