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Good afternoon,

The ASX 200 is down 1.26% for the week, dragged down by the banks, property trusts and defensives. 
The market is looking reactive to any negative trade war news. It seems to me that it's the view that stocks will continue to catch a bid while earnings are flat-ish/up a bit and the world isn't going to spin into a trade-war induced slow-down. 

Locally, rates might get cut again... but I don't think so. The property market has enough green shoots (well, at least according to the media) to probably keep the bankers hands under their bums and off the "cut" button.  
Westpac
Lawdy lawd! AUSTRAC reckon Westpac have done similar to CBA (maybe worse) and had 23 million AML/CTF breaches including 12 cases resulting in child exploitation. Each offence is worth a civil penalty of c.$20m (apparently) so on basic math that's a.... sh*tload of money ($460 with 12 zeros). 

The board just came out and "unreservedly apologised" - read it here. 

Look, Google "Westpac AUSTRAC", I've not much more to say about it. I'm not sure you'd be too interested in your retail entitlement offer at $25.32...

If you want to know if the banks are good value, look at last week's weekly note
Gage Roads
On to more positive, well-run companies... Gage Roads (GRB) gave yet another orderly, bang in line with expectations AGM update. The company strategy continues to evolve with a name change, further brand acquisitions and aspirations to become the #1 independant supplier to the national beer market. 
  • Revenue up 20% to almost $40m
  • 61% of sales are branded sales (vs 32% two years ago)
  • 30% of sales are now on the East Coast
  • Gross profit margins are up to 64% (target 65-70%)
  • EBITDA up 23% to $5.5m
The craft beer market continues to grow 7-10% per annum
I have a feeling this is going to be one of those stocks that clients say to me in 2 years time "oh, it just never really peaked my interest, I should've bought more."
Movers & Shakers

A2 Milk (A2M) surprised a lot of people this week (clearly). It lifted its guidance by as much as 30% on stronger margins which management reckon was a result of their genius marketing investment in China. Most people know I'm relatively sceptical about these Daigou companies, so I suppose congrats, hope it goes well for you. I'm not buying a share.

MACA (MLD) jumped after winning $480m worth of work at Ravensthorpe Nickel mine. There's some value in these mining services names, but need to have an excellent handle on the balance sheet, their pipeline and confidence in their ability to manage costs through the cycle. MLD is down from $1.80 to $0.90 over past two years and now poped to $1.15. Risky business. We like Imdex (IMD) and Parenti (PRN) in the space. 

Elsewhere, model portfolio stocks Aristocrat (ALL), ALS Co (ALQ), Appen (APX), Monodelphous (MND) all had strong weeks which is pleasing. We continue to favour quality at reasonable prices as our preferred investment thesis. 
Doing poorly this week was a few consumer facing names (BBN, BAP, ARB, AX1, MTS, LOV, MYR) as well as expensive tech (NXT, NAN, BVS).  
Have a good weekend, 
LL
Luke Laretive
CEO & Investment Adviser

T +61 3 8639 1601 | M 0451 122 656 | lukel@senecafs.com.au
Level 2 Professional Chambers
120 Collins Street Melbourne VIC 3000 
AFSL No. 492686
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