As expected, the ASX followed Wall St’s overnight turnaround.
The S&P/ASX200 gained 50.10 points or 0.72% to 7,048.20, crossing above its 20-day moving average. Over the last five days, the index has lost 0.91% and 6.42% over the last 52 weeks.
The top performing stocks were Paladin Energy Ltd (ASX:PDN) up 10.54% and Insignia Financial Ltd, up 11.83%.
Paladin had no news, but was a beneficiary of Japan’s re-interest in nuclear energy.
Insignia reported an underlying net profit after tax (UNPAT) of $234.5 million, an increase of 59% on FY21. Statutory net profit after tax in FY22 was $36.8 million.
Commenting on the result, Insignia Financial CEO Renato Mota said: “We delivered strong financial outcomes from the disciplined execution of our strategic priorities, and particularly from realising the benefits of the MLC acquisition.
“We experienced a 59% uplift in UNPAT, a marked turnaround of $3.1 billion improvement in platform flows (on a proforma basis), and integration is expected to be achieved 18 months ahead of plan.”
What’s making news today
Qantas rallies
Qantas has been all over the shop this week. The company copped flak for its response to delays and customer frustration: a $50 voucher.
That will get frequent flyers far.
The flying kangaroo’s shares dipped during the week but rallied today on a buy-back scheme and a more positive outlook for 2023.
The outlook didn’t stop the union from calling for CEO Alan Joyce’s resignation after another big loss, but at this stage, that’s less likely to happen than a 12-hour flight from Melbourne to London.
Qantas roughly halved its loss last financial year and is expected to get back to pre-COVID levels of profitability in 2022, yet it is still plagued by flights cancellations, delays and baggage issues.
The carrier posted an $860 million net loss for financial year 2022, down from a $1.69 billion loss the year before: revenue jumped 54% from 2021, when border closures bit hard.
The airline says it is on track to achieve cost savings of $1 billion this year.
"We had to ramp down almost all flying once Delta hit and stay that way for several months before ramping back up through multiple Omicron waves as we all learned to live with COVID in the community," Joyce said in a statement.
"We always knew travel demand would recover strongly but the speed and scale of that recovery has been exceptional."
Commenting on Qantas Group's annual results, Forager Funds Management chief investment officer Steve Johnson said: “The result was largely as expected. Strong pricing and lack of capacity is offsetting the short-term impacts of higher fuel costs and operational disruptions from staff shortages and illness.
“The guidance provided for 2023 was cryptic, but seems to be suggesting they are tracking modestly ahead of pre-Covid profitability. We are expecting at least that for the year.
“The surprise was the announcement of a $400 million on-market buyback. As shareholders, we generally welcome companies returning cash. But in the current environment of significant public perception issues for Qantas, we would have preferred they wait another 6-12 months.
"It unnecessarily opens them up to criticism of shareholders benefiting while customers are suffering. They should be focussed on fixing the problems first.”
Note, Qantas Group is a holding within the Forager Australian Shares Fund.
Appen earnings released tomorrow
Appen will release its highly anticipated first half earnings tomorrow amid a share price decline.
Market analyst Tony Sycamore gave us his rundown of what to expect:
“Founded in 1996, Appen Limited (ASX:APX) is the global leader in developing high-quality datasets used to build and continuously improve artificial intelligence (AI) systems.
“Data types can include speech and natural language data, image and video data, text and alphanumeric data and relevance data to improve search and social media engines. It reports its half-year numbers tomorrow, Thursday, August 25.
“In February, Appen signed off on its FY2021 results. It reported an 8% increase in revenue to US$447.3 million (all figures are in US dollars). However, its underlying NPAT fell 20% to $28.5 million.
“The market had been expecting a hit to Appen’s earnings after a move by Apple to allow iOS users to block the app tracking technology that allowed Facebook and other tech giants to target advertising. But that didn’t stop the share price from plunging 28.7% to $6.11 on the day of the report.
“The rout has continued into the first half of 2022. After another tough month July, Appen provided a trading update in early August. The update flagged a first-half revenue drop of 7% to $182.9 million due to weaker digital advertising demand and a slowdown in spending from some of its largest customers. It also flagged an underlying net profit after tax loss of $3.8 million, compared to a $12.5 million net profit after tax in 1H FY21.
“Management noted that they were “reviewing all investments in the business to accelerate productivity improvements and margin expansion.”
However, with scant details on how management would achieve this, the market sent the share price 27% lower from $5.71 to close at $4.15.
Appen Share Price Chart
After falling from a high of $43.66 in August 2020, the share price of Appen is trading back at levels it last traded in 2017, just above $4.00.
Heading into tomorrow’s report, the share price of Appen has spent the past three weeks delicately poised, range trading between $4.00 on that downside and $5.00 on the upside.
Know your customers: Salesforce shows double-digit top-line growth but downgrades guidance
eToro market analyst Josh Gilbert said of the Salesforce figures: “Salesforce has once again delivered strong year-over-year revenue growth at 22%, but marginally downgraded its Q3 and full-year guidance showing it is not immune to the economic slowdown.
“Demand for collaboration and productivity tools is increasing, with enterprises wanting to automate operations and foster remote working. Salesforce has all the tools to support these companies’ operational needs, making it a promising long-term opportunity for investors despite the marginal slowdown in corporate IT spending and weaker macro environment.
“Its downgraded guidance is no real shock and isn’t all that bad given the economic backdrop globally, especially across Europe where it makes 20% of revenue. The nature of Salesforce's products remains crucial in this digital age, and the downgrade is more likely to be a delay in enterprise demand rather than anything more pressing in the long run.”
“With the stock down 29 per cent this year but continuing to display resilient double-digit top-line growth, it's difficult not to be attracted to Salesforce shares.”
The Five at Five
Anson Resources surges after joining forces with Sunresin to develop full-scale lithium plant at Paradox Lithium Project in the US
Sunresin has successfully concluded eight months of engineering design work for Anson Resources Ltd (ASX:ASN)’s Paradox Lithium Project’s DFS.
Hartshead Resources completes $11 million placement to fund Shell Engineering study and Geotechnical survey
“Importantly, these funds will be used to further advance the phase one field development of the Anning and Somerville gas fields, including the recently announced Shell gas offtake route engineering study, which represents a significant milestone in the advancement of the project," Hartshead Resources NL (ASX:HHR) CEO Chris Lewis said.
Predictive Discovery fields broad, high-grade gold up to 48 metres at 5.26 g/t gold from NE Bankan
“Predictive’s next phase of drilling, which is focused on further defining the quality and extending the fast-growth resource of the NE Bankan gold deposit, continues to prove up the significance of what is the largest gold discovery in West Africa for over a decade,” Predictive Discovery Ltd (ASX:PDI) MD Andrew Pardey said.
American Rare Earths closes the books on oversubscribed $14 million placement
The funds will accelerate exploration across American Rare Earths Ltd (ASX:ARR)’s North American project base.
Magnis Energy Technologies delighted by latest “game changing” results from EFC battery program
Results from Magnis Energy Technologies Ltd (ASX:MNS, OTCQX:MNSEF)’s Extra Fast Charging (EFC) battery program show only 3% loss of charge retention after about 2,600 cycles.
On your six
Twitter’s former security chief turns whistleblower; says company lied about bots and safety
The accusations could affect a legal battle between Twitter and billionaire Elon Musk, who is trying to cancel his US$44 billion deal to buy the company.