The Match Out: ASX holds 7500 on the back of Materials strength, Pinnacle (PNI) tumbles on downgrade, Flight Centre (FLT) returns from halt

A strong lead from US markets took the ASX to another 9-month high today, however, early strength was once again sold into.
James Gerrish

Market Matters

Despite closing 36pts off the highs, the index managed to close above 7500 for the first time since April last year. While Real Estate was the best-performing sector, it was the index points added by Materials that took the market higher today. Energy was the main laggard with demand lower than expected on the back of a mild European winter while an OPEC meeting is currently underway which is unlikely to lead to production cuts.
  • The ASX 200 finished up +25pts/ +0.33% at 7501
  • The Real Estate sector was best on ground (+1.37%) while Industrials (+0.70%) & Materials (+0.68%) were also strong.
  • Energy (-1.16%), Tech (-0.42%) and Utilities (-0.09%) were the only sectors to close lower.
  • Pinnacle Investment Management (ASX: PNI) -7.21%, copper a downgrade by UBS today, in line with our views that FUM flows may disappoint this reporting period. We took a profit on our position today.
  • The Reject Shop (ASX: TRS) +1.71%, CEO announced his departure for personal reasons after just 7 months. The company said 1H revenue is likely to climb 4% and EBITDA around 12% while sales for the first few weeks of 2023 were strong.
  • Credit Corp (ASX: CCP) +1.66%, first half results today were a little disappointing, however, the stock rallied after the company maintained FY guidance.
  • Flight Centre (ASX: FLT) +8.09%, returned to the market after successfully raising $180m to fund the acquisition of UK based Scott Dunn. More on FLT below.
  • Nufarm (ASX: NUF) -1.86%, hosted their AGM today, reiterating long-term targets remain achievable. The market was less impressed with the detail at the AGM, giving the company no benefit of the doubt here.
  • Iron Ore was ~0.4% lower in Asia today though not seeming to bother the big miners with BHP (ASX: BHP), Fortescue (ASX: FMG) and Rio Tinto (ASX: RIO) all closing higher
  • Gold was flat in Asian trade today, settled $US1927 at out close.
  • Asian stocks were also strong today, Hong Kong down +0.36%, Japan +0.11% while China was up +0.32%
  • US Futures are all trading lower, around -0.25% for the S&P500 Futures.  


Weekly Video Update - Portfolio Performance

In the first video update for 2023, Portfolio Managers James Gerrish & Harry Watt talk about Portfolio Performance for January and FY23 to date across the suit of Market Matters Portfolios.
  • Flagship Growth Portfolio: January +8.9%, FY23 20.96%
  • Active Income Portfolio: January +3.18%, FY23 10.51%
  • Emerging Companies Portfolio January +8.36%, FY23 15.51%
  • International Equities Portfolio January +6.46%, FY23 12.94%

Flight Centre (ASX: FLT) $17.11

FLT +8.09%: rallied after completing a big $180m raise to help fund the acquisition of UK’s Scott Dunn. The company said the acquisition will be EPS accretive in the mid-teens while also giving them more leverage to the UK market as well as increased exposure to luxury holidays. Scott Dunn did ~$200m in transaction value and $51m in revenue last year with more than 70% of bookings coming from the UK. Flight Centre expects 1H revenue of $1b, EBITDA of $95m while guidance for the full year was $250-280m EBITDA, in line with expectations. The raise was completed at $14.60/sh with retail holders now eligible to bid into the Share Purchase Plan (SPP0 at the same price).

Flight Centre (ASX: FLT)

Credit Corp (ASX: CCP) $22.00

CCP +1.66%: 1H report for the debt collection company was out this morning with the stock initial negative reaction overrun by the session’s end. Net profit for the half fell 30% to $31.8m on the back of US restructuring costs and higher provisioning. These costs are likely to unwind into the second half, with provisioning seemingly conservative at this stage. CCP has struggled to buy debt ledgers given the current health of debts globally, however this has also helped recoveries. The company stuck to full year NPAT guidance but lifted their ledger investment highlighting the need to pay up here.

Credit Corp (ASX: CCP)

Broker Moves

  • Liberty Financial Group Ltd Raised to Outperform at Macquarie
  • Pepper Money Cut to Neutral at Macquarie; PT A$1.70
  • Top Shelf International Cut to Market-Weight at Wilsons
  • Resolute Mining Raised to Buy at Canaccord
  • IGO Cut to Sell at Canaccord; PT A$13.50
  • Charter Hall Long WALE Raised to Buy at Ord Minnett; PT A$4.87
  • Deterra Cut to Hold at Canaccord; PT A$5.10
  • Lifestyle Communities Cut to Hold at Ord Minnett; PT A$18.25
  • Megaport Cut to Hold at Canaccord; PT A$6.30
  • Gold Road Cut to Underperform at RBC; PT A$1.50
  • Harvey Norman Cut to Neutral at JPMorgan; PT A$4.70
  • Coles Group Cut to Underweight at JPMorgan; PT A$16
  • Beach Energy Cut to Underperform at Macquarie; PT A$1.45
  • Beach Energy Raised to Add at Morgans Financial Limited
  • Universal Biosensors GDRs Cut to Speculative Hold at Bell Potter
  • Neuren Cut to Speculative Hold at Bell Potter; PT A$8.60

Major movers today

Have a great night

The Market Matters Team

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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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