Another Heavy News Day

Today is a big one for US politics which we don't normally cover, because of Pres. Biden taking on a host of Bernie Sanders-style measures with his latest budget move. While of course I agree that tackling child poverty and unaffordable education will help the country, using taxes to cover the cost of new measures requires great care, which may not be really achievable with the tiny majority the Democrats have in Congress. The odds are that the Republican populist arm remaining from the Trump years will produce their own tax and spending plans, meaning a messy mish-mash of measures will come. The yield on 10-yr treasuries rose to 1.688% on GNP up 6.4% annualized in Q1.

For whatever it is worth, markets seem keen on the proposed measures, boosted by a nicely lower level of new unemployment insurance claims last week, at 553,000, but one which failed to meet the consensus estimate of 540,000 according to Bloomberg. It is a mixed market day.

Business newspaper article

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Before hitting the news here is a follow-up to my report on crypto-currencies yesterday, on another haven from inflation, gold, which we own two ways, via the SPDR Gold ETF, GLD, and with Kirkland Lake Gold Ltd, a Canadian miner, KL I am going to write about KL, which is holding a proxy vote for its board from which I am extracting this article. Although Canadian, it reports in US$s.

In June 2020 it resumed mining at Detour Lake mine which it bought earlier in the year. It also boosted its shareholder value with buybacks and dividends, for a total of $848.3 mn. 2020 sales hit $2,460 bn, up 78% thanks to the new mine and a higher price for the yellow metal. Its net earnings rose 41% to $787.7 bn, along with the exploration success at its Detour new mine. It expects to get higher reserves and production thanks to the acquisition.

Adding icing to the cake, KL is also a leader in green mining, which is why I jumped on this stock before its bit transformation last year. Its greenhouse gas emission is well below the industry norm of the World Gold Council (WGC). Its Macassa Mine has one of the lowest emission levels of any gold mine. It aims to achieve net-zero by 2050 or earlier with a program of smart mining and sustainability. By 2022 it aims to reach the Responsible Gold Mining principles of the WGC on ESG targets.

Its performance in 2020 was excellent despite the shut in of both Detour and Macassa in Q2 at the peak of the Covid-19 outbreak.

To keep on track, KL uses Mercer, a Canadian company, to tag its performance against 35 other gold mining companies, including the biggies like Gold Fields, Kinross, Yamana, Agnico Eagle, and IAMGold. It ranked 12th ..

KL last year produced 1,369,700 oz of gold, despite the Holt Complex suspending production on April 1, booted by Detour. Without the new site its output was 852,900 oz, about 7.5% down from 2019. Its operating cash costs vs 2019 were only down $20/oz from 2019's $284/oz without Detour, and at $404/oz including it. Holt produced 113,952 oz of the yellow metal in 2019 and under 114,000 oz last year. Net earnings last year topped $3.41/sh up 60% from 2019 levels.

Its CAPEX didn't suffer despite the virus and the distributions, hitting $488.8 mn, of which $128.7 mn was for Macassa Mine, notably its #4 shaft which is ahead of schedule. It also spend $122.7 mn from capitalized and expensed exploration spending. It is now trading down 1.75% at $37.39, on gold price

This is a small cap operating in Canada, Australia, and the USA. In 2020, despite the goodies, the share price fell 16.14%. (It pays its board members with options at C$12.64, not in US currency.) I am voting for management in the proxy vote to take place a week from today (May 6.)

Now for today's news which is again heavy:

*Today's big earnings Q1 report came from up north too. BCE gained 1.1% at the open and now is up 0.94%. Its adjusted EPS hit C78¢/sh, and undjusted 71¢/sh, all in loonies. Sales rose 1.2% to C$5.71 bn, and adjusted EBITDA, earnings before interest, taxes, depreciation, and amortization rose 0.5%. The big new earnings were in broadband subs, up 51% from prior year to 188,468 new accounts, and up 12% in new internet subs, at 21,288 new accounts. This was offsed by about C$1.6 mn in broadband spending. Ir has capital liquidity of C$6.5 bn, to spend on services. This stock yields 6%. Further boosting BCE was a deal with Xandeer for a Canadian self-serve TV and digital ad platorm. The consensus forecast was for revenues of US$4.43 mn and eps of 65 US cents, both beat. It hit a new 52-wk high today.

