The Match Out: ASX flatlines with lack of direction, Strategy Day galore for industrials

It was a pretty muted session from the index point of view today with very little to drive markets following the US observing Memorial Day today. Real Estate gave back much of yesterday’s outperformance, followed by weakness in coal stocks weighing on the Energy sector. Banks were also marginally lower today, partly offset by strength in Telcos. The was a plethora of Strategy Days across large-cap companies which we touch on below. Building Approvals was the main data print locally, coming in well below what was hoped with a drop of -8.1% vs a 2% gain, though this did little in the way of moving markets given the data can be very volatile.

• The ASX 200 finished down -8pts/ -0.11% at 7209
• The Telcos sector was best on ground (+0.62%) while Materials (+0.17%) was the only other gainer of note.
• Real Estate (-0.88%) & Energy (-0.67%) were the key underperformers today, followed by weakness in Financials (-0.35%) and Tech (-0.14%)
• Paladin (ASX: PDN) -19.92% tumbled before entering a trading halt. Comments out of Namibia suggest the Government is looking at ownership stakes in natural resource deposits in the country. Look for a further discussion on this in the morning report tomorrow.
• Wesfarmers (ASX: WES) +0.51% hosted a strategy today talking about their plans for the underperforming Catch acquisition as well as the outlook across retail and the Chemicals, Energy & Fertilizer business.
• Qantas (ASX: QAN) +2.65% moved higher on positive outlook plans at today’s strategy day.
• Challenger (ASX: CGF) +2.61% also hosted an investor day as they prepare for the sale of their banking arm. They said NPAT is now expected above the midpoint of guidance with the sale to complete in the first half of FY24.
• The Canadian Lithium company Sayona (ASX: SYA) -11.9% struggled after raising $200m at a ~15% discount to last close to fund their expansion and drilling program.
• Lifestyle Communities (ASX: LIC) -3.55% said FY23 settlements will be lower than previously advised with a slowdown of sales at two of their development sites.
• Iron Ore was down -0.5% in Asia today though Fortescue (ASX: FMG) -0.2% was the only stock of the big 3 that closed lower.
• Gold was also down -0.5%in Asian trade, hanging around $US1933/oz, gold stocks were mixed today.
• Asian stocks are mixed, Nikkei the only gainer up +0.3%. Hang Send -0.12%, and China -0.34%
• US Futures are up today with the US back online tonight after a holiday, S&P +0.30% and Nasdaq +0.50%.

ASX200

QANTAS (ASX: QAN) $6.59

QAN +2.65%: the flying kangaroo hosted an investor day today to set the scene for the next few years as they prepare for the exit of CEO Alan Joyce. Qantas has exited the COVID disruption as a leaner business with better margins, aiming for 18% in the domestic business vs ~13% in FY19. The International business is expected to jump from mid-single digits in FY17-19 to the low double digits (10-12% targeted in the medium term), while Jetstar is expected to return to the ~15% pre-COVID margins from FY24. Their loyalty business is on track to hit $425-450m in EBIT this year, up ~15% on FY19, before doubling by FY30. Trading on ~6.5x PE, it is well below the long-term average given fears around a significant near-term CAPEX spend to revitalize its fleet and lounges, however, today’s presentation allayed some of those fears, continuing to target 2-2.5x Net Debt to EBITDA with FY24 CAPEX guidance of $3-3.2b. Key to their execution will be reducing costs in line with the expected normalization of airfare prices.

Qantas (ASX: QAN)

Broker Moves

• Rural Funds (ASX: RFF) Raised to Reduce at CLSA; PT A$1.86
• ALS (ASX: ALQ) Cut to Underweight at Jarden Securities; PT A$11.35
• IDP Education (ASX: IEL) Cut to Accumulate at CLSA; PT A$25
• GWA Group (ASX: GWA) Rated New Overweight at JPMorgan; PT A$2.25
• ARB (ASX: ARB) Rated New Hold at Morgans Financial Limited; PT A$29.05

Major movers today

Have a great night

The Market Matters Team

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