Market Update & Important Indicators
U.S. stocks slipped after data showed slowing activity in the U.S. manufacturing sector, though the energy sector gained. The energy sector rallied after oil prices staged a push higher. Shares of Chevron climbed 1.3%, while fellow Dow component Exxon Mobil Corp., which reported better-than-expected earnings, advanced 0.8%. The Dow advanced 196 points, or 1.1%, to 17,361 and the S&P 500 increased 26 points, or 1.3%, to 2,021.European stocks fluctuated Monday as lingering concerns over the health of global economies, coupled with uncertainty surrounding debt negotiations in Greece, continued to spook investors. After rising cautiously in early trade, the Stoxx Europe 600 index spent most of the session in the red before edging marginally into positive territory at the close. Compounding those jitters, figures on Monday showed that the eurozone's manufacturing activity remained close to stagnation in January.
China shares fell on the latest sign of weak manufacturing activity in that country, while concerns about global growth kept pressure on much of the rest of the region. The Shanghai Composite Index finished down 2.6% at 3,128, while Hong Kong's Hang Seng Index slipped 0.1% to 24,485, after a final gauge of manufacturing activity for January by HSBC Holdings PLC inched higher, but still indicated a contraction from the previous month.
Base metals were mixed overnight, with copper falling 0.3%. Brent crude climbed 3.9% to $55.06/bbl and gold dropped 0.7% to $1,274/oz.
Thought for the day
WA Industrials – Unique international opportunities
We identify four WA-based stocks that have unique international opportunities. Not only do they all have significant exposure to the US$, but boast impressive key clients like the U.S. Department of Defense, Proctor & Gamble and Nestlé.
Alexium (AJX) | Market Cap $165m
While the Company has recently made exciting progress on flame retardant fabrics for military applications and has formed a relationship with the U.S. Department of Defense, successful commercialisation in the global commercial flame retardant chemical market will be the game changer for AJX.
Austal (ASB) | Market Cap $550m
Having long-term contracts and relationships with the U.S. Navy is a good place to be in a world tough on most construction businesses. The pipeline of potential work in the U.S. extends well into the next decade and we believe Austal is very well positioned to win a share of it. With positive trends in margins and free cash flow, and a lower A$ providing a further boost, we expect Austal to deliver earnings growth and resume dividends in FY15.
OBJ Limited (OBJ) | Market Cap $127m
The firming relationship with Proctor & Gamble (P&G), a company that has 130,000 employees, serves ~4.4b consumers daily across 180 countries, turns over >US$80b, and boasts well-known brands such as Gillette, Duracell, Olay and Covergirl, provides a strong endorsement of OBJ’s ground-breaking technologies. Importantly, the technology relates to how products are used, as opposed to their formulations. After developing this technology for more than a decade OBJ is now on the cusp of commercialisation.
TFS Limited (TFC) | Market Cap $459m
Last year was transformational. After 14 years TFC closed the plantation life cycle with first harvest and heartwood sales. TFC also produced its first Indian Sandalwood Oil (ISO) and inked a ground-breaking supply agreement with Galderma, a global dermatology company. The first ISO acne products have since been launched in the U.S. These achievements continue to attract investors to TFC’s investment products, providing cash flow for further, higher value, on balance sheet plantation investment.
In This Issue
Alexium (AJX) | Initiation
Alexium (AJX) is a chemicals and solutions company that develops and licences flame retardant specialty chemicals and reactive surface treatment technology. While the Company has recently made some exciting progress on flame retardant fabrics for military applications, the global commercial flame retardant chemical market offers substantially larger opportunities. In our view, AJX’s environmentally-friendly, cost effective technology places it in an excellent position to capture market share.
WA Industrials | Unique international opportunities
We identify four WA-based stocks that have unique international opportunities. Not only do they all have significant exposure to the US$, but boast impressive key clients like the U.S. Department of Defense, Proctor & Gamble and Nestlé.
Recent Contacts & Presentations
Northern Star (NST), Doray Minerals (DRM), Troy Resources (TRY), Gold Road Resources (GOR), Saracen Mineral Holdings Limited (SAR), Beadell Resources Limited (BDR), Resolute Mining Limited (RSG), RTG Mining (RTG), Alexium International Group Limited (AJX), Pacific Energy Limited (PEA), Otto Energy Limited (OEL), Peninsula Energy Limited (PEN), Sandfire Resources NL (SFR), Atrum Coal (ATU), Empired (EPD), DTI Group (DTI), Austal (ASB), TFS Corporation (TFC), Pioneer Credit (PNC), IMF Bentham (IMF)
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