Archive for May, 2011

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    • ASX Company News: Australasia Consolidated Secures Telechoice Contract

    Sunday, May 22nd, 2011

    Australasia Consolidated Limited (AAO) is pleased to announce that Emerchants Ltd has secured a major new contract with Telechoice, the largest Optus dealer in Australia. AAO recently announced an agreement to acquire 100% of Emerchants, the leading player in the pre- paid financial cards market in Australia. AAO also announced a capital raising of $10 million on which it has received broker firm commitments. Telechoice is the number one Optus dealer in Australia, offering mobile phone, internet and telecommunications products with over 300 stores located around the country. Emerchants has successfully secured a 3 year contract with Telechoice which is expected to issue over 350,000 pre- paid financial cards in the first year to form part of their Incard 24/7 program. The unique functionality of the Emerchants card will provide consumers with the ability to recharge their pre-paid mobile phones with an SMS. The flexibility of the technology also enables Telechoice to restrict the expenditure of the cards for taxi and mobile phone purposes only.

    Australasia Consolidated Limited Managing Director Bob Browning was very pleased to announce contract win on behalf of Emerchants. ”This is a major development for the Emerchants business, not only because Telechoice is such a large retailer and the contract is significant in size but also because it demonstrates the unique capability of Emerchants’ technology,” Mr Browning said. “Emerchants has advanced technology in the pre-paid financial cards market and it is this technology that allows customers such as Telechoice to offer Point Of Sale (POS) and real cash promotional rebates to their customers. “Telechoice was attracted to these unique features and sees it as a very powerful promotional tool to drive sales not only in their own stores but also into their partner organizations.

    Australasia has an agreement to acquire Emerchants, the market leading provider of pre-paid financial cards with 28% market share in Australia. Australasia is focused on the twin goal of delivering high quality payment systems to its customers and superior returns to its shareholders. Emerchants is Australia’s leading provider of pre-paid financial cards with a number of high profile clients including NRMA, Cabcharge, Edge Loyalty, Tru Energy, Save the Children, Bayer, Cardno, Monodelphous, ABC Learning, Palace Cinema and Harley Davidson. Emerchants has established a proven payments platform that provides customers with a unique combination of flexible payments, high levels of security and unprecedented levels of reporting and oversight. Emerchants has ‘market ready’ technology that has been established over the last 9 years that is fully scalable to support significant volume growth and is fully integrated into the EFTPOS system.

    www.australasiaconsolidated.com.au

    http://www.traderdealer.com.au/fundamentals/aao

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    ASX Company News: Transfield Services To Provide Drilling Services To Fortescue

    Sunday, May 22nd, 2011

    Transfield Services (TSI) well services and well construction business, Easternwell, announced today that it has signed a contract with Fortescue Metals Group Ltd for the provision of drilling services and associated equipment to its mining operations in Western Australia. As part of the agreement, Easternwell is initially providing three rigs to Fortescue’s (FMG) Christmas Creek, Nyidinghu and North Star sites. The contract also allows for Easternwell to provide Fortescue with additional rigs and services in the future.

    Transfield Services’ Managing Director and Chief Executive Peter Goode said, “This is a strategically significant win for Easternwell and the broader Transfield Services group as it establishes a relationship with one of the country’s major mining and exploration companies. It also further underpins Easternwell’s growth for FY12 and beyond, which we identified at the time we bought the business.” Fortescue Metals Group is one of the world’s largest producers and sea-borne traders of iron ore. It has plans to increase iron ore production from 55 to 155 million tonnes by 2014. Transfield Services acquired Easternwell in December 2010 and provides the company with increased exposure to Australia’s key growth sectors.

    Transfield Services delivers essential services to key industries in the resources and industrial, property and infrastructure sectors. A leading global provider of operations, maintenance, and asset and project management services, Transfield Services has more than 28,000 employees in Australia, New Zealand, the United States, Canada, the United Arab Emirates, Qatar, India, Malaysia, Chile and New Caledonia.

    www.transfieldservices.com

    http://www.traderdealer.com.au/fundamentals/tsi

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    Stock Market Analysis: Weekly Market Wrap

    Friday, May 20th, 2011

    Commodities Support Consolidation in Global Stock Markets

    Investor nerves have again been tested this week. After heavy selling early on in the week the market has bounced off key levels to finish in consolidation.

