S&P 500 was up by 5.16 points or 0.28% to 1859.45 on Friday. This was the best monthly gain since October. Shares got an early lift from positive signs on the U.S. economy. The latest reading on consumer sentiment came in slightly above expectations despite a severe winter that some observers say has hampered economic activity. And an indicator of manufacturing activity in the Midwest pointed to expansion, bucking expectations for a drop.

In recent months, U.S. indicators have been mixed, raising questions about the strength of the economy at a time when the Federal Reserve is scaling back, or tapering, its post crisis stimulus program. Also on Friday, the Commerce Department revised U.S. fourth-quarter growth to 2.4% from 3.2%, matching economists' predictions.


S&P Daily Chart (Thomson Reuters)

S&P ASX 200 was down 6.6 points or 0.12% and closed at 5404.80 points. Macquarie Groupis understood to be conducting due diligence on mortgage broker aggregation group Vow Financial, spurring suggestions the company may be pondering a broader roll-up of some of its stakes in mortgage players.Paladin Energy has been in news lately with a preliminary deal to sell 25 per cent of the company’s flagship Langer Heinrich mine in Namibia. While final approvals for the deal are yet to be received, the likely cash injection of $US190 million ($213 million) from the sale looms as a crucial boost for a loss-making company that has $US300 million worth of debt maturing in 16 months. Cabcharge   reported a first-half profit of $36 million – up 8.1 per cent from a year earlier. Despite this, it lowered its interim dividend from 18¢ to 15¢, fully franked.

Company earnings season is mostly finished, with no major reports scheduled. The Reserve Bank will hand down its monthly interest rate decision this week, but no surprises are expected. Key data releases this week include GDP, building approvals and retail sales, while the Australian Industry Group will publish its monthly check on the manufacturing sector.


ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:-

Code	Company Name	Price	Change	%Change
WSA	WESTERN AREAS LIMITED	$3.28	$0.21	6.84%
MML	MEDUSA MINING LIMITED	$2.17	$0.13	6.37%
JHX	JAMES HARDIE INDUSTRIES PLC	$14.50	$0.83	6.07%
MQA	MACQUARIE ATLAS ROADS GROUP	$3.15	$0.14	4.65%
KMD	KATHMANDU HOLDINGS LIMITED	$3.03	$0.12	4.12%

 
 
Stock of the Day – Adelaide Brighton (ABC)
Adelaide Brighton Ltd is engaged in the manufacture and distribution of cement, and cementitious products, lime, premixed concrete, aggregates, sand and concrete products. It is an integrated construction materials and lime producing group of companies focused on the engineering, infrastructure and resource sectors. It is focused on the production of clinker, cement and lime products, premixed concrete and aggregates and concrete products. 

Adelaide Brighton’s fiscal 2013 net profit after tax or NPAT result of AUD 151.3 million down 1.2% on the prior year. Operating cash flow of AUD 227.3 million was strong and an AUD 0.03 special dividend was declared in addition to a fully franked final dividend of AUD 0.09 per share. Operating conditions were similar to those of 12 months ago. Cement and lime exposure to resources and infrastructure offset subdued conditions in commercial and residential building activity. Lime volume growth was held back by a weak gold sector and import pressure, however margins were supported by cost cutting initiatives stemming from the company’s AUD 112 million investment program to improve efficiency.


Source – Adelaide Brighton

Revenue growth was 3.8%, but NPAT was down 1.2% largely because of higher energy costs which rose 10%. Returns from Adelaide Brighton’s joint ventures disappointed on continued weak market weakness in South East Queensland and Victoria. Adelaide Brighton’s residential exposure which accounts for about 30% of revenue is expected to pick up as improvement in approvals flow to the construction phase in fiscal 2014. We are seeing a sustained increase in private sector construction with Western Australia, South Australia and the Northern Territory making up 48% of revenue.


ABC Daily Chart (Source – Thomson Reuters)

Operating cash flow generation was strong at AUD 227.3 m (up 22%), driven by exceptionally strong working capital management. Capital spending on Adelaide Brighton’s major growth projects is now complete which should result in healthy free cash flow generation in the coming years. The balance sheet remains strong with net debt to equity at 23.4%. We like the Adelaide Brighton story but find it expensive at the current price and would review it again at a later date.

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