Weekly review: Australian unemployment rises, BHP to undergo change of guard, WA relaxes medical cannabis laws

Australian unemployment rises BHP mining Western Australia medical cannabis laws
WEEKLY MARKET REPORT

In line with other worrying economic signals such as Australia’s Reserve Bank downgrading economic growth forecasts last week, figures from the Australian Bureau of Statistics have revealed a rise in unemployment.

On Thursday, the ABS revealed the unemployment rate for October 2019 of 5.3% had inched up 0.1% on September’s seasonally adjusted figure of 5.2%.

In seasonally adjusted terms, 19,000 more jobs were canned in October 2019 – resulting from a decline of 10,300 full-time jobs and 8,700 part-timers finding themselves out of work.

It is expected these figures will cause some concern for the RBA, which is targeting a full employment rate of 4.5%.

BHP gains new chief

It was a changing of the guard at one of the world’s largest miners this week, with BHP Group (ASX: BHP) revealing current chief executive officer Andrew Mackenzie was retiring at the end of the year.

Mike Henry has been named as his replacement and has been a member of BHP’s executive leadership team since 2011.

He will stepping up from his current role of president operations minerals Australia, which he has held since 2016.

BHP chairman Ken MacKenzie said Mr Henry has deep operational and commercial experience within Australia, Asia, Europe and the Americas.

“I am confident his discipline and focus will deliver a culture of high performance and returns for BHP,” Mr MacKenzie said of Mr Henry.

Autonomous mines

The major miner was in the news for other reasons this week with the company revealing its plans to implement driverless haul trucks at its Goonyella Riverside coal mine next year.

Owned by the BHP Billiton Mitsubishi Alliance (BMA), the mine will gain 86 converted autonomous Komatsu trucks with the first trucks expected onsite by mid-2020 and the full roll-out to be completed within two years.

This will be the latest mine in Queensland’s Bowen Basin to embrace robotics to boost efficiency and worker safety.

BMA has assured its workers that the adoption of autonomous trucks would not result in employee redundancies.

BHP’s petroleum business continues to thrive

Meanwhile, the major reported its petroleum business would continue to deliver “strong returns” and contribute “significant value” to the company through the next decade and beyond.

BHP president operations petroleum Geraldine Slattery acknowledged the world was in a decarbonising phase, but deep-water oil and gas close to existing infrastructure still offer competitive returns in the coming years.

Underpinning this growth, is BHP’s assets with “attractive growth options” including Scarborough, Wilding Phase I, Trion and Trinidad and Tobago North.

Untimely death in the Pilbara

WA lithium miner Pilbara Minerals (ASX: PLS) received some unwanted attention after an alleged altercation at its Pilgangoora mine site led to the death of a male contractor.

It is believed a fight broke out between two contractors following a morning pre-start meeting and resulted in a 30-year old man named Troy Hausler facing court with charges regarding 40 year old Toby Richter’s murder.

Mr Hausler has been remanded in customer pending his appearance at the Stirling Gardens Magistrates Court later this month.

Pilbara Minerals managing director Ken Brinsden expressed his condolences to those affected by the incident.

During the September quarter, production at Pilgangoora had been moderated due to subdued lithium market conditions.

However, the company revealed in an update this week, plant modifications had achieved a “substantial uplift” in lithium recoveries from the Pilgangoora operation.

WA relaxes medicinal cannabis laws

Over in the cannabis sector, Western Australia’s McGowan Labor Government revealed legislative changes to the medicinal cannabis sector.

The new laws allow general practitioners to prescribe medicinal cannabis products without requiring specialist approval – removing a huge barrier to the industry.

According to WA health minister Roger Cook, the new legislation is a result of reviewing three years’ worth of prescribing data. He added it brings WA in line with New South Wales, Queensland and Victoria.

Medicinal cannabis data company FreshLeaf Analytics principal consultant Rhys Cohen said the change would increase patient numbers within the state and lead to price reductions.

“Previously, if you were a general practitioner in WA and wanted to prescribe cannabis to a chronic pain patient, for example, the state government would expect you to get a pain specialist to endorse the request or collaborate with you on the treatment of a patient,” Mr Cohen said.

He added similar changes in other states have resulted in higher prescribing rates and he expects this will happen in WA.

Small cap stock action

The Small Ords index closed the week at 2934.6 points, up a healthy 1.05%.

All ord small XJO November 2019 chart ASX
ASX 200 vs Small Ords

Small cap companies making headlines this week were:

Vmoto (ASX: VMT)

Electric scooter manufacturer Vmoto has unveiled two new models at the Esposizione Internazionale Ciclo Motociclo e Accessori (EICMA) Motorcycle Show in Italy.

E-Max VS1 and Super Soco CPx scooters were unveiled to thousands of spectators at the Milan event in addition to a large online audience.

