Taking Stock - Disney smashes streaming subscriber expectations.

In todays taking stock, we discuss how Disney smashes streaming subscriber expectations, boosting segments hurt by COVID-19.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Local markets traded lower yesterday, as it posted its first daily loss in seven session. The JSE All Share index closed 0.41% weaker (now at 65,883 index points) while the Top 40 index ended the session 0.36% down. South Africa is scrambling to start inoculating its citizens after it paused the rollout of the vaccine developed by AstraZeneca and Oxford University following a small clinical trial. Investors also waited for President Cyril Ramaphosa's address last night.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Thursday as traders digested fresh corporate results and amid more muted trade in Asia Pacific due to the Lunar New Year. The pan-European Stoxx 600 ended the session up around 0.5%, with tech stocks leading the gains as most sectors and major bourses finished in positive territory. AstraZeneca reported product sales totalling $25.8 billion for 2020, a 10% rise from the previous year. The Anglo-Swedish pharmaceutical giant posted a fourth-quarter sales rise of 12% to just over $7 billion.

 

 

US MARKET COMMENTARY

The Dow Jones Industrial Average ended another day near the flatline on Thursday as the market’s strong momentum to begin February started to lose steam. Energy was the worst-performing sector, sliding more than 1%, while the strength in technology supported the broader market. Investors also digested a worse-than-expected reading of weekly jobless claims. First-time claims for unemployment insurance totalled 793,000 last week even amid declining.

 

 

ASIAN MARKET COMMENTARY

Shares in Australia and Japan struggled for gains on Friday where trading volume is expected to be low as many markets in the region are closed for the start of the Lunar New Year holiday. The country’s so-called Big Four banks traded mixed. Shares of ANZ reversed earlier losses to trade up 0.12%, Commonwealth Bank shares also erased losses to climb 0.34%, Westpac traded lower by 0.13% and the National Australia Bank lost 0.12%. The Japanese market resumed trading after being closed Thursday for a public holiday.

 

 

CURRENCY MARKET COMMENTARY

The rand firmed against the dollar on Thursday, extending gains for the third straight session buoyed by strong risk sentiment, as traders awaited mining and manufacturing data and President Cyril Ramaphosa's address. At the close, the rand traded at R14.63 against the U.S. dollar, 0.79% firmer than its previous close. Meanwhile, the dollar headed for its first losing week in three as new signs of weakness in the US jobs market dented investor expectations about the pace of a pandemic recovery.

 

 

COMMODITIES MARKET COMMENTARY

Oil prices fell a second day this morning, extending losses after OPEC cut its demand forecast and the International Energy Agency said the market was still over-supplied. Oil prices have risen over the last few weeks as OPEC and other producers in the group known as OPEC+ cut production, while Saudi Arabia also promised unilateral reductions in output that started this month. Gold held steady on Friday as investors awaited fresh catalysts, although prices were on track to post heir best week in three, helped by a weaker dollar.

LOCAL COMPANIES

Italtile (ITE) -3.9%

JSE-listed tile, bathroom-ware and home-finishings giant Italtile posted a stronger than anticipated interim performance on Thursday, reporting double-digit growth in key financial metrics including group-wide turnover and profit. Turnover was up 14% to R6.2 billion for its half-year to the end of December 2020, while its trading profit surged 38%, to R1.4 billion. This saw the group’s dividend per share for the period jumping 35% to 31 cents, compared with 23 cents per share for its 2019 interim results. Italtile group, which owns the CTM, Italtile and TopT store chains, has benefited significantly from the “work-from-home” trend, which has seen a boom in home improvement spending by South Africans in the face of the extended Covid-19 pandemic and related restrictions. The trade restrictions were in place for most retail businesses, baring essential goods retailers such as grocery stores and pharmacies. May and June trading was also affected under slightly lower lockdown restrictions. The initial lockdowns contributed to the group reporting a 7% decline in overall turnover for its 2019 full-year results (to June 2020).

 

ArcelorMittal (ACL) -14.6%

ArcelorMittal says it has signed an agreement with a hopeful South African independent power producer (IPP) to buy land adjacent to its Saldanha Works operation, should the party be successful in the current emergency power bidding process. Chief executive Kobus Verster said on Thursday during a media briefing that the gas-based plant is expected to generate 350 megawatts of power in its first phase. The power generated from the plant will however not be used for the steel maker. It will “participate…in some of the benefits of passing on the land to the supplier,” Verster said. In October last year amendments to the electricity regulations were finally gazetted, allowing for Eskom to procure additional power from IPPs to supplement its capacity. The gazette stipulates that Eskom will be able to procure power from a variety of sources: wind and solar photovoltaic power (6 800MW), storage (513MW), gas and diesel (3 000MW) and coal (1 500MW), giving a total of 11 813MW. On Thursday, ArcelorMittal said it is also considering the establishment of a back-of-port logistics hub using the ancillary land and equipment at Saldanha Works.

INTERNATIONAL COMPANIES

Walt Disney (DIS) +0.7%

Disney reported strong growth in paid streaming subscribers and its first quarterly profit since early last year in its earnings report for its fiscal first quarter of 2021 after the bell Thursday. The stock was up around 1.7% after hours. Earnings per share came in at 32 cents adjusted versus a loss of 41 cents expected, according to Refinitiv. Meanwhile, Revenue stood at $16.25 billion versus $15.9 billion expected. Disney said it now has almost 95 million paid subscribers to its Disney+ streaming service as of the quarter ended Jan. 2. This comes during the first quarter after Disney’s free-trial period ended for some subscribers who are also Verizon customers. Average monthly revenue per paid Disney+ subscriber, however, dipped 28% compared with the same quarter last year, from $5.56 to $4.03. That’s because this number now includes subscribers to Disney+ Hotstar, which launched in India and Indonesia last year. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter.

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Research Team

Media, Sasfin Wealth

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