    The early sell-off came as investors exercised caution ahead of key IMF and EU finance minister meetings which discussed the plight of economies in Portugal, Greece and Spain. The spectre of a debt restructure is still hanging over Greece, but Portugal received a bailout package. In the US technology stocks led markets lower, but IPO activity and a bounce-back in commodities prices have driven a recovery.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 rebounded off key levels this week as commodities started to see some buying after a few weeks of selling. Mining stocks have driven the index higher but the strong Aussie dollar is still weighing on company profits and forecasts. Banks contributed to the weakness in the index after being downgraded by Moody’s ratings agency.

    US Markets

    US stock market indices staged their second straight gain overnight after weakness earlier in the week, led by the technology sector as HP produced disappointing results. Since then however stocks have been given a boost by Dell reporting better than expected results. Professional networking site LinkedIn had a successful IPO, closing up 109% at $94.25, making it the best-performing initial public offering for the year. This success has raised hopes that more IPOs may come to the market to help drive more capital off the sidelines.

    Resource stocks have been supported after it was announced there would be a scale back of the $US11 billion Glencore International IPO, which is seen as a litmus test for the commodities super cycle going forward. Material and energy stocks were the biggest gainers, as oil futures again reached $US100 a barrel for the first time in a week, while in soft commodities prices stopped their slide after floods damaged wheat, corn and soybean fields, raising the spectre of a supply shortage leading to higher prices.

    Overnight, the Dow Jones closed up 0.4% at 12,605, the S&P 500 index closed up 0.2% at 1,343, the Nasdaq ended up 0.3% at 2,823, and the smaller cap Russell 2000 was up 0.2%.

    European Markets

    European stock markets are ending the week in consolidation. The weak US economic and corporate data fuelled concerns that the global economic recovery may be faltering and put pressure on shares, however they recovered after the US markets continued with their gains.

    The IMF and the EU finance ministers have made progress by signing off on a EUR78 billion bailout package for Portugal. Meanwhile the European Central Bank is attempting to manage the prospects for a restructuring of Greek sovereign debt, needed to fund the EUR60 billion gap for Greece for this year and next. The IMF is also now searching for a new chief after Dominique Strauss-Khan resigned, while being held in the U.S. on sexual assault charges.

    Overnight in London the FTSE 100 index closed up 0.5% at 5,956, the German DAX was up 0.7% at 7,358, while in France the CAC was up 1.3% at 4,027.

    Asian Markets

    Asian share markets are ending the week flat. The major news from the region has been confirmation of the slowing growth in Japan. Recent data is showing that the Japanese economy contracted sharply in the first quarter of 2011, as the March earthquake and tsunami resulted in gross domestic product (GDP) contracting -0.9% in this quarter, and is now tracking at a -3.7% annualised decline. The fall marked the second consecutive quarter of contraction, taking Japan into what economists consider a “technical recession”.

    The Chinese and Hong Kong markets have been treading water this week, even though there was a report from Credit Suisse that maintained an overweight stance on the Chinese market also helped, despite noting that China is among the worst performing markets for the past 12 months.

    Overnight in China the SSE Composite was down -0.5% at 2,859, while in Hong Kong the Hang Seng Index closed up 0.7% at 23,164 and in Japan the Nikkei 225 Index was down -0.4% at 9,620. The South Korean KOSPI was down -1.9%, while the Indian market was up 0.3%.

    Our View

    The Australian share market has had a strong rebound this week, despite early weakness. As the week progressed investors have added risk to their portfolio positions, taking advantage of the sharp sell-off in commodities prices in the past few weeks.

    The S&P/ASX 200 index is testing its 200-day moving average, and the recent recovery in commodities prices has added support around these levels. There are still headwinds with the strong Aussie dollar continuing to weigh on the market and the mining resource tax is resurfacing after the WA government’s charges for iron ore royalties increasing by $2 billion.

    The S&P/ASX 200 is currently trading at 4735, having found support around the 4,640 level this week. There is likely to be further consolidation near-term where the focus will continue to be on corporate earnings reports, the Aussie dollar and commodities prices, particularly copper, gold and crude oil. Key levels for the index next week will be 4850 to 4600.

