Market Update & Important Indicators:
Stocks rebounded from recent declines intraday, as upbeat data pointed to the strength of the U.S. economy. The Dow Jones Industrial Average added 179 points, or 0.9%, to 20731 intraday, buoyed by gains in shares of financial, industrial and energy companies. The S&P 500 rose 0.9% and the Nasdaq Composite added 0.8%. Major indexes wavered shortly after the opening bell, then climbed steadily following data that showed the U.S. consumer on solid footing. A measure of consumer confidence grew in March to its highest level in 16 years, the Conference Board said. U.S. home prices also rose in January at their fastest pace in 31 months, according to the S&P CoreLogic Case-Shiller Indices, spurred in part by a pickup in job growth. The S&P 500 is still up about 10% since Election Day despite declining in recent sessions. The U.S. gold price finished lower by 0.2% at 1,251.30 US$/oz.
European stocks finished higher, as analysts said worries were abating over whether the Trump administration will be able to push through pro-growth reforms in the world's largest economy. The Stoxx Europe 600 index rose 0.6% to end at 377.30, rallying after Monday's drop of 0.4%. The pan-European benchmark slid on Monday along with equities worldwide after a Republican overhaul of the U.S. health care system fizzled, sparking worries about President Donald Trump's other business-friendly plans.
In Asia, Japan's Nikkei Stock Average ended 1.1% higher, recouping most of Monday's losses, after the yen steadied against the dollar to bring some relief to the country's exporters. The dollar fell to its lowest level against the yen since mid-November on Monday. Singapore's Straits Times Index was among the top gainers in Asia amid a broad recovery in stock markets in the region as investors look beyond the failure of the Trump administration to replace the Affordable Care Act. The 30-stock benchmark index ended about 1.0% higher at 3,157.82, helped by higher oil prices and bargain hunting after the recent pullback. Meanwhile, Thailand's SET Index ended up another 0.4% at 1576.72, more than recovering from losses a day earlier as it follows other Asian markets higher.
Australian shares ended at their highest level in nearly two years, as investors regained confidence in the global growth outlook after a failed overhaul of U.S. health care legislation last week rattled nerves. The S&P/ASX 200 index closed up 1.3%, or 74.5 points, at 5821.2, with higher oil prices fuelling positive sentiment toward energy stocks. Mining stocks were mostly higher as investors speculated about the impact of Tropical Cyclone Debbie in eastern Australia. The cyclone led miners to close coal mines temporarily, raising the prospect of lost production if their operations sustain storm damage or are flooded. However, analysts also talked up a possible boost to coking coal prices that could boost mining company profits, especially as negotiations over the second-quarter coking coal contract and annual Japanese thermal coal contract are nearing completion. Queensland accounts for around 60% of the global seaborne trade in coking coal, used to make steel.
The London Metal Exchange's three-month copper contract closed up 1.96% at $5,873/t. All other base metals finished higher on Tuesday. Aluminium prices rose 0.8% at 1,936/t, zinc prices rose 2.3% at 2,804/t, lead prices rose 1.5% at 2,319/t, tin prices rose 2.7% at 20,056/t, whilst nickel prices also finished 2.3% higher at 9,928/t.
In this Issue:
Paringa Resources (PNL) | Seams Sublime | BUY
Market Cap $118m | Current Price $0.56 | Target Price | $1.55
Paringa Resources (PNL) released an Expanded Bankable Feasibility Study (BFS) incorporating the WK No. 11 seam into the production profile for the Poplar Grove Mine. Mining both the WK No. 9 and WK No. 11 seams has significantly improved the economics of Poplar Grove which now boasts 2.8Mtpa clean coal production generating US$67mpa EBITDA, a NPV8 of US$310m and a 42% IRR (PNL estimates). Combined with the Cypress Mine, the Buck Creek Complex will generate 6.6Mtpa clean coal, US$163mpa EBITDA and a NPV8 of US$655m (A$850m) over a 25-year mine life. Both mines are fully permitted to start construction with sales contracts in place for 4.8Mt over the first 5 years of production. BUY recommendation with a $1.55 target price.
Tox Free Solutions (TOX) | Bundled off Barrow | BUY
Market Cap $460m | Current Price $2.37 | Valuation $2.50
TOX has lost out on a longer-term waste services contract on Barrow Island (despite being the incumbent). The $1-2m earnings impact is not material in our view, however our FY18 EBITDA forecast falls by more than this as we build in further conservatism. TOX has done well to diversify the business over the last few years, however we believe investors would welcome an acquisition holiday so as to see a clean run-rate and evidence of organic growth. Our valuation falls to $2.50 (prior $2.60), however we maintain a buy call on a longer term view of the growth potential in an attractive industry.
Recent Contacts & Presentations:
MZI Resources Ltd (MZI), Seafarms Group Ltd (SFG), Marindi Metals Ltd (MZN), Rift Valley Resources Ltd (RVY), Botanix Pharmaceuticals Ltd (BOT), Thundelarra Ltd (THX), DTI Group Ltd (DTI) OpenDNA Limited (OPN), Metro Mining Ltd (MMI), Tox Free Solutions Ltd (TOX), St George Mining Ltd (SGQ), Venturex Resources Ltd (VXR), Creso Pharma Limited (CPH), Sino Gas & Energy Holdings Ltd (SEH), Orecorp Limited (ORR) Doray Minerals Limited (DRM), Capricorn Metals Ltd (CMM) Independence Group (IGO), Cardinal Resources Limited (CDV), Metal Bank Ltd (MBK), MOD Resources Ltd (MOD) Quintis Ltd (QIN), Regis Resources Ltd (RRL), Apollo Minerals Ltd (AON)
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