The Match Out: ASX marginally higher, IT stocks drive the gains, Link (LNK) cops another bid

James Gerrish

Market Matters

A choppy but marginally positive session for the ASX today as volumes peter out ahead of the Christmas break. Actually, having a full week of trade before Christmas doesn’t happen very often and it seems like some in the market have taken off early - if all the red dots on my Bloomberg are anything to go by. Today the IT stocks did best with another takeover approach for Link Administration (ASX:LNK) while a bounce back in Afterpay (ASX:APT) also helped. APT has been under decent pressure in recent months, down 30% in the last quarter alone. Energy stocks also bounced +0.82% while the Real Estate sector was down again, losing around 1%.

  • The ASX 200 added ~9points / 0.13% to 7364 – volumes very low.
  • Real Estate stocks under pressure again, this time Charter Hall (ASX:CHC) was to blame by falling 7.5% following the announcement they would buy 50% of Paradice Investment Management for $207m with the option of buying the lot. This is an interesting move from a property company moving into equities. Paradice manages around $18bn.
  • Link Administration +15.03% rallied on another takeover, this time from Dye & Durham, a Canadian provider of software for legal professionals. The cash offer represents $5.50 per share of Link, a premium of about 15% over Tuesday’s closing price. LNK closed today 1c above the offer price.
  • Rio Tinto (ASX:RIO) -2.02% is going harder into Lithium with a ~$1bn deal, the read-through from a valuation perspective was positive for the sector today. Pilbara Minerals (ASX:PLS) +8.76% after falling 9% yesterday on production downgrade.
  • Morningstar is the buyer for Praemium’s (ASX:PPS) international business. The well-flagged sale attracted a price tag of $65m, which seems cheap if you add up what PPS has spent on developing it over the past few years.
  • Aussie Broadband (ASX:ABB) +3.28% released Q2 22 connection data that was a tad weak overall, but it’s a timing issue & importantly, organic growth was ahead of expectations – more on this below.
  • Iron Ore was down a touch in Asia, it’s trading US$108.28/MT.
  • Asian markets were mixed, The Nikkei off -0.17%, Hong Kong up +0.65% and China -0.23%.
  • US Futures are all down smalls, Dow -15pts, Nasdaq -0.235%.

ASX 200 Chart

Aussie Broadband 4.73%

ABB +3.28%: A stock we like and own in our Emerging Companies Portfolio released a connections update for 2Q-22 today and there were a few swings and roundabouts, although positive overall. Importantly, connections organically are ahead of expectations whilst the bulk transfer (which is a white labelled offering for Origin) was behind schedule due to some technical issues – this is now to be transferred in January. Overall, organic growth is the key and this accelerated in a typically seasonally slower period, plus it seems like churn rates (loss of customers) is low. I’m an ABB customer and shareholder, and very happy with it!

We remain bullish and long on ABB and see it as buy sub $5. 

Broker Moves

Not a lot happening at all with the majority of analysts now wrapping Chrissy presents…

  • Murray Cod Australia Rated New Overweight at Barrenjoey
  • Gascoyne Cut to Speculative Buy at Canaccord

Major Movers Today

Enjoy your 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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