The scooters will be available next year and have been designed for commercial customers including food and parcel delivery companies.

With the company’s recent growth success, Vmoto managing director Charles Chen said the new scooters would ensure the company’s growth continues next quarter and beyond.

Blue Energy (ASX: BLU)

Under a new agreement, Blue Energy will supply gas to Pure Minerals’ proposed nickel refining plant in Townsville, Queensland.

Blue secured the non-binding memorandum of understanding with Pure Minerals’ wholly owned subsidiary Queensland Pacific Metals which paves the way for Blue to provide 7 petajoules of gas annually from its North Bowen Basin gas asset for 15 years.

According to Blue, Townsville has previously been a small gas market, but the proposed giga factory (Tesla style) battery manufacturing plant along with QPM’s refinery are expected to create extra demand.

Blue will supply QPM’s gas from its ATP814P Sapphire Block in Queensland’s Bowen Basin, which hosts close to 216PJ of 3P gas reserves and an additional contingent resource of 186PJ.

Althea Group (ASX: AGH)

Medicinal cannabis company Althea Group now has 3,000 patients for its products, with 500 alone acquired in October.

According to Althea the 2,815 patients who were prescribed its medicinal cannabis products last month represent a 20-fold increase on the 127 patients that were prescribed products in October last year.

The company expects it will have 4,000 patients on its books by the end of the year.

Althea’s Australian strategy is currently being emulated oversees in new markets such as Germany and the UK.

The Agency Group Australia (ASX: AU1) and Aspen Group (ASX: APZ)

The Agency Group Australia’s property management has continued to expand with the company reporting this week it had been appointed to manage Aspen Group’s (ASX: APZ) recently acquired $20 million Perth rental portfolio.

The Agency’s latest coup follows a record breaking month in October where it generated gross commission income of $5.4 million underpinned by monthly records on both Australia’s east and west coasts.

This was a 54% increase on Septembers commission income of $3.5 million.

Also during October, The Agency sold $345 million worth of property made up of $241 million in east coast residential sales and $104 million in WA sales.

Fatfish Blockchain (ASX: FFG)

Swedish-listed Abelco has made a $12.7 million bid for Fatfish Blockchain’s subsidiary Fatfish Global Ventures AB.

Fatfish has accepted the offer which involves it disposing of its 81% stake in the subsidiary in return for 50.1% of the enlarged share capital of Abelco – estimated to be worth about $12.7 million.

According to Fatfish, the deal will create a tech “powerhouse” with an international presence across the Nordic region and South East Asia.

Fatfish chief executive officer Kin Wai Lau said the company was “extremely excited” to be working with Ableco and “impressed” with the Swedish market and its “advanced position and capabilities” regarding start-ups.

SG Fleet Group (ASX: SGF) and Collaborate Corporation (ASX: CL8)

Prominent fleet management company SG Fleet Group has scooped up a $2.2 million stake in share economy focused Collaborate Corporation.

Collaborate carried out a placement averaging $0.014 per share to SG Fleet, with SG Fleet chief executive officer Robbie Blau also to join Collaborate’s board.

The investment follows Collaborate’s launch of Carly in March this year which is Australia’s first flexible vehicle subscription service.

In addition to the $2.2 million investment in Collaborate, SG Fleet will provide Carley with 100 vehicles – additional vehicles will be supplied subject to demand and economic returns.

SG Fleet and Carley will also work together to accelerate the growth of Carley’s consumer demand channels.

ASX floats this week

Small Caps readers who want to view upcoming IPOs or see the performance of stocks that have listed in 2019 can now do so.

The latest company to make its way onto the ASX this week was:

VGI Partners Asian Investments VG8 IPO ASX

VGI Partners Asian Investments Ltd (ASX: VG8)

VGI Partners Asian Investments was the latest VGI Partners Ltd subsidiary to list on the ASX this year with the company’s securities beginning trade on Wednesday after raising more than $556 million.

The company issued almost 223 million shares at $2.50 each giving investors the opportunity to be part of the entity’s strategy to buy and hold long-term investments in what it deems to be great undervalued businesses.

As its name suggests, VGI Partners Asian Investments will be focussed on high-quality businesses in Asian regions including those listed in countries with a “robust and reliable legal system”, “strong corporate governance” and developed capital markets.

At the end of its first week on the ASX, VGI Partners Asian Investments closed at $2.35 – down 6% on the $2.50 IPO price.

The week ahead

A fairly quiet week coming up for economic reporting with Reserve Bank meeting minutes out on Tuesday the main thing to look for at home and see what Australia’s central bank is thinking given the fact lowered interest rates and tax cuts seem to be failing in boosting the economy.

We can expect similar scenes in the US with the Federal Open Market Committee minutes out later in the week. It is unlikely that we will see the Fed will lower rates a forth time before before the end of 2019.

This week’s top stocks