    By Michael Hevern
    Head of Research

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    Trading book Review: The Technical Analysis Course – 4th Edition

    Friday, May 20th, 2011

    The Technical Analysis Course – 4th Edition

    Author: Thomas Myers
    RRP $85.00

    Trading book review by Janene Murdoch from the Educator Investor Bookshop

    The Classic Introduction to Technical Analysis– Fully Updated and Revised!

    The most reliable method for forecasting trends and timing market turns, technical analysis is as close to a “scientific” trading approach as you can get and it is particularly valuable in today’s volatile markets. The Technical Analysis Course, Fourth Edition, provides the know how you need to make this powerful tool part of your overall investing strategy.

    Through a series of lessons and exams, you’ll master the techniques used by the most successful technical analysts in the market today. Updated with hundreds of real market examples, The Technical Analysis Course provides the essential foundation for using time-tested technical analysis techniques to profit from the markets. You’ll learn how to:

    *Identify profitable chart patterns, including reversals, consolidation formations, and gaps
    *Utilize key analytical tools, including trendlines and channels, support and resistance, relative strength analysis, and volume and open interest
    *Perform advanced analysis using moving averages, trading bands, Bollinger Bands, oscillators, the Relative Strength Index, stochastics, and moving average convergence-divergence

    This book is available from the Educated Investor Book shop. If you would like to order this book please visit The Educated Investor Bookshop website.

    By Janene Murdoch
    Educated Investor Bookshop

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    Ubiquity and Trading Financial Markets

    Friday, May 20th, 2011

    I recently read an excellent book that has interesting application to the financial markets. The book is titled Ubiquity, Why Catastrophes Happen. This is not a book review; instead I will build on one of the key concepts in the book as it relates to trading any market.

    Imagine dropping a single grain of sand onto a table, followed by another grain of sand and another and so on and so on. Initially a few grains of sand will form a small pile on the table and the addition of a single grain of sand will have very little impact on the pile. As the pile builds, the grains of sand will start to build up and the slope of the pile will become steeper. Now a single grain of sand falling on to the pile may trigger an avalanche. The new grain of sand may dislodge one grain of sand or a whole lot of grains of sand and the sand will continue to move until the pile becomes stable again. As the pile gets very steep it is possible that a single grain of sand falling onto the pile will result in a complete collapse of the pile.

    There are a few things to note from this simple experiment:

    * the triggering condition for any avalanche is always exactly the same, a single grain of sand being dropped onto the pile.
    * the size of the avalanche can vary dramatically from a single grain of sand moving, to total collapse of the sand pile.
    * the steeper the pile the more unstable the pile becomes.

    Translating this experiment into a trading context we can get a few things from it.

    Consider that each trading day in the market is like adding a grain of sand to the sand pile. Then any trading day could trigger a decline, with a down day being the primary trigger. You cannot tell the difference between one trigger and the next trigger as you cannot distinguish between two grains of sand. It is a human tendency to look for reasons why an event occurred, however the why is always exactly the same, another trading day.

    A one-day drop could then rebound the next day or result in a multi-day decline or even the next bear market. Any down day could be a suitable trigger and the size of the subsequent move is unpredictable. The author did find a core relationship between the size of the event and the frequency that it occurs at. While one event was not predictable in size, the larger the collapse the less frequently it occurred and this was governed by a power law. As the number of grains of sand doubled, the avalanche was less likely to occur by a factor of 2.14. As the size of an earthquake doubles it is four times less likely to occur. Amazingly this power law holds for earthquakes, extinctions, storms and many other natural phenomena, with different numbers governing the relationship.

    But the most important thing to get from this study is that when the market is set up for a fall it is far more likely to occur and any collapse is likely to be larger. The steeper the pile of sand the bigger the avalanches tend to be because of the inherent instability. Michael produced an excellent article recently on divergence and showed the current situation in a range of markets. The set up for instability exists. When you add to that the precarious financial situation of many governments, most noticeably Greece, high unemployment in the US, political unrest in the Middle East, the end of Quantitative Easing in the US and high commodity prices the sand pile certainly appears to be unstable.

    The author notes that it is not possible to predict the size or timing of events, but it is possible to observe the steepness of the sand pile at any time. The death of one species could lead to mass extinctions, a small spark in the forest could lead to massive bush fire, or a wrong turn could start a world war. But for these devastating effects to occur the sand pile must be steep enough to be unstable.