*Also reporting was Finnish Nokia which had a more mixed year, with radiofrequency sales crashing and mobile sales falling, only partly offset by Nokia Tech business for non-telcom corporate clients. Its 2021 Q1 sales hit euros 5.1 bn, up from 4.9 bn a year ago, but down against later periods in 2020. It had higher sales in only one region—North America, where it sold euros 1.6 bn of telco, vs only euros 1.49 bn in Europe itself.

Gross margins rose to 38.2% from 37.9% a year earlier and operating margins hit 10.% from 8.5%. NOK has on hand euros 3.7 bn in cash and 8.8b in todal cash, vs a mere euros 1.1 bn a year ago This was a period when covid-19 hit and was not expected, remember. Its earnings/sh came in at 7 eurocents/sh from 5 cents.

Its business is changing with network infrastructure flat at 42 bn, mobile sales down from Q4 and the whole of 2020 at euros 2.3 bn, and operating margins at 3.4% versus 2.8% (not a misprint). It is doing better in sidelines like, investing in venture funds, hiring women, and cuting energy use by 50% by 2032 from 2019. Making phone equipment never was a pollution hazard since Alexander Graham Bell.

NOK maintained its 2021 and 2023 outlook (omitting 2022 because it is harder to call. It expects to have sales this year of euros 20.6-21.8 bn. Its operating margins will be 7-10%. Its free cash flow will rise and it will have a return on invested capital of 10-15%. In 2023 its operating margins will be at 10-13%. Its return on invested capital will be 15-20%. Nokia opened up 9.52% to $4.6 as it beat consensus forecasts of eps of 1¢ and revenues of $5.83 bn. It's now at $4.58. Ericsson is down 1%. to $13.9.

*Orbia Advance Corp, MXCHF of Mexico, reported net sales of US$1.914 bn up 18% from prior Q1 thanks to heavy demand for its drip feed lines. Operating income jumped 77% to $305 mn. Consolidated net income hit $173 mn, up 125% fro the 77 mn last year. Financing costs fell 20% to $68 mn. It paid more taxes, up 540% (!) to $64 mn. EBITDA was up 46% to $451 mn. EBITDA margin hit 23.6% up 455 basis points. Net majority income topped $141 bn up 21.3% but cash flow was negative at $85 mn to increase working capital by $257 mn. Its leverage rose to 1.9 times. Its debt dropped 2% to $2.87 mn. This barely listed stock is doing well but my brokerage doesn't cover it, so I have to pretend I am in London. It produces crop irrigation systems to cut water demand

Orbia earns 35% of its revenues in Europe; 8% in North America; 47% in Latin America (including Mexico), and the rest in places like Israel, a big drip-feed market. MXCHF is $2.67 bid, 2.92 ask.

*Mexican Cemex reported Q1 sales of 3.4 bn, up 11% from a year ago on the highest volume ever in a Q1. Net profits hit $665 mn, or 42¢/sh up 41¢ from last Q1. Q1 cement sales rose 9% to 16.2 mn metric tonnes. EBITDA jumped 28% to $864 mn and operating profit was up 50% to $406 mn (including asset sales.) It raised its full-year EBITDA forecast by $200 mn to $2.7 mn and also raised its CAPEX by the same amount to $1.3 bn. It cut debt by $550 mn in Q1 to $9.6 bn, or 3.6x EBITDA from 4.1x (corrected DJ Newswire.) CX opened at $8.24, a 3-yr high, and now is $8.15, up 6.3%.

