Terrible Thursday On Wednesday!

I have no time to watch the impeachment hearings today as we are having one of those terrible Thursdays with a host of reporting companies on a Wednesday! Moreover, crises in Hong Kong and Israel have impacted local shares into the red and may affect the Israeli coalition talks between the two Benjamins, Netanyahu and Gantz—which may be why Netanyahu ordered the rocket fire into Gaza and the West Bank. I think Trump is jealous that he cannot change the subject from impeachment with a similar move. The trouble is the US doesn't have hostile enough neighbors, unless you count Mexican drug cartels.

Results (and non-results) are being listed alphabetically.

*Canadian CAE Q2 profit and revenue beat in its FY Q2 and it rose 5.9% at the opening, but is lower now, up only 4.2%. Revenues were C$896.3 mn, up by 50 mn from the consensus forecast of C$849.9 bn (Refinitiv IBES) and up 21% y/y. It also reported eps of 28 loony cents/sh vs consensus of 25¢ and 23¢ a year ago. It has resumed its rise which was interrupted by poor results for Q1 put out in August when sales were up 14% but earnings fell 11.5% because of lower profit margins. Last month fellow-Quebequois National Bank of Canada raised its full year forecast but the rest of the Canada chorus line continued to diss CAE. Its CEO is a francophone, Marc Parentm who said it has not increased its outlook for the FY and expects capex to rise by 10-15% from FY 2018-9. Its backlog is $9.2 bn and was up nearly $1 bn in the quarter. CAE just bought half of Simcom and did a 15-yr deal with Directional Aviation Capital, both adding to its clout in business and private airplanes training using simulators.

Its healthcare training revenues remain flat and it is losing money with that diversification from simulation. It is considered to be in play by E-trade today.

*Computer Modelling (CMDXF) reported on its Q2 for FY 2019-20 in C$s. Revenues rose 11% to C$19.873 mn mainly from a doubling of its perpetual licenses from a low base, an 8% rise in annuity/maintenance licenses (its main earner), and a 10% jump in software licenses.

Operating profit hit $9.343, up 11% or by 3 percentage points from prior Q2. Earnings before interest, taxation, depreciation, and amortization rose nearly 40% y/y from $5.837 mn to $10.426 mn. However revenue Canada boosted its bite by 20% leaving operational cash flow up only by a quarter. Net income at $6.868 mn vs prior Q2 level of 5.056 mn. It declared a dividend of 10 loony cents not covered by EPS or cashflow/sh at 9 loony cents. The divvie is up 50% from prior Q2. Its Americas business sagged but it saw fast growth in the Eastern Hemisphere.

*Brazilian Cosan again failed to produce its quarterly numbers and the stock lost 1.43% on US markets to $16.16. It is still near its 52-wk high of $17.65 because there are few Latin countries looking as appealing as Brazil at the moment. Zacks says CZZ  now intends to report earnings today after the close.

*Fukui Computer Holdings (Tokyo 9790) today reported on its Sept quarter sales which were up 40.4% in yen from prior year at ¥3.7 bn although its net profit margin fell to only 31.6% from prior Q2 level of 36.5%. Net income and eps both rose 92% (!) to ¥1.19 bn and ¥57.75 respectively. Despite this phenomenal result, the share closed up only 1.9% in Tokyo trading but did reach a new 12-mo high, having risen by 90.5% in yen. I averaged down on the stock yesterday at $25/sh mainly to nudge TD Ameritrade post the price, but I am still using Tokyo rather than pink sheet data. Free trades are useless if you cannot get prices. FKCIF.

*China's Hollysys Automation (HOLI) reported on its Q1 for FY 2019-20 today, the period ended Sept. 30. Non-GAAP net income hit $29.3 mn, up 6.1% from prior Q1 although revenues fell by 11.2% to $123.2 mn because the important railroad contract for linking up Hong Kong and Mainland China ended, offset by disposals and foreign exchange gains. It gained in gross margins for integrated contracts and services, but the product sales margin fell.

Non-GAAP gross margin rose by half a percent to 37.7% in the quarter and eps rose 6.5% to 49¢/sh. HOLI also gained because there were 204 working days in the June quarter this year vs only 170 days last. Another potential negative is that inventories rose to 56 days vs only 51 days in Q1 2018.

Industrial Automation contracts rose by 4.6% to $84 mn including an urban heating supply order. This now is its major line of business vs rail transport before 2017. It completed the Zhong'an coal chemical project and will provide maintenance, and HOLI is expanding into power plants, petrochemicals control and offshore oil businesses with CNOOC, a state firm. HOLI aims to get more business by upgrading plants producing chemicals and pharmaceuticals. It won a contract to link up Beijing-Daxing airport to the city with a driverless subway and will also add more smaller lines tot he Pearl River basin system. HOLI fell 1.35% overnight over the latest Hong Kong violence but today it has been both up and down vs yesterday. It trades at a tempting 7.54x earnings if you believe those earnings but has lost about 40% over the past year.

