In today’s briefing:
- MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
- [IO Fundamentals Weekly 2024/37] China’s Housing Crisis Intensifies, Clouding IO Recovery Outlook
- [IO Technicals Weekly 2024/37] Volatility Eases as IO Trades At Support Level
- Structural Monitoring Systems – Earnings at inflection point
MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
- Back on the 19th August, MyState Ltd (MYS AU), Tasmania’s biggest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
- Under the terms, MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the combined group.
- This is done and is expected to be wrapped up in December. Today is the last day of trading for Auswide cum-FY24 final dividend.
[IO Fundamentals Weekly 2024/37] China’s Housing Crisis Intensifies, Clouding IO Recovery Outlook
- China’s industrial production grew 4.5% YoY in August, missing the 4.7% forecast and marking the slowest growth since March.
- Property investment fell 10.2% YoY YTD, with house prices declining 5.3% YoY, the steepest since 2015.
- Iron ore imports dropped 1.38% MoM as port inventories rose continued rising into September. Typhoon Bebinca disruptions may drive inventory drawdown in coming weeks.
[IO Technicals Weekly 2024/37] Volatility Eases as IO Trades At Support Level
- SGX Iron Ore futures closed 55 cents higher at $92.80/ton, after fluctuating between a $95.55/ton high and $89.60/ton low.
- Short-Term technicals reveal bearishness as the 9-day moving average fell below the 21-day, triggering a death cross signal.
- Iron ore prices failed to sustain a 50% Fibonacci retracement level, indicating weak market support amid poor fundamentals.
Structural Monitoring Systems – Earnings at inflection point
- RaaS Research is initiating coverage of vertically-integrated aviation designer and manufacturer Structural Monitoring Systems (ASX:SMN) with a DCF derived valuation of $0.82/share, representing potential capital upside of 44% from the current share price.
- SMN delivered its maiden EBITDA profit in FY24 and we expect the company to maintain profitability into FY25 while bringing key new products to market.
- A likely decline in contract manufacturing revenues to make way for higher margin own brand products should have a positive impact on group gross margins going forward, adding to the earnings leverage from expected revenue growth (management have forecast 25% revenue growth in FY25).
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