The Match Out: ASX rallies as some of the dogs start to bark!

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The majority of companies have now reported and while we hate using the old cliché, its been better than feared, much like the broader economic outcomes that have played out over the past year which has prompted a more aggressive stance by central banks globally – the imminent recession is getting less airtime and markets are reflecting that. As we’ve written at nauseum over recent months, we’re neutral at the index level but that belies significant action that’s unfolding under the hood, a theme we expect to continue, creating a great environment for stock picking, as long as you pick the right stocks!

• The ASX 200 finished up +50pts/ +0.71% at 7210 – on the day’s highs = bullish
• The Material sector was best on ground (+1.60%) while Consumer Discretionary (+1.42%) & Property (+0.64%) were the other standouts.
• IT (-0.31%) and Healthcare (-0.08%) the weakest links, although that’s reflective of CSL (ASX: CSL) (-0.29%) rather than Ramsay (ASX: RHC) +3.18%
• Mineral Resources (ASX: MIN) +7.97% reported after mkt yesterday with a solid beat at the profit line. & higher dividend.
• Star Entertainment (ASX: SGR) +2.12% reported an eye watering $2.17bn of write downs + ongoing regulatory & legal costs of $595m, although underlying EBITDA of $317m was slightly ahead of guidance.
• Tyro Payments (ASX: TYR)+14.67% beat on FY23 and issues EBITDA guidance for FY24 that was ~15% ahead of consensus.
• EML Payments (ASX: EML) +31.54% smashed downbeat expectations into a market that was ~6% short the stock.
• Adbri (ASX: ABC) -14.6% guided to higher capex and announced no dividend for the 1H23.
• Zip Co (ASX: ZIP) +4.55% rallied after reporting record transaction volumes and revenue for FY23. There remains hope!
• Bowen Coking Coal (ASX: BCB) +16.28 bounced back after a ~25% decline yesterday - debt refinancing now the key in the short term, if that happens, the rally will continue.
• APA Group (ASX: APA) +1.48% found some buyers into recent weakness – we think this looks interesting sub ~$9 / yielding above 6%.
• Wesfarmers (ASX: WES) +2.99 % hit a new 52-week high today, closing at $53.66.
• Iron Ore was flat in Asia, however continues to defy the bears with Futures trading ~US$110/mt
• Gold edged higher trading at US$1925 at our close.
• Asian stocks were solid Hong Kong up +2.21%, Japan +0.10% while China was up +1.32%
• US Futures are all up, around +0.20%

ASX 200 Index

Mineral Resources (ASX: MIN) $69.48

MIN +7.97%: We covered Mineral Resources (MIN) this morning (here) with the result a beat at the profit line by ~6%, however the quality seemed to be low and the higher than expected dividend was a strange one given the uplift in capex guidance for the year ahead. Most brokers saw it as a mixed result at best and by in large, the notes reflected that, but the share price didn’t - the Chris Ellison effect! We like and hold MIN in the Flagship Growth Portfolio backing them to successfully use revenues generated in Iron Ore and mining services to execute on their Lithium ambitions, and while short term challenges will come up, if they get this right, and we expect they will, MIN it worth well north of the ~$70 it’s trading at today.

EML Payments (ASX: EML) $0.98

EML +31.54% The troubled payments company delivered an update today that was well ahead of company guidance into a market that was ~6% short, and fireworks ensued! Revenue of $254.2m was up 9% and ahead the $239m expected driving an underlying EBITDA beat of ~20%. They are making progress on their strategic review and operational turnaround which has seen the stocks lift itself from the depths of despair. We have management in tomorrow and will provide additional colour from there.

Tyro Payments (ASX: TYR) $1.29

TYR +14.67%: FY23 results out this morning were solid, with revenue of $435m v $427m expected, driving EBITDA of $42.3m which was a 5% beat to consensus. The kicker however came with FY24 guidance of EBITDA in the range of $52-58m, which was ~15% above market expectations while also factoring in weaker discretionary spend. They’ll provide more colour at their upcoming strategy day on the 18^th October 18-Oct-23. One real positive to highlight was strength in less discretionary health spending which is up 24% YoY.

• A solid result, but worth waiting for more colour at their strategy update in October.

Broker Moves

• DGL Group Raised to Add at Morgans Financial Limited; PT A$1.10
• Codan Raised to Outperform at Macquarie; PT A$8.20
• Liberty Financial Group Ltd Cut to Neutral at Macquarie
• Waypoint REIT Raised to Buy at Moelis & Company; PT A$2.84
• Integral Diagnostics Raised to Overweight at Wilsons; PT A$3.40
• Codan Raised to Buy at Moelis & Company; PT A$8.10
• Decmil Rated New Buy at Blue Ocean; PT 47 Australian cents
• Integral Diagnostics Cut to Hold at Canaccord; PT A$3.15
• Mineral Resources Raised to Buy at CLSA; PT A$77
• Liberty Financial Group Ltd Cut to Neutral at Citi; PT A$4.10
• Waypoint REIT Raised to Positive at Evans & Partners Pty Ltd
• Allkem Raised to Buy at HSBC; PT A$17.30
• Imdex Cut to Hold at Bell Potter; PT A$1.70
• Integral Diagnostics Cut to Hold at Jefferies; PT A$3.50

Major Movers Today

Enjoy the night
The Market Matters Team

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