Morning Notes

05/09/2017 Argonaut Morning Note

Market Update & Important Indicators
Markets in the U.S. were closed overnight for the Labor Day public holiday. On Friday, stocks edged higher following a roughly-in-line jobs report. Gold prices rose Monday, hitting their highest level in 11 months in the morning after North Korea's latest nuclear test. Gold prices also rose Friday after the latest monthly U.S. jobs report came in weaker than economists expected. The U.S. gold price added another 0.7% to close at 1,333.80 US$/oz.

Investors moved into haven assets and sold stocks following North Korea's largest-ever nuclear test. The Stoxx Europe 600 index ended the day 0.5% lower, after falling by as much as 0.7% earlier in the session. The CAC-40 ended the day down 0.38% at 5103.97 and Germany's DAX declined 0.33% to 12102.21. The FTSE100 also declined, down 0.36% to 7411.47. While investors will watch for developments surrounding North Korea, the European Central Bank will be in focus as it's set to release its latest policy decision on Thursday. There's been speculation that the ECB may reducing its bond-buying program of EUR60 billion a month, which is currently scheduled to run through December.

Investors reacted to North Korea's latest nuclear test by selling stocks and the South Korean won. Just before European markets opened, South Korea's Defence Ministry reported that North Korea was again preparing for a possible missile launch. South Korea's Kospi fell as much as 1.7%, though it quickly pared declines and ended down 1.2%, while the South Korean won slid 0.7% against the U.S. dollar. Elsewhere, Hong Kong's Hang Seng Index fell 0.8% and the Nikkei 225 was 0.95% lower at 19508.25. Singapore's Straits Times index was 1.41% lower at 3230.97. China stocks started higher and finished near session highs to extend their recent gains; the Shanghai Composite finished at a fresh 20-month peak.

Australian shares joined a broad pullback across the region in the wake of North Korea's latest nuclear test. Finishing in the middle of the day's range, the S&P/ASX 200 fell 0.4% to 5702.0, with most sectors in the red. Banks were lower, led by Commonwealth Bank as it remains under pressure since the government filed a civil suit alleging widespread compliance breaches. Newcrest picked up 0.2% as gold miners were buoyed by a jump in the precious metal.

The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 1.2% to finish at $6,917/t. The other base metals finished mostly higher. Nickel prices added 1.8% to 12,194/t to make fresh 2-year highs, while aluminium prices fell by 0.9% to close at 2,098/t. Lead prices traded 0.1% lower at 2,367/t, whilst Zinc prices jumped 0.6% to 3,205/t – making another 10-year high. Tin prices rose by 0.7% to finish at 20,985/t.

In this issue
Threat Protect (TPS) | Picking up the run-rate | SPEC BUY
Market Cap $21m | Current Price $0.027 | Valuation $0.040

The strong performance in 4Q17 sets TPS up well for FY18. The nature of both Monitoring and Guarding segments provides for a high degree of revenue consistency and we anticipate a baseload of ~$14m revenue in FY18. We expect further acquisitive growth in the Monitoring business to boost this number and, given the leverage in the underutilised control rooms, have a positive impact on margin. We upgrade to a speculative buy (prior hold) recommendation on a revised blended valuation of $0.040 (prior $0.030).

Recent Contacts & Presentations
Fleetwood Corp Ltd (FWD), DTI Group Ltd (DTI), Calima Energy Ltd (CE1), Austal Ltd (ASB), Indoor Skydive Australia (IDZ), OZ Minerals Ltd (OZL), NorWest Energy Ltd (NEW), Berkut Minerals Ltd (BMT), Draig Resources Ltd (DRG), Minotaur Exploration Ltd (MEP), Ausdrill Ltd (ASL), Neometals Ltd (NMT), PNX Metals Ltd (PNX), Northern Minerals Ltd (NTU), New Century Zinc Ltd (NCZ), Metal Bank Ltd (MBK), Rift Valley Resources Ltd (RVY), Panoramic Resources Ltd (PAN), Doray Minerals Ltd (DRM), Wellard Limited (WLD), Bryah Resources Ltd (BYH), Auris Minerals Ltd (AUR), Gage Roads Brewing Co Ltd (GRB), Stavely Minerals Ltd (SVY), Orbital Corporation Ltd (OEC), 4DS Memory Ltd (4DS), Kin Mining NL (KIN)

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