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ASX heads higher, Zip Co hits all-time high

Daily Market Update

ASX heads higher, JB Hi-Fi’s (ASX:JBH) dividend bonanza, Zip Co (ASX:Z1P) hits all-time high 

The ASX200 (ASX:XJO) started the week on a strong footing, jumping 0.9% to open the week with all but the interest rate sensitive sectors of property and utilities heading higher.

Whilst reporting season is in focus, Zip Co (ASX:Z1P) was by far the biggest highlight, adding 16.9%, sending the market cap over $6 billion as investors seemingly move away from Afterpay (ASX:APT) into one of its main competitors in the US.

In terms of reporting season, JB Hi-Fi Ltd (ASX:JBH) delivered a significant dividend increase, up 81.8% to $1.80 per share after a bumper six months of retail sales.

According to the report, total sales increased 23.7% in the first half to $4.9 billion, driven by a 161.7% increase in online sales which now represent 13.7% of total sales.

A unique click-and-collect system is allowing JBH to benefit from efficiencies of scale with net profit improving 86.2% to $317.7 million.

Sales growth broad-based across both consumer electronics and white goods via the Good Guys business which saw a 26.4% increase in sales growth, now $1.45 billion or 30% of total sales.

Management refused to offer guidance given the Melbourne lockdown but highlighted a slight ‘slowdown’ in sales in January, printing at 17.4% above 2020 levels. A solid result on all levels, with the share price up 3.0% on the news, but questions remain about how long elevated sales can remain post a vaccine rollout.

Nearmap (ASX:NEA) slaps down short seller, Coca-Cola Amatil (ASX:CCA) offer increased, Altium (ASX:ALU) shares sink

Coca-Cola Amatil (ASX:CCA) finally received an increased offer from Coca-Cola European Partners (CCEP) taking the deal from $12.75 to $13.50. Not insignificant but likely not what investors had been expecting. CCEP is clearly seeking to keep the price low in the hope of extracting efficiencies from this mature, slow-growing sector.

Altium (ASX:ALU) fell 4.8% after reporting a 12% fall in profit and a rare contraction in US revenue by 4%. The design company highlighted their ‘pivot to the cloud’ and difficult pandemic conditions for the rare revenue miss, but with a profit of just US$16.6 million, there isn’t much room for missteps.

Aerial imaging company Nearmap (ASX:NEA) slapped down the short selling report released by J Capital last week, the share price jumping 19.0% after management disproved each of the ‘researchers’ assertions.

The company reported record annualised contract revenue, being the annual amount of the most recent monthly recurring sales, which hit US$35.1 million, the net loss was halved from US$18.6 million to US$9.4 million.

Importantly, first-half sales are not more than all of FY20 combined with total sales hitting $112.2 million. Their key customer groups showed significant strength with insurance contracts up 43%, government, 53%, and roofing companies 198%.

Nikkei hits 30,000, US markets closed for President’s day 

With US markets closed for President’s Day, all eyes were on Japan, where the Nikkei 225 index finally touched 30,000 points again. The last time the market was at this level was in 1990, thirty short years ago.

Japan offers an interesting insight into the potential implications of near-zero interest rates and an environment of deflation, which many suggest the rest of the world may be facing in the coming years.

Have markets moved ahead of themselves? Is there a risk that we are currently seeing a 10, 20, or thirty-year high in US or Australian markets?

On the positive side, many Japanese companies have delivered strong returns in the same period that the Nikkei took to recover previous highs, suggesting active management, rather than index investment may be the best course of action.

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