    Focus your study on the set up criteria, the events that determine whether the market is currently stable or reaching a critical state where the next down day could be the start of something big.

    By Jeff Cartridge
    Education Manager

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    Stock Market Analysis: Markets Consolidate

    Friday, May 20th, 2011

    * US stock market indices staged their second straight gain overnight, as commmodities prices consolidated.
    * European stock markets ended higher, helped by continuing gains in the U.S. markets.
    * Asian stock markets ended mixed yesterday.
    * In commodities prices consolidated.  

    The SPI Futures is trading below the key level of 4800, closing down -0.2% (or -11 pts) at 4,749. The key levels for our index today are 4760 and 4680. The ASX is set to consolidate as we have positive leads for markets in the U.S. and European markets. 

    Australian shares higher traded higher yesterday, led by resources stocks. BHP Billiton rose 1.2%, Rio Tinto rose 1.3%, Newcrest rose 2.3%, Fortescue Metals rose 1.6% and OZ Minerals rose 5.2%. Expect these stocks to consolidate today, while the banking sector appears to have shrugged off the Moody’s downgrade and commodities prices consolidated overnight.  The mining tax will be in focus again today after the WA Government sharply increased the state iron ore royalties from the miners by $2 billion.

    See below for ASX listed companies in the news today.

    Economics News Today

    * AOFM auctions $750 million of Oct 2014 bonds.

    U.S. Markets

    US stock market indices staged their second straight gain overnight, as corporate news outweighed disappointing economic news. 

    The Dow Jones finished higher led by Amex and McDonalds up over 1.2%, while the S&P 500 index rose, led by the industrial and telecommunications sectors, and the tech-heavy Nasdaq Composite rose for a third straight session. 

    The scale back of the Glencore International $US11 billion initial public offering is seen as a litmus test for the commodities super cycle going forward, and has helped the mood for commodities.

    LinkedIn, the professional networking site, had a successful IPO closing up 109% at $94.25, making it the best performing initial public offering for the year.  The success of this IPO has raised hopes that more IPOs may come to the market to help drive more capital off the sidelines. 

    Economic news was mixed: the weekly jobs report showed better-than-expected unemployment claims figures, however the Federal Reserve Bank of Philadelphia’s reading on mid-Atlantic manufacturing activity plunged to its slowest pace in months, and housing sales of previously occupied homes in the U.S. fell slightly in April.

    The Dow Jones closed up 0.4% (or 45 points) at 12,605, the S&P 500 index closed up 0.2% (or 3 points) at 1,343, the Nasdaq ended up 0.3% (or 8 points) at 2,823, and the smaller cap Russell 2000 was up 0.2%.

    Company groups that make up the S&P index generally traded higher: Industrials were up 0.6%, Consumer Staples were up 0.3%, the Technology sector was up 0.2%, while Materials and Energy sector were flat.

    European Markets

    European stock markets ended higher overnight, helped by continuing gains in the U.S. markets. The Stoxx Europe 600 index rose 0.7%. 

    The IMF is looking for a new head following the resignation of Mr Strauss-Khan, currently being held in the U.S. on sexual assault charges.  Germany is advocating that the new leader should be European because of the issues that the region faces near-term. 

    In London the FTSE 100 index rose 0.5% led by the miners and financials as investors look to add risk to their portfolios. Investec jumped 5.4% after the financial services group reported a 22% jump in fiscal year net profit.  BP rose 1.6% after Bank of America upgraded it to a “Buy”, however other energy stocks consolidated in light of crude-oil futures dropping below $US100 a barrel, after a string of disappointing U.S. data.

    Bank stocks gained across the European region, with Societe Generale up 0.6% and Barclays PLC stronger by 2.5%. In Germany, the DAX 30 index advanced as investors went looking for opportunities from the recent pullback.

    The FTSE 100 index up 0.5% (or 32 points) at 5,956, the German DAX was up 0.7% (or 55 points) at 7,358,  while in France the CAC was up 1.3% (or 49 points) at 4,027.

    Asian Markets

    Asian share markets ended mixed yesterday, with Japan in a “technical recession”.  