*Hong Kong listed Tencent (TCEHY) missed consensus profit forecasts despite sales rising 21% from prior year. This was because of a huge 28% drop in advertising revenues from losses to competitors ByteDance and Alibaba (BABA). Profits were off 13% to RMB 20.4 bn from prior Q3 and basic eps down the same amount, to RMB 2.151/sh. Of course the yuan or RMB is also lower for dollar shareholders. 9-mo results were better as Beijing removed its blockage of new video games early this year.

The data was un-audited but in IFRS. The news took down Naspers of South Africa, a 31% owner of TCEHY, by 2.4% and then cut the price of Prosus, PROSY, the new Euroland version of NPSNY by 2.4%.

*Tower Semiconductor Q3 sales came in at $312 mn, the very bottom of the Israeli-owned chip company's guidance, which it left at the same level for the rest of the year. They were down from prior year Q3 level of $323 mn TSEM operates also out of the USA under the Jazz Semiconductor label. The lowball result came despite higher fab orders from its Panasonic arm in Japan and some other market gains. The shrewd Israelis tried to focus on the rise from Q1 rather than looking at last year.

Its gross profit was $58 mn vs prior year's $73 mn, and operating profits hit a mere $23 mn vs prior Q3 levels of $39 mn. Earnings before interest, taxes, depreciation, and amortization (cash-flow) rose by $5 mn to $75 mn sequentially, but was 20% below the level at Q3 2018. It did state that it is gaining experience and some sales for its advanced display and CMOS chips which should pay off in 2020 and beyond, according to CEO Russell Wellwanger. The share fell 7.3% in Israeli trading but recovered and is up 1.3% on Q at $23.32

Other companies

*Antofagasta is down over 3% in London today despite forecasts of a copper shortage coming next year. It is being hit for being from Chile, which with more troubled Peru, mines the stuff. ANFGF is a potential way for gold miners to diversify.

*Banco Santander (SAN) is down 3.5% with no particular news, but worries about coalition government and Catalans.

*Bank of Nova Scotia (BNS) will report on its FY Q4 results on Nov. 26, early enough so I can write them up before I head north for Thanksgiving and other family events.

*Ecopetrol of Colombia is in a new 49% $750 mn alliance with Occidental to develop the Midland Basin field in West Texas. I mistakenly sold EC fearing that Bogota would nip its global forays in the bud. EC and OXY are both down on the news.

*Your editor averaged down on Genfit at $15.78 today, GNFTF rather than the ADR which is almost invisible. The French firm reported on the quality of its tests for liver disorders yesterday.

*GlaxoSmithKline's Nucala (mepolizumab) in phase III trials substantially reduced flares from hyperoeosinophile syndrome and it will be submitted for FDA approval next year. GSK.

*Mercado Libre (MELI) is back over $506, but still about $100 below its high YTD. It is Argentinian but operates all over Latin America in dollars. Its earnings may fall under the latest consensus forecast.

*SoQuiMich is down some more over concern about Chile.

*Teva is up another 2.6% at the opning today hitting $9.86. It fell to only $9.67 but now is back up to $9.925 after its new bonds were rated BB (the same as the old) by S&P. I sold my old TEVA shares too soon. My state's attorney-general is suing to recoup a reported $2 bn in insurance rate increases which hit NY consumers because of mis-sold opioids, of course not all from Teva. This cost my state money for prescriptions, emergency room visits, and treatment. Being a New Yorker I may have been over pessimistic.

*Vodafone Germany and practically every other telco has been lured into deals by Amdocs (DOX). VOD also will do sharing with Virgin Media in Britain and with most competitors in Germany. It has a lot of debt but plans to spin off its mast or tower business next May.

Disclosure: None.

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Whimsical Wealth 4 years ago Member's comment

Why had Teva dropped so much?

Danny Straus 4 years ago Member's comment

Saying that Bibi is only fighting Gaza for political reasons is like saying Obama only took out Bin Laden for political reason.

Ayelet Wolf 4 years ago Member's comment

I suspect no politician takes action without factoring how it will impact his/her chances at re-election. And Netanyahu is certainly in a tough spot with the country now going to have new elections for a 3rd time, with no clear winner projected yet again.

But in this case, it's pretty obvious that with over 200 rockets being fired at it's civilians, Israel had to take some action against Gaza. But at the moment it's been a pretty tepid response. I suspect neither size wants a real escalation. A ceasefire has already been declared.

Harry Goldstein 4 years ago Member's comment

The country had an opportunity to take out one of the world's most dangerous terrorists, responsible for hundreds of innocent deaths, with little to no collateral damage and they took it. Good for them - the world is a safer place because of it.