Good afternoon,

Markets haven’t gone far the past week or so, but since March we’ve had a pretty strong move higher with the index putting on c.500 points or 9%.

Mid-caps the best performers last week, adding 41bps while the rest of the market was down. Flight Centre (FLT +8%), Bluescope Steel (BSL +5.8%), Domino’s (DMP +5.2%) and the retailers (JBH & HVN +4%).

Healthcare led the sectors with Nanosonics (NAN +4.8%) and Sonic (SHL +4.5%), COH, CSL and RMD also all up >3%. Utilities struggled: SKI, AGL and AST all down over 5%.


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Big Movers
Nearmap (NEA) starting to kick goals in the US, with Annualised Contract Value (ACV) – which is “revenue” for NEA – from the US is now bigger than Australia. Group ACV is up 41%pcp. The brokers are all over it with Buy recommendations from Chardan, Moelis, Canaccord, Morgan Stanley and Foster. Consensus price target is $1.53, and the last trade was $1.47.

Hub24 (HUB) bounced back after a drastic and quick share price fall from $15.50 to $11.50. Looks to have stabilised now, closing the gap on the chart and catching up price target upgrade from Ords.

Ords also initiated on Wisetech (WTC), and it’s share price jumped and made new highs last week.

Getting flogged was Integrated Research (IRI -21%) after they guided to flat profit growth resultant from the downswing in the infrastructure sector and dodgy European business.

Village Roadshow (VRL -14%) raised $51m via a placement and sold off Wet n Wild to fix up its troubled balance sheet. Doesn’t solve their main problem, which is that no one goes to the cinemas anymore.


Netflix & Chill
And why does nobody go to the cinemas anymore… Because there’s only one thing better than watching a great movie for 2 hours… it’s watching a great series for 12 hours straight… on my couch… in my pyjamas… (which to be honest I’d rather doing right now after a few too many beers celebrating the West Coast Eagles victory over the Pies at the MCG).

Anyway, Seneca’s latest new starter, Jordan Travers highlighted to me last week why Netflix shares are up 145% this year. It makes a 100% return on every one of its 130 million customers, one year after customer acquisition. The scary part of this is that Morgan Stanley reckons they could have 260m members by 2022.

Why do we love it so much? They make great content. And it’s getting better all the time. In fact, as of 1Q18, Netflix reported nearly $16bn in net content assets globally on the balance sheet, with almost $2bn of produced content not yet available on the service. Netflix wins because it owns the production and the distribution of entertainment. Good strategy. And it’s just getting started.

In the US, they are still scaling, with potentially record net new customer additions in 2018.

Whilst in the rest of the world…. lord help us. They are just getting warmed up!


Have a good week,
LL