    The Japanese market sold-off after data showed their economy contracted sharply in the first quarter of 2011, as the March earthquake and tsunami resulted in gross domestic product (GDP) contracting -0.9% in the first quarter of 2011, and is now tracking at a -3.7% annualised decline. The fall marked the second consecutive quarter of contraction, taking Japan into what economists consider a “technical recession”.  Japanese utilities declined after the Prime Minister raised the possibility of splitting up electricity generation and distribution businesses, this sent power generators plummeting and Tokyo Electric Power Co. (Tepco) sold down -8.0%. 

    In China the SSE Composite was down -0.5% (or -13 points) at 2,859, while in Hong Kong the Hang Seng Index was closed up 0.7% (or 154 points) at 23,164 led by miners. In Japan the Nikkei 225 Index was down -0.4% (or -41 points) at 9,620, the South Korean KOSPI was down -1.9%, and the Indian market was up 0.3%.    

    Commodities

    The Dollar Index was higher at 75.12 on a lower Euro, while the Australian Dollar last traded lower at 106.65. Commodities prices consolidated.

    For the session the benchmark crude NYMEX for June delivery was down -1.6% (or -$US1.67) to settle at $98.40. Copper prices are higher still below 2-year highs as Copper for June delivery was down -1.3% (or -5.3 cents) at $US4.0480.  June gold was down -0.2% (or -$US3.40) at $US1,491.50.

    ASX Market News

    AUN – Austar the regional pay-tv provider has confirmed it is in discussions with Foxtel that may result in a takeover offer.

    BKN – Bradken the consumable products supplier to the resources and freight rail industries, has acquired Wear Protect Systems Pty Ltd (WPS) and two of its related companies for an upfront payment of $13.3 million and an earn-out over two years.

    BXB – Brambles, the pallets supplier and documents manager, is still targeting an annual operating profit between $US740 and $US780 million, after sales in the 9 months to the end of March lifted 5 percent.

    CDD – Cardno says the 1H11 financial year has been robust, but 2H11 profit will be lower than in the first half.

    JHX – James Hardie Industries has posted a net loss of $US347 million for the full year to 31 March 2011, and expects the key US housing market to remain flat in the current year.

    LEI – Leighton Holdings says its Asian subsidiary has won two major contracts worth $547 million to construct the South Island Line (East) rail project in Hong Kong.

    MAK – Minemakers Ltd shares jumped after the phosphate explorer confirmed reports it was in talks with a state-owned Indian enterprise about jointly developing its Northern Territory project.

    MAP – MAP Group, the airports owner, expects to pay distributions of 21 cents per stapled security in calendar 2011.

    QBE – QBE Insurance Group will raise $493 million through the placement of subordinated debt notes with overseas institutional investors.

    RCG – RCG Corporation the footwear business owner expects full year net profit at the upper end of earlier guidance.

    RIO – Rio Tinto has priced $US2 billion of fixed rate bonds, comprising $US700 million of 5-year, $US1 billion of 10-year and $US300 billion of 30-year SEC-registered securities.

    TSE – Transfield Services has reaffirmed annual profit guidance, as it sells a business unit in the United States for $US255 million.

     

    Local Corporate Reporting

    PanAust Ltd (PNA)              Full year 2010 AGM
    InvoCare Ltd (IVC)              Full year 2010 AGM
    Spark Infrastructure (SKI)    Full year 2011 AGM
    Spotless Group Ltd (SPT)    Trading statement 

    Ex-dividend Date

    None

    Market Summary

    ASX – to open flat

    US & UK/Europe – higher

    US ADRs – Generally Higher

    BHP down -0.9% & RIO  down -1.2%; AWC up 0.4%
    ANZ up 1.8% & NAB up 1.9%
    NEM  up 1.5%, JHX down -0.2% , NWS up 1.8%

    Commodities Stock Index down -0.3%
    Gold Stocks Index up 0.6%
    Oil Stocks Index up 0.2% 

    By Michael Hevern
    Head of Research

    For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

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    ASX Company News: Leighton To Build New Rail Line in Hong Kong

