The Match Out: ASX gives back most of Fridays gains with a few downgrades about

James Gerrish

Market Matters

The market gave back ~95% of Friday’s gains today however it didn’t feel like an overly bearish session with some green tickers emerging throughout the session, particularly some technology stocks that moved a long way up from their session lows while the Real-Estate sector was the best relative performer. US Futures edged higher, the British Pound also gained ~1% during the Asian session implying that rhetoric coming from the new Chancellor is being taken more favourably.

  • The ASX 200 finished down -94pts/ -1.40% at 6654
  • The Property sector was the best relative performer (-0.62%) while IT (-0.73%) also did better than the weak market.
  • Cyclical sectors struggled with Energy & Materials (-2.11%) both down more than 2% as recessionary fears creep back into the collective thinking.
  • A fair amount of stock-specific news today, quarterlies are coming out and we had a smattering of downgrades.
  • (ASX: CSL) -1.28% says it now expects to grow net profit between 13-18% to between $US2.7bn and $US2.8bn in FY23, when including the impact of its Vifor acquisition. Guidance at the full year had not included this with consensus sitting at $2.64bn ahead of today. We suspect the market was muted given their qualification around the currency, with the outlook provided on a constant currency basis with the strong US dollar potentially impacting the actual result by around $US200 million.
  • Westpac (ASX: WBC) -0.30% has been linked to a bid for payments company Tyro (TYR) +8.71% - a few are now interested in this one it seems.
  • Endeavour Group (ASX: EDV) +1.46% says that group sales for the first quarter climbed 3.1% on the prior corresponding period while hotel sales for the quarter were up 90.8% to $538 million!!
  • The price of Chinese battery-grade lithium carbonate hit a record high of 532,000 yuan ($118,807.2) per tonne last week, according to Benchmark Mineral Intelligence.
  • Liontown Resources (ASX: LTR) +4.89% while Core Lithium (ASX: CXO) added 5.19% in response.
  • IGO Limited (ASX: IGO) -1.63% fell on the sad news of the passing of CEO Peter Bradford at just 64, the stock was down ~5% early on.
  • Praemium (ASX: PPS) +2.16% was higher on a decent quarterly – HUB +0.36% was down sharply early and enjoyed a very strong recovery through the session with obvious buying about.
  • Adbri (ASX: ABC) -22.01% tanked on a 20% earnings downgrade and CEO departure.
  • Costa Group (ASX: CGC) -13.42% highlighted some issues in their Citrus crop that will impact earnings.
  • Gold was up ~US$6 to ~US$1650.
  • Iron Ore fell 2.5% in Asia as China casts a shadow over growth (and thus demand).
  • Asian stocks were mostly lower Hong Kong down -0.54%, Japan lost -1.04% while China was up +0.20%
  • US Futures are all up, around +0.70%

ASX 200 Chart

Adbri (ABC) $1.435

ABC -22.01%: Knocked today following a profit downgrade and the departure of their CEO. The building products company now forecast net profit after tax (NPAT) of $75-85m which compares to the consensus of $116m for FY22 (December year-end). The market was already bearish on ABC earnings as can be seen in the earnings graph below which is available on the Market Matters website

Metcash (MTS) $3.80

MTS -1.55%: The grocery & hardware wholesaler kicked off a two-day investor briefing in Adelaide, saying strong sales momentum has continued in the first half in all segments, with group sales up 7.7% so far for the 23 weeks to October 9 year-on-year, with growth across all three of Metcash's businesses. As a refresher, Metcash stocks 1600 IGA & Foodland stores along with Independent Hardware Group (IHG) which operates under Mitre 10 and Home Timber & Hardware + it supplies other brands while it also has a majority stake in Total Tools. In liquor it supplies independent liquor stores including Cellarbrations, the BottleO, IGA Liquor and Porters Liquor. The strategy update is the first for the new Metcash chief executive Doug Jones who came over from Massmart in South Africa, a Walmart subsidiary.

Praemium (PPS) $71c

PPS +2.16%: 1Q23 result out today that was marginally ahead of estimates, with net inflows positive at $659m. Total Funds Under Administration (FUA) achieved $41.4b, up 3% on the same time last year, which is a good outcome given ASX200 0.8%. A big positive was still robust quarterly inflows - the best for three quarters since 2Q22 – offset my market revaluations of -$159m. Overall, a solid 1Q23 result although it’s unlikely that we’ll see any material changes to FY23 numbers.

Broker Moves

  • Green Technology Metals Rated New Speculative Buy at Canaccord
  • Sayona Mining Rated New Hold at Canaccord
  • Allkem Rated New Sector Perform at RBC; PT A$14.40
  • Megaport Rated New Neutral at Credit Suisse; PT A$8.10
  • Xero Raised to Neutral at Macquarie; PT A$74
  • Bega Cheese Rated New Reduce at CLSA; PT A$3.60
  • Inghams Rated New Buy at CLSA; PT A$3.40
  • Fortescue Raised to Neutral at Evans & Partners Pty Ltd
  • NAB Raised to Outperform at Macquarie; PT A$32.25
  • ANZ Bank Cut to Neutral at Macquarie; PT A$25.50

Major Movers Today

Have a great night

The Market Matters Team

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James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

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