KALIN®

Kalkine Daily - 24/02/2014

Feb 25, 2014

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KALKINE DAILY

Date - 24/02/2014

S&P 500 was down 0.19% to 1836.25 on Friday. The main focus this week will be Part Two of Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony before the Senate Banking Committee on Thursday. Ironically, Yellen's congressional testimony before U.S. lawmakers was rescheduled after a Senate panel previously canceled the original hearing date due to a recent snowstorm in Washington, D.C.

This week's economic calendar includes consumer confidence, new home sales and several other reports on the housing market, durable goods orders, the preliminary data on gross domestic product and the final February reading on consumer sentiment from Thomson Reuters and the University of Michigan. While the housing data is likely to be discounted as a result of weather issues, the consumer confidence data may still provide insight to investors as to whether economic growth remains on track. Of the 441 companies in the S&P 500 that had reported earnings through Friday, 65.3 percent have reported earnings above analysts' expectations, slightly below the 67 percent rate for the past four quarters, but above the 63 percent average since 1994.

S&P 500 Daily Chart (Source – Thomson Reuters)

S&P ASX 200 was up 26.4 points on Friday and closed at 5438.7 points. On Friday, Crown Resorts chairman James Packer added $65.6 million to his fortune after the casino and hotel group paid a dividend of 18¢. Its profit jumped 29.4 per cent to $325 million. The biggest winner of the week was Andrew Forrest, the founder of Fortescue Metals, who will receive $102.8 million in dividends after the iron ore miner took the lead of rivals BHP Billiton and Rio Tinto and announced a higher-than-expected payout. Santos confirmed it FY14 production guidance range. Stockland announced that it has exchanged unconditional contracts for the sale of a 50 per cent stake in the Piccadilly tower, court and retail centre at 133 Castlereagh Street Sydney to Investa Office Fund. Leighton expects FY 2014 net profit after tax of between A$540- A$620 million, FY 2014 net income of A$545 million.

S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 on Friday were:-

Code	Name	Price	Change	% Change
BRG	BREVILLE GROUP LIMITED	$9.73	$0.73	8.11%
MFG	MAGELLAN FINANCIAL GROUP LIMITED	$13.35	$0.66	5.20%
QAN	QANTAS AIRWAYS LIMITED	$1.25	$0.06	5.04%
MML	MEDUSA MINING LIMITED	$2.14	$0.10	4.90%
PNA	PANAUST LIMITED	$1.98	$0.08	4.22%

Stock of the Day – Seek.com

SEK’s ability to deliver consistent positive surprise was again demonstrated by a 30% increase in underlying NPAT and with FY14 guidance provided for underlying NPAT to be marginally higher. SEK reported a very strong 1H14 result with NPAT of $87.4m, whilst this was supported by a $7m benefit from a lower tax expense, SEK also delivered an outstanding operational result with SEK Learning and Brasil being the highlights.

SEK also announced the acquisition of additional interest in JobStreet, a SE Asia based online employment business. The acquisition takes SEK’s interest from 22% to 75% for a cash consideration of $261m. Whilst this result has seen good performance from the education division and SEK’s international businesses we continue to expect the Australian job ad market to improve in the 2H14. This provides leverage to a cyclical recovery for SEK and will in our view further support the growth into FY15.
The divisional analysis shows that the key areas of outperformance were better than expected performance in SEEK learning and SEEK International. We note that SEEK Learning strength more than offset the weaker than expected result from THINK – in our view this is particularly positive given that the THINK business has now been sold and Learning continues to be a part of the SEK operations.

SEEK Daily Chart (Source - Thomson Reuters)

The key features of the result were a 38% and 37% increase in group revenue and EBITDA with strong performances from the international and education businesses and satisfactory performance from Domestic online business. SEEK Domestic delivered a 5% decline in EBITDA with revenue down 3% and remains well positioned for any improvement in market conditions given its entrenched leadership position. We like the SEEK story but think that the stock is too expensive at the current price and would review it at a later date.