Australia | Jun 18 2013
This story features LENDLEASE GROUP.
For more info SHARE ANALYSIS: LLC
The company is included in ASX200, ASX300 and ALL-ORDS
By Stephen Hogan, Senior Private Client Adviser, Equities/Derivatives
Australian Market
The Australian market (XJO) closed down -11.5 points or 0.24% to 4814.4 today. The market began the day with a sell off in the morning, hitting a low of almost -60 points at 4768 around 12:30 and rallied back all afternoon till close. Most sectors finished in the red with the exception of a few. The best sector was the A-REIT sector adding 1.73% and the worst was the Gold sector, falling -2.29%. Overnight the Dow Jones rose 109.67 points or 0.73% to 15,179.80, investors are preparing for the Fed Chairman Ben Bernanke to speak on Wednesday (Thursday in Aus) regarding the latest FOMC meeting, concluding on the same day.
The June RBA meeting's minutes were released today, stating that even though the cash rate had not been cut for this month, the RBA has indicated that it is prepared to keep cutting interest rates even though the AUD is falling. Between the May and June meetings, the Australian dollar fell seven per cent against a surging US dollar but the RBA considers it to still be too high. The high Australian dollar, which has been above 100 US cents for most of the past 12 months, has been a drag on much of the non-mining sectors of the Australian economy. "The exchange rate had depreciated noticeably, though it remained at a high level considering the decline in export prices that had taken place over the past year and a half," the RBA minutes released today.
Low interest rates and an upswing in the property market have resulted in the NSW state government budgeting a record $5 billion in stamp duties in the year ahead, with the strong market expected to continue over the next three years.The government is expecting revenues from stamp duties to top $6.2 billion in the four year forward estimates period, reflecting its optimism in the outlook for a continued turnaround in the property market.
ANZ Bank Limited ((ANZ)) has been accused of charging excessive fees to its customers over the past 6 years. Court papers are to be filed next week after the Fair Play on Fees campaign, which was launched in March, attracted more than 25,000 registrations, says the case will claim repayment of default fees charged by both ANZ and its former subsidiary National Bank over the past six years. This includes fees for unarranged overdrafts or rejected payments, as well as late payment or exceeding a credit limit on credit cards. "ANZ has overcharged hundreds of millions of dollars over the past six years," Fair Play on Fees lawyer Andrew Hooker said. "Their customers have come to us in droves, with over 11,000 signing up in the past three months. We expect thousands more to join them over the next week."
Miner Lynas Corporation Limited ((LYC)) is dropping a defamation action against a Malaysian green group. In April last year, Lynas initiated legal proceedings against Save Malaysia Stop Lynas. Two months later, independent media website Free Malaysia Today apologised for running stories sympathetic to the activists, who opposed plans for a processing plant. Lynas Corporation chief executive Eric Noyrez on Tuesday said solicitors had been instructed to discontinue legal action against the activist group. "There is no value in continuing disputes with members of our local community," he said in a statement. "Therefore, Lynas intends to instruct its solicitors to discontinue its defamation claim against the Save Malaysia Stop Lynas group." Still, Mr Noyrez said the green group's comments had created fear, ahead of the plant starting operations in November 2012.
Lend Lease Group ((LLC)) are still doing damage control today, trying to reassure shareholders that its earnings will still grow this financial year, even after the restructure deal. LLC's share price dropped 7.5% on Monday in reaction to the news that construction earnings were affected by a slowdown and then announced a streamlining of its Australian construction business that is likely to involve job cuts. "Lend Lease confirms it is on track to deliver a solid result in line with market expectations for FY13," it said in a statement. "This is based on a range of published analyst earnings expectations which converge on $540-$550 million and the published Bloomberg median of $547 million." Lend Lease made a net profit of $501.4 million in the 2011-12 financial year.
