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Edging higher ahead of Thanksgiving (NWH, TLS)

James Gerrish

Market Matters

Stocks were strong again on open this morning trading up to a new all-time high for the ASX 200 of 6879 – marginally eclipsing the August milestone by 5pts, however given no US trade tonight (closed for Thanksgiving) and a quiet half day on Friday the market tapered off late in the session the to close more or less flat on the day, although 6864 represents a new closing all-time high – the most hated decade long bull continues!

Around the region today, Asian market were all lower but not by a lot while US Futures traded down during our time zone. On the sector front, the healthcare sector continued to fire as stalwarts CSL and Cochlear (COH) continued both hit all-time highs – CSL now closing on the $300 milestone.

Overall, the ASX 200 gained +13pts /+0.2% today to close at 6864. Dow Futures are trading lower by -82pts/-0.29%

ASX 200 Chart

ASX 200 Chart


NRW Holdings (NWH) unch; the mining and construction services company spent the day in halt as it looks to raise money to fund the purchase of BGC Contracting. Not new news, with the deal in play for some time, but a deal we like for NWH, slotting in nicely alongside their current offerings and being touted as 14% EPS accretive pre-synergies. NWH are also very experienced in bringing in bolt on acquisitions including the purchase of RCR Tomlinson’s Mining and Heat Treatment businesses off administrators earlier this year one of a number of recent cash splashes.

NWH will pay a total of $310m for the businesses, but this includes taking on around $185m of debt, paying the remainder to the shareholders of BGC. They are paying a reasonable price and taking on some debt however the businesses is set to pay back a large portion of the costs in the first year. We own NWH in the Platinum Portfolio, and at this stage will be applying for shares in the SPP launched alongside the institutional offer.

NRW Holdings (NWH) Chart

Telstra +4.04%: Not many sessions where TLS rallies +4% however today a rare day in the sun for Aussie telco following a string of broker upgrades. Macquarie increased their target to $4/sh with a reduction in longer-term capex estimates the main driver underpinning their increase of ~6%, Credit Suisse also sharing that view increasing their TP from $3.70 to $3.90 primarily driven by lower capex assumptions. JP Morgan retained their bullish view on the stock and kept a $4.25 target price.

Current Broker Calls on Telstra (TLS)

Source: Bloomberg

Telstra (TLS) Chart

Broker moves;

· Mineral Resources Resumed Outperform at Macquarie; PT A$20

· Collins Foods Cut to Neutral at UBS; PT A$10.60

· Collins Foods Cut to Sell at Canaccord; PT A$9.50

· Collins Foods Raised to Add at Morgans Financial Limited

· EBOS Raised to Buy at UBS; PT NZ$25.50

· Telstra Raised to Outperform at Macquarie; PT A$4

· Telstra Raised to Outperform at Credit Suisse; PT A$3.90

· Perpetual Cut to Underperform at Macquarie; PT A$35.50

· SCA Property Rated New Hold at Jefferies; PT A$2.63

· Vicinity Centres Rated New Hold at Jefferies; PT A$2.52

· Charter Hall Retail Rated New Buy at Jefferies; PT A$4.86

· GUD Holdings Cut to Market-Weight at Wilsons; PT A$11.05

· Soul Pattinson Cut to Sell at Morningstar

· Medical Developments Rated New Buy at Canaccord; PT A$8.70

· NextDC Rated New Buy at Jefferies; PT A$8.09

· Viva Energy REIT Rated New Neutral at Goldman; PT A$2.62

· Cleanaway Reinstated Buy at Goldman; PT A$2.30

· Home Consortium Rated New Neutral at Goldman; PT A$3.69

· Independence Group Cut to Hold at Shaw and Partners; PT A$5.90

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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