Sasfin : Apple sales drop 5% after huge revenue decline

MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

On the Johannesburg Stock Exchange yesterday, the All-Share index closed at 79,802, down 0.02%, while the Top-40 lost 0.13%. Investors will look towards the purchasing managers' index survey for January by S&P Global, which will be released later today, to give an indication on the state of the economy. In sector news, the Industrial Transportation sector led gains yesterday, up 4.2% by the close of play. Looking at companies, Hammerson was up over 7.2% to lead gains while on the other end of the scale Thungela fell almost 5.3% by the close of the session.

EUROPEAN MARKET COMMENTARY

European markets were up yesterday as investors digested the interest rate hikes by European central banks that were in line with expectations. The pan-European Stoxx 600 index closed 1.4% higher with most sectors and major bourses in the green. Oil and Gas stocks led losses, closing down 1.5% while Technology stocks saw significant gains, adding 4.6%. In company news, Italian supercar maker Ferrari reported yesterday that it convincingly beat earnings expectations. Ferrari shares climbed by 2.6% before the close of the session.

US MARKET COMMENTARY

US stocks were mixed yesterday, as the S&P 500 and Nasdaq both rose on favourable earnings reports by Apple, Amazon, Alphabet and Meta. Today will see payrolls data being released, with investors expecting 187,000 jobs to have been added in January. Looking at other company news, FedEx advanced 6.4% yesterday after the shipping company announced it was to get rid of 10% of its officers and directors.

ASIA MARKET COMMENTARY

Asian-Pacific stocks traded mixed today as investors looked at the Caixin purchasing managers' index which showed services activity in China picked up last month. In Japan, a Services Purchasing Managers' Index reading came in at 52.3 January, up from the 51.1 seen in December. The S&P Global purchasing manager's index in Hong Kong came in at 51.2, indicating private sector growth for the first time since August 2022. In company news, India's Adani conglomerate has now lost more than $100 billion after the company walked out on a planned public share sale.

COMMODITY MARKET COMMENTARY

Gold prices were higher this morning as markets worked through Federal Reserve Chair Jerome Powell's comments regarding inflation. Global central banks will now start to work on slowing the pace of interest rate increases as many feel a turn in the fight against inflation. Meanwhile, oil prices rose slightly this morning as investors look to China's economy slowly recovering and hope that fuel demand will increase.

CURRENCY MARKET COMMENTARY

The rand held steady yesterday, as markets were still processing the previous day's news that the U.S. Federal Reserve has slowed rate hikes. At the close the rand traded at R17.05 to the dollar, 0.08% firmer. Elsewhere, the dollar gained against the euro and sterling this morning as the euro and sterling slipped against the dollar this morning as the European Central Bank and the Bank of England announced that they had managed to tame inflation in their economy for now. The Yen traded marginally higher against the dollar this morning.

LOCAL COMPANIES

ANGLO AMERICAN PLC (AGL) -1.29%

Anglo American has announced the timetables for any dividends payable in 2023. Confirmation of any actual dividends payable, and the dates thereof, will be contained within interim and final results announcements. Dividend no 42 will have an announcement date of Thursday, 23 February 2023 while the last day to trade on the JSE to qualify for dividend will be Tuesday, 14 March 2023. The payment date for dividend no 42 is set for Friday, 28 April 2023. Dividend no 43 will have an announcement date of Thursday, 27 July 2023 while the last day to trade on the JSE to qualify for dividend will be Tuesday, 15 August 2023. The payment date for dividend no 43 is set for Tuesday, 26 September 2023.

SUPER GROUP LIMITED (SPG) +11.01%

Revenue is believed to be between R28.1 billion to R30.3 billion, up between 30% and 40% compared to revenue of R21.6 billion recorded on 31 December 2021. Profit before tax is set to come in at R1.53 billion to R1.65 billion, up from the previous profit before tax level of R1.22 billion recorded on the 31 December 2021. This represents an increase of about 25% to 35%. Earnings per share (EPS) should see an increase of between 25% to 35% from last year's 190.2 cents per share to between 237.7 cents per share and to 256.8 cents per share. Headline earnings per share (HEPS) should be between 238.6 cents per share and 257.7 cents per share, down between 25% to 35% from a year ago when the company announced HEPS of 190.9 cents per share.

RCL FOODS LIMITED (RCL) -1.96%

RCL FOODS expects its headline earnings per share ("HEPS") for the six month period ended December 2022 ("current period") to be between 53.2 cents (-26.8%) and 58.1 cents (-20.1%) when compared to the reported HEPS of 72.7 cents for the six month period ended December 2021 ("comparative period"). Earnings per share ("EPS") for the current period is expected to be between 54.4 cents (-26.3%) and 59.0 cents (-20.1%) when compared to the reported EPS of 73.8 cents for the comparative period.

INTERNATIONAL COMPANIES

Apple (AAPL) +3.7%

Apple announced yesterday that its overall sales came in about 5% below last year's levels. EPS came in at $1.88 per share, against the expected $1.94 per share, down 10.9% from a year ago. Revenue is down 5.49% at $117.15 billion against estimates of $121.10 billion. iPhone revenue is down 8.17% and Mac revenue is down 28.66%. Bucking the trend is iPad revenue which rose 29.66% over the course of the year. To combat the challenging macroeconomic environment Apple has slowed hiring and is cutting costs but it has not announced staff cuts unlike many other tech companies.

Alphabet (GOOGL) +7.3%

In an earnings report released yesterday, Alphabet missed on both top and bottom lines. According to Refinitiv, earnings per share (EPS) are at $1.05 per share against the $1.18 per share expected. Revenue was expected to come in at $76.53 billion but was at $76.05 billion instead. YouTube was the biggest disappointment with advertising revenue only raking in $7.96 billion after the company expected revenue of $8.25 billion. Google Cloud revenue was also less than expected, coming in at $7.32 billion, slightly below the $7.43 billion expected. Traffic acquisition costs (TAC) also came in below expectations. $13.32 billion was expected but the company only spent $12.93 billion. Operating expenses increased 10% to $22.50 billion.

Amazon (AMZN) +7.4%

Amazon reported yesterday that the company better-than-expected revenue for the fourth quarter of last year. The company announced that earnings per share came in at 3 cents per share for the quarter and revenue for the year increased 9% to $149.2 billion, above the expected $145.42 billion. Amazon Web Services brought in $21.4 billion against the expected $21.87 billion while Advertising made $11.56 billion against the $11.38 billion expected. Operating income for the quarter was at $2.7 billion, down from $3.5 billion a year ago as the e-retailer said its working to reel in costs. The company said it will cut 18,000 jobs among its corporate workforce and has also implemented a hiring freeze, stopped warehouse expansion for now and cut back on spending on certain projects to help with the high level of expenses.

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