UGL Limited ((UGL)) has secured $120 million in new contracts across its global property services business, DTZ. The wins include a three-year property management deal to advise Rolls-Royce, the world's second-largest maker of aircraft engines, on the management of its real estate across 20 countries in Europe, the Middle East and Africa. UGL has also locked in an extension to its global service contract with American chemicals giant DuPont, with DTZ to act as a transaction adviser on projects in Europe, the Middle East, Africa, the Americas and Asia Pacific regions. It has also won a five-year contract to deliver facilities management services to the Aspire Zone, located in Doha, Qatar. Occupying a 250-hectare site, the Aspire Zone project is one of the largest sporting complexes in the Middle East. It has also been appointed joint leasing agent by Charter Hall Office Trust to lease 1 Martin Place, Sydney, Australia.
Tiger Resources Limited ((TGS)) has stated that is expects to exceed its production estimates of copper in concentrate this year at its Kipoi Copper Project in the Democratic Republic of Congo. Preliminary targets suggested the project would mine 37,000 tonnes but are now expecting to reach between 41,000 and 43,000 tonnes. ''The Company's guidance for average operating cash costs for 2013 of $0.48 per pound of copper produced is maintained,'' Tiger Resources added in a statement.
AUD is currently trading at $0.9510, down $0.0035 against the USD.
Top Performers
Coalspur Mines Limited ((CPL)) up $0.025 or 0.025% to $8.47
Boart Longyear Limited ((BLY)) up $0.042 or 6.72% to $0.667
Drillsearch Energy Limited ((DLS)) up $0.040 or 4.10% to $1.015
Dexus Property Group Limited ((DXS)) up $0.042 or 4.00% to $1.092
Virgin Australia Holdings Limited (VAH) up $0.015 or 3.45% to $0.45
Bottom Performers
Billabong International Limited ((BBG)) down -$0.025 or -13.89% to $0.155
Cudeco Limited ((CDU)) down -$0.28 or -8.95% to $2.85
St Barbara Limited ((SBM)) down -$0.05 or -7.58% to $0.61
FKP Property Group Limited ((FKP)) down -$0.085 or -7.42% to $1.06
Oceanagold Limited ((OGC)) down -$0.12 or -7.12% to $1.565
Our Comments
Great turn around again today and I am seeing encouraging signs from the market. Today we sent out a note on a long term options trade with great/risk reward characteristics.
See note below:
Today we are looking at opening bullish credit spreads for clients on the XJO. Whilst the market may see some volatility here up until the election we believe going into December from the election point the Australian market will trade very strongly.
They are long dated bullish options trades that look like the following –
Selling the XJO 5350 Puts and receiving $6.20 per share
Buying the XJO 5050 Puts and paying $3.85 per share
Therefore the spread is 300 points and we receive $2.35 per share, giving us a risk of $0.65 per share.
So if you trade 10 contracts (XJO is still 1000 shares per contract) your total risk is $6500. This would occur if the market come 19th of December is trading below 5050.
Your maximum profit is$23,500. This would occur if the market is trading at or above 5350 come 19th December.
The breakeven point is 5050 plus our risk which is $0.65. This means breakeven on the XJO is 5115. If come December 19th the XJO is 5115 we break even.
Great risk reward trade (possible $23,500 profit with only $6500 at risk!!!)
Trade 20 contracts and the possible profit is $47,000 with risk of only $13,000
All we are asking the market to do is go to a new high by the end of the year.
Let me know if you would like me to do this for you.
(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)
Re-published with permission. Views expressed are not by association FNArena's (see our disclaimer).
Stephen Hogan is an Authorised Representative of Novus Capital. Authorised Representative No.345411 – http://www.stephenhogan.com.au
Novus Capital Limited ("Novus") is holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this e-mail or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
Novus believes that any information or advice (including any financial product recommendation) contained in this document is accurate when issued but do not warrant its accuracy or reliability. Novus is not obliged to provide you with updated information or advice if circumstances change. Novus, its directors, officers, associates and employees exclude to the full extent permitted by law, all liability of any kind whether in negligence, contract, under a fiduciary duty or otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, arising from or in connection with this e-mail or an attached document.
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