*Fibra Uno will fete its 10th anniversary on May 3 on-line. The stock rose on the news. FBASF.

Drug dealers

*Novacure is expected to report after-hours with sales of $139.36 mn and eps of 2¢. NVCR.

*Israel is trying to cancel its order for the Astra-Zeneca covid vaccine. I noted a death in Canada yesterday. AZAN is down 1.66%.

*Enlivex is up 11.8% on now news I can find. ENLV opened up 13.5%. It is today's top performer.

*Thermo Fisher Scientific is due to report later today, with consensus predictions of $9.72 bn in sales and profits of $6.65/sh. These are averages, why they look precise.TMO is down 4.42% after CFRA cut it to buy from strong buy.

*TEVA is up 4.25% at $10.55 after its report.

*Zymeworks is up 1.5% after losing for weeks. ZYME is from British Columbia, Canada.

*Both Roche and Novartis are down 07-08% today over currencies. RHHBY; NVS.

*Takeda is off 0.93%. TAK.

*Merck MRK and Bristol Myers BMY are down, by 5.14% and 5.02% over missed results on both sales and eps.

*Dr. Reddy's is up 0.82% because the Indian drug firm will sell generic abendazole tablets in the USA, a generic of GSK's anti-worm med. Earlier this week it was one of 5 Indian drug firms which will make Merck's Covid-19 jab for India and other emerging markets. RDY makes SputnikV jab too.

Oil and Users

*BAE SystemsBAESY, will build hydrogen-powered buses with Plug Power. BAESY is a UK defense firm 

*Schlumberger Ltd opened up 2.52% today after its report yesterday. It is now up 0.4%. SLB.

*Royal Dutch Shell B will report later today, with expected earnings of 62¢/sh (equal to 2 Dutch shares) and revenue of $63.95. RDS-B.

*Nio reports after hours, with expected sales of $1.02 bn and a net loss of 16¢/sh. NIO is down 5.2%.

*Canadian Solar is down 3.5%. CSIQ.

*Energy Fuels of Canada, UUUU, is down ~2%.

*Algonquin (AQN) and Atlantica fund (AY) are down 0.4% and 1.4% today, ending their dance up.

*Cosan of Brazil is up 1.1% today on no news. CSAN is up ~18% YTD and was my top pick for 2021.

*Pembina Pipeline PBA hit a new high today up 1.55% to $31.25 on the NYSE.

*Canadian CAE which trains pilots hit a new high today at US $31.71 after being raised to outperform by CIBC analysts. It was recommended by Patti the Biotech Maven whose son is a pilot.


While Nasdaq is recovering, stocks whose major market is abroad are not. My Qualcomm QCOM is up 3% on a revenue beat of 52% annualized. 

*French VEOEY Veolia is lower by 1.1% sans nouvelles.

*Taiwan Semi TSM is off 1% while Tower Semi TSEM of Israel and the US is up 031%.

*Coupang CPNG of Korea crashed another 1.72% today. Mercado Libre MELI dropped 2.1% to $1588.31

*Prosus lost 2.06% today. Naspers fell 2.13% as Pretoria revealed looting by the former government. PROSY and NPSNY are down but Multichoice, MCHOY, the spinoff, is ahead 1.05%. SASOL, which we don't own, hit a new high.


*Deutsche Bank was today's surprise winner despite messes. DB.

*Banco Santander recouped another 1.33% today. SAN it a new 52-wk high.

*Sumitomi Mitsui, SMFG, rose 1% today but Mitsubishi, MSBHF, only rose 0.02%.

*AAIGF, AIG Hong Kong, is another top performer today, up 3.25%.

*Lazard (LAZ) is up 0.5% but Lazard Global Total Return & Income Fund (LGI, the fund) is up only 0.1%. It poached a rival British fund team.

*Synchrony Finance, a US share, hit a new high after rising 2.1% today. SYF.

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