    Friday, May 20th, 2011

    The MTR Corporation has appointed Leighton Asia (LEI) to deliver two major contracts for the construction of the South Island Line (East) rail project worth a total of approximately A$547 million. One of the contracts is awarded to a joint venture between Leighton Asia and John Holland Pty Limited, which expects revenues of approximately A$101 million from its share. The South Island Line (East) will be a medium-capacity railway covering approximately 7 kilometres from Admiralty Station to South Horizons Station with intermediate stations at Ocean Park, Wong Chuk Hang and Lei Tung. Spanning many different civil engineering disciplines, the contracts require Leighton Asia to construct 2 kilometres of viaduct that will form the above-ground section of the railway, a 115-metre long Aberdeen Channel railway bridge, 1.1 kilometres of tunnels, two elevated stations at Ocean Park and Wong Chuk Hang, two underground stations at Lei Tung and South Horizons and related plant and ventilation buildings. Cut-and-cover construction methods and drilling and blasting will be used for tunnelling works. When completed, the South Island Line (East) will provide fast and reliable railway service for communities in the south of Hong Kong Island and help ease traffic congestion at critical bottlenecks like Aberdeen Tunnel and the central business district. Construction works are scheduled to begin in May 2011, with an expected completion date in 2015.

    “Leighton Asia has built a solid track record in rail infrastructure in Hong Kong over some three decades with a number of significant projects, including key sections of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. Our significant rail and tunnelling experience makes us well suited to successfully deliver this project and we are pleased to be able to work with the MTR Corporation again,” Leighton Asia Managing Director Hamish Tyrwhitt said.

    Leighton Asia is part of the Leighton Group, Australia’s largest project development and contracting group with annual revenues exceeding US$16.5 billion. Leighton Asia has been operating in Asia for over 35 years. Based in Hong Kong, the company also operates in Macau, China, Mongolia, Taiwan, the Philippines, Thailand, Vietnam, Laos, Cambodia, Indonesia, Malaysia, Singapore and Brunei. Focused on success and with a unique combination of local knowledge and international experience, Leighton Asia is the region’s international contractor of choice.

    www.leighton.com.au

    www.leightonasia.com

    http://www.traderdealer.com.au/fundamentals/lei

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    ASX Company News: Orbital Corporation Acquires Sprint Gas

    Friday, May 20th, 2011

    International clean energy technology group Orbital Corporation Limited (OEC), is pleased to announce its investment in the LPG aftermarket business of Sprint Gas (Aust) Pty Ltd. This will be effected by Orbital’s acquisition of 55% of the shares of a newly formed company which will acquire the business assets of Sprint Gas including all brands, intellectual property, contracts and other tangible assets. The Sprint Gas business was founded in 1978 by the Boemo family who will continue to own 45% of the business as a co-investor with Orbital, with appropriate put and call options between the shareholders.

    Imports, assembles and distributes automotive LPG and CNG conversion kits in the Australian LPG aftermarket. It is one of the largest distributors in the Australian LPG aftermarket with forecast sales of approximately $7 million in the year ending 30 June 2011. It also distributes OMVL SpA, AEB Srl, Tomasetto Achille Srl product, all manufactured in Italy, and Linh Gas Cylinders from Thailand.  It has distribution centres in Victoria, Queensland and Western Australia and has over 30 years’ experience in the LPG systems supply business. Under the terms of the acquisition agreement, Orbital will make an equity investment of $2.0 million in a newly formed entity, which will be assigned the Sprint Gas brand names, all IP and other contracts of the business as well as tangible assets. The transaction contemplates total business assets of $3.6 million, including debtors and creditors; a small component of goodwill will also be assumed by the newly formed ‘Sprint Gas’. Key management and operating personnel will transfer across to ‘Sprint Gas’ with the business.

    Commenting on the acquisition, Orbital’s CEO, Mr Terry Stinson, said, “We are very pleased to be able to expand our LPG aftermarket business. Sprint Gas has been a clear leading player in the Australian LPG aftermarket for many years. Its product portfolio combined with Orbital’s “Liquid” product, will give the new business a full range of performance and price options to offer to the market. The acquisition fits well with Orbital’s alternative fuels strategy and also fits with our goal to grow our domestic business”.

    Orbital is an international developer of innovative technical solutions for a cleaner world. Orbital provides innovation, design, product development and operational improvement services to the world’s producers, suppliers, regulators and end users of engines and engine management systems for application in motorcycles, marine and recreational vehicles, automobiles and trucks. Orbital’s principal operations in Perth, Western Australia, provide a world class facility with capabilities in design, manufacturing, development and testing of engines and engine management systems.

    www.orbitalcorp.com.au

    http://www.traderdealer.com.au/fundamentals/oec

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    ASX Company News: Bradken to Acquire Wear Protect Systems

    Friday, May 20th, 2011

    Bradken (BKN) announced its acquisition of Wear Protect Systems Pty Limited and two of its related companies located in Wangara, Western Australia for an upfront payment of $13.3 million and an earn-out over two years.  WPS has extensive experience in epoxy, composite and rubber formulation and manufacturing processes and will become part of the Bradken Mining Division’s Wear Products business also located in Western Australia, complementing Bradken’s existing range of wear liner products.

