Why Star Entertainment is looking like pocket aces

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead. 

MARKETS WRAP

  • S&P 500 - 4,138 (-2.14%)
  • NASDAQ - 12,382 (-2.55%)
  • CBOE VIX - 23.90 (+15%)
  • FTSE 100 - 7,534 (-0.22%)
  • STOXX 600 - 433.17 (-0.96%)
  • US 10YR - 3.028%
  • USD INDEX - 108.95 (EUR/USD breached below parity for the second time in a year)
  • GOLD - US$1748/oz
  • WTI CRUDE - US$90.67/bbl
  • SPI FUTURES - 6,905 (-0.69%)

EARNINGS WRAP AND PREVIEW

It was the battle of the A's yesterday. Ampol posted a record first-half earnings report after revenues - get this - soared 83%. But apparently that wasn't good enough because shares finished lower. Audinate reported record revenues as well - but with its gross margin nearing 75%, its niche monopoly status continues to shine. AdBri's profits fell and quantitative guidance was difficult for management to provide. All it could say was that demand would remain strong - but did anyone buy that? The share price did all the talking. Adairs reported a fall in profits as well, but said FY23's early stages are looking a little rosier.

Reliance Worldwide shareholders were not thrilled either, as price pressures kept its net profit figure subdued and its dividend flat. LendLease flagged a lot of the same issues - supply chains, inflation, COVID - as reasons for why it swung to a net loss. And yet, it finished in the green! Isn't this market bizarre...

Spare a thought though for Star Entertainment shareholders. Not only did they not get a dividend at all, they swung to a $200 million net loss. But as you're about to find out - that's not deterring some of the brokers from taking a peek under the balance sheet.

STOCKS TO WATCH

I don't know about you, but I feel like gambling stocks may be the hot new sector. 

On that note, Star Entertainment has come into favour with brokers, despite the current problems at Crown. 

Australian revenue of $1.53 billion and EBITDA at A$236.7 million beat consensus. The Star Sydney is generating revenue comparable to pre-COVID levels, while The Star Gold Coast domestic revenue is up 26% the Treasury Brisbane domestic revenue is up 18%.

Goldman Sachs struck the most cautious note, rating the stock Neutral on the basis of uncertainty around regulation. Crown Casino opening back up could also be a joker in the pack. 

"Trading momentum continues to be strong, but uncertainties are likely to remain at the forefront for investors."

Macquarie and UBS, however, back the stock with Outperform and Buy ratings respectively.  

THE CALENDAR

Source: Forex Factory

THE CHART

In a classic case of 'do what I say, not what I do, the Bank of America's Global Fund Manager Survey shows that as a group fundies are not quite selling stocks just yet despite all the negative commentary in the financial press. What is different is their allocation to equities has taken a dive. That means they're putting their new inflows into something else.

Meanwhile, the recent stock recovery has stopped just short of breaking the downward trend set in January. The bulls will have to wait a bit longer until they're back in the driver's seat. 

THE STAT

This was naturally weighed down by the Super Bowl, which attracts a lot of ad revenues in the US. But it doesn't take away how remarkable the fall has been.

Today's report was written by David Thornton and Hans Lee

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The Morning Wrap
Markets Wrap
Livewire Markets

Australia's most comprehensive markets wrap is back for 2023, with a fresh look and a new emphasis on getting you and your money ahead of the curve. Available each weekday morning at 8:30am AEDT. Written by Chris Conway, Kerry Sun, and Hans Lee.

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