Sasfin : Tesla beat expectations on both earnings and revenue

MARKET COMMENTARY

LOCAL MARKET COMMENTARY

Local stocks on the JSE traded lower during yesterday's session. The JSE All-Share index closed out the session 0.39% down at 79,725 points, while the blue-chip Top 40 index reported a 0.32% loss. All eyes now turn to the South African Reserve Bank later today, which is expected to announce its first rate hike for the year. In sector news, Electronic and Electrical Equipment added 2.02%, making it the best performer on the day. On the other side of the coin, was Alternative Energy, which shed 3.73%.

EUROPEAN MARKET COMMENTARY

In Europe, markets closed lower for the second time this week despite positive news showing an uptick in eurozone services and manufacturing activity. The eurozone PMI came in at 50.2 this month, up from 49.3 last month and ahead of the 49.8 expected reading. Meanwhile, German business sentiment showed "considerably less pessimistic expectations" in January. Finally, the Pan-European Stoxx 600 closed out the day 0.3% lower.

US MARKET COMMENTARY

The Nasdaq finished the session lower yesterday, as investors continued to digest the latest batch of corporate earnings. Technology stocks battled yesterday after Microsoft's guidance painted a bleak picture for the rest of the year, fuelling growth concerns. Investors now await further earnings releases from other high-profile companies this week. Tesla reported earnings after the bell which saw the company beating expectations on both earnings and revenue.

ASIA MARKET COMMENTARY

Asian stocks were mostly higher this morning as investors brace for a slew of economic data. The Bank of Japan emphasized the need to keep the current trajectory of its monetary policy, according to the Summary of Opinions from its last meeting. The central bank is set to continue purchasing government bonds. Meanwhile, South Korea's economy marked its first contractions since 2020 as its GDP declined 0.4% in the final quarter of 2022. China and Australia are closed today.

COMMODITY MARKET COMMENTARY

The gold price touched a nine-month high this morning, as investors braced for announcements from central banks this week. Meanwhile, oil prices were up in early trade today. US crude inventories rose by 533,000 barrels to 448.5 million barrels in the week which ended January 20^th. This was significantly short of expectations for a million-barrel rise. The weaker dollar also helped the price of Brent crude to rise.

CURRENCY MARKET COMMENTARY

The rand strengthened against the dollar yesterday, as traders turn their focus to the SARB later today. At the close of the session, the rand was 0.16% firmer as it traded around R17.11 to the dollar. In other news, the dollar weakened against the euro yesterday with traders and investors wary of making big moves as all eyes turn to central banks announcements this week. Additionally, some regions in Asia are closed for Lunar New Year, limiting currencies to their ranges.

LOCAL COMPANIES

TRENCOR LIMITED (TRE) 0.0%

The Company expects basic loss and headline loss per share for the current period to be between 0,7 and 1,3 cents compared to the reported earnings and headline earnings per share of 3 cents for the year ended 31 December 2021. This represents a negative change of between 123% and 143%. Pending publication of the Company's audited annual results for the year ended 31 December 2022 ("current period"), expected to occur on or about 24 March 2023.

QUILTER PLC (QLT) -2.5%

Assets under Management and Administration ("AuMA") of £99.6 billion at the end of December 2022, an increase of 3% from 30 September 2022. Average AuMA for the fourth quarter of £98.8 billion (Q4 2021: £110.0 billion) and net inflows of £159 million for Q4 (Q4 2021: £950 million) versus £236 million in Q3 2022 (Q3 2021: £1,018 million). Solid performance from the Quilter channel with quarterly gross platform flows of £594 million (Q4 2021: £691 million), with adviser productivity stable at £2.4 million (annualised). Total Quilter channel quarterly net inflows of £513 million (Q4 2021: £584 million) with the decrease reflecting lower levels of new business. Refinance of existing £200 million subordinated bond (which will be called in February 2023) completed in early January through an issue of £200 million of 8% Fixed Rate Reset Subordinated Notes due April 2033.

ASTRAL FOODS LIMITED (ARL) -2.0%

Astral has reasonable certainty that earnings per share ("EPS") and headline earnings per share ("HEPS") for the six months ending 31 March 2023, are expected to decrease by no more than 90%, being 142.0 cents each, compared to the six months ended 31 March 2022 (EPS of 1 456 cents and HEPS of 1 420 cents). The Group's balance sheet position remains healthy with good levels of liquidity in place. Further voluntary trading updates will be considered should market and operational conditions change materially. A further trading statement will be provided in April 2023 once the Board has reasonable certainty of the expected EPS and HEPS ranges. A large portion of the capital expenditure commitments amounting to R737 million, outlined during the F2022 results presentation, has been placed on hold given the current adverse market conditions. The Group has however committed funds towards backup electricity generation solutions to reduce the adverse impact of load shedding. Poultry feed input costs, making up about 70% of the cost of producing a live broiler, increased significantly into 1Q2023 with the SAFEX yellow maize price peaking at around R5,300 per ton on the back of a weakening local currency and a tight global balance sheet.

INTERNATIONAL COMPANIES

Tesla (TSLA) +0.4%

The electric car maker reported earnings after the close of the bell yesterday, which beat expectations on both earnings and revenue. Earnings per share came in at $1.19 versus the $1.13 expected, while revenue was reported at $24.32 billion versus the $24.16 billion expected. Additionally, the company reported automotive revenue of $21.3 billion in the final quarter of 2022. This represented a 33% growth year-over-year. Finally, CEO Elon Musk said that the company could produce 2 million cars this year.

IBM (IBM) -0.5%

IBM reported quarterly revenue yesterday, which topped estimates. Earnings per share came in at $3.60 per share, adjusted, versus the $3.60 expected. Revenue was reported at $16.69 billion, versus the $16.4 billion expected. The revenue beat was mostly driven by higher-than-expected growth in the group's software and infrastructure segments. The group's net income rose 16% to $2.71 billion. Additionally, IBM revealed a plan to invest $20 billion in New York's Hudson Valley area over the course of a decade.

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