    Commenting on the acquisition, Mr Hodges said, “We are pleased to have acquired this business, which is an excellent addition for Bradken and will allow us to leverage sales of a complementary range of wear products and materials through Bradken’s rapidly expanding geographical reach.” The acquisition is being funded from current facilities and is expected to be completed before the end of May 2011.

    www.bradken.com.au

    http://www.traderdealer.com.au/fundamentals/bkn

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    Stock Market Analysis: Energy and Materials Sectors Lead The Markets

    Thursday, May 19th, 2011

    * U.S. stock markets have broken a 3-day losing streak overnight, as commmodities prices recovered.
    * European stock markets ended with modest gains as rising commodity prices spurred on the resources sector.
    * Asian stock markets ended mostly higher yesterday.
    * Commodities were sharply higher.  

    The SPI Futures is trading below the key level of 4800, closing up 0.5% (or 24 pts) at 4,721. The key levels for our index today are 4760 and 4680. The ASX is set to trade higher as we have positive leads for markets in the U.S. and Europe. 

    Yesterday the Australian market gains were led by the resources sector, as the financial sector was weaker after a Moody’s downgrade of the big four banks.  Expect the materials and energy sectors to lead the way again today as commodities prices rose sharply overnight.

    See below for ASX listed companies in the news today.

    Economics News Today

    * Consumer Inflationary Expectations Survey for May
    * Foreign Exchange Transactions and Holdings of Official Reserve Assets
    * WA Government State Budget presentation

    U.S. Markets

    U.S. stock markets have broken a 3-day losing streak overnight, as commodities prices recovered.  Sentiment was helped by the release of the Federal Reserve’s FOMC minutes which showed the central bank officials are in no hurry to tighten monetary policy, as they tread a fine line after the completion of QE2 in June.  The Fed commented that the economy is improving, which could lead to higher demand for raw materials like steel and fertiliser. 

    The Dow Jones had its biggest gain since April 27th, led by bellwethers Caterpillar, Chevron and Exxon Mobil.  The S&P 500 stock index was led higher by the materials and energy sectors, while the tech heavy Nasdaq Composite had its biggest gain since April 20th, as a strong corporate profit report from Dell was in contrast to HP’s disappointment of yesterday.   

    Material and energy stocks were the biggest gainers as oil futures closed at $US100 a barrel for the first time in a week.  In soft commodities prices stopped their slide after floods damaged wheat, corn and soybean fields, raising the spectre of supply shortages which would lead to higher prices.

    The Dow Jones closed up 0.6% (or 81 points) at 12,480, the S&P 500 index closed up 0.8% (or 11 points) at 1,340, the Nasdaq ended up 1.1% (or 32 points) at 2,815, and the smaller cap Russell 2000 was up 1.6%.  Four stocks rose for every one that fell on the New York Stock Exchange.

    All ten company groups that make up the S&P index traded higher: Materials were up 2.2%, the Energy sector was up 2.0%, Industrials were up 1.4%, Consumer Staples were up 1.2%, the Technology sector was up 0.7%, while Financials closed up 0.4%.

    European Markets

    European stock markets ended with modest gains overnight, as rising commodity prices spurred on the resources sector and real estate shares were also strong.  The Stoxx Europe 600 index closed up 0.3%, breaking a four-session losing streak.  

    Sentiment was buoyed after a EUR78 billion bailout for Portugal was signed off, however in Greece the ASE Composite index fell 1.4% despite the European Central Bank attempting to hose down the prospects for a restructuring of Greek sovereign debt which is needed to fund the EUR60 billion gap for Greece for this year and next. 

    In London the FTSE 100 climbed as large cap mining stocks rallied and in Germany the DAX also rebounded, led by resource and energy stocks.

    The FTSE 100 index was up 1.1% (or 63 points) at 5,923, the German DAX was up 0.7% (or 47 points) at 7,303, while in France the CAC was up 0.9% (or 36 points) at 3,978.

    Asian Markets

    Asian stock markets ended mostly higher yesterday.  In Japan the Nikkei Stock Average rose, led by the banking sector, while tech stocks rose after Dell’s better-than-expected report and exporters were helped by the weaker yen.  In Hong Kong the Hang Seng Index climbed as did the Chinese Shanghai Composite, led by the materials and energy sectors.

    In China the SSE Composite was up 0.7% (or 20 points) at 2,872, while in Hong Kong the Hang Seng Index closed up 0.5% (or 110 points) at 23,011 and in Japan the Nikkei 225 Index was up 1.0% (or 95 points) at 9,662.  The South Korean KOSPI was up 1.6%, while the Indian market was down -0.3%.

    Commodities

    The Dollar Index was higher at 75.40 on a lower Euro, while the Australian Dollar last traded lower at 105.66. Commodities were sharply higher.

    The benchmark crude NYMEX for June delivery was up 3.3% (or $US3.19) to settle at $US99.80. Copper for June delivery was up 2.7% (or 1.1 cents) at $US4.0930 and June gold was up 1.1% (or $US15.80) at $US1,497.00.

    ASX Market News

    ABC – Adelaide Brighton, the cement and lime manufacturer, expects full year profit to be in line, despite a weaker 1H11 due to maintenance shutdowns and a loss of contracted cement volumes in WA.

    AUN – Austar the Regional Pay TV provider has confirmed it is in discussions with Foxtel that may result in a takeover offer.

    CAZ – WA Premier Colin Barnett says it was basically his decision to reject the Cazaly Resources proposal to export iron ore from Fremantle.

    BIG 4 – Major banks traded lower after global ratings agency Moody’s downgraded the big four banks and the Commonwealth Bank subsidiary, BankWest, by one notch to AA2 with a stable outlook, due to their sensitivity to volatile wholesale funding markets.

    FGL – Foster’s Group Ltd is looking to cut up to 50 jobs at its Abbotsford brewery in Melbourne as part of moves to improve performance at the plant.

    GMG – Goodman Property Trust reported a $NZ500,000 rise in full year distributable earnings after tax to $58 million, as net property income and financing costs rose.

    GNC – Grains handler and marketer GrainCorp Ltd will not confirm or deny that it is the subject of takeover interest.

    MAK – Minemakers Ltd shares jumped after the phosphate explorer confirmed reports it was in talks with a state-owned Indian enterprise about jointly developing its Northern Territory project.
    MEO -  MEO Australia has announced a deal with Italian energy major ENI, giving it 50 percent of the earnings from new gas discoveries in the Timor Sea off northern Australia.

    NWH – NRW Holdings, the mining services provider, has been awarded a $158 million 12-month contract in the Pilbara region of WA.

    PSA – Petsec Energy Ltd plans to sell its Beibu Gulf oil project in China so it can utilise $US37 million in funding towards developing shale oil plays in the U.S.

    QAN – Qantas and Australia Post have reconfigured their JV businesses Australian Air Express and Star Track Express.

    QBE – QBE has raised $US1 billion through the placement of subordinated debt notes with institutional investors in the U.S.

    RIO – Rio Tinto has priced $US2 billion of fixed rate bonds, comprising $US700 million of 5-year, $US1 billion of 10-year and $US300 billion of 30-year SEC-registered securities.

    UNX – Uranex NL shares have spiked after the uranium explorer announced a major new discovery at its Mkuju project in southern Tanzania.

     

    Local Corporate Reporting

    MAP Airports (MAP)             Full year 2010 AGM
    James Hardie (JHX)             Q4 2011 Results
    Brambles Industries Ltd (BXB)  Trading statement
     

    Ex-dividend Date

    None

    Market Summary

    ASX – to open  higher
    US & UK/Europe – higher

    US ADRs – Generally Higher

    BHP up 1.1% & RIO  up 1.2%; AWC down -0.5%
    ANZ up 0.8% & NAB up 1.2%
    NEM  up 0.5%, JHX up 0.1% , NWS up 1.4%

    Commodities Stock Index up 1.4%
    Gold Stocks Index up 1.1%
    Oil Stocks Index up 1.3% 

    By Michael Hevern
    Head of Research

    For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

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