The Match Out: ASX weaker, CSL weighs, Western Areas (WSA) finally gets a bid

James Gerrish

Market Matters

A weak session today however it was only driven by selling in one stock – the rest of the market finished marginally higher when stripping out the impact from CSL. Naturally healthcare was the weakest of the sectors. Tech caught a bid today, finishing more than 2% higher.

  • The ASX 200 finished down -31pts/-0.43% at 7295.
  • CSL (ASX: CSL) came out of trading halt today following a big $4b raise. Shares finished right on the offer price at $273, down -8.16%. The stock alone took 34pts off the index today.
  • Qantas (ASX: QAN) was out with an update which we cover below.
  • PointsBet (ASX: PBH) finished +3.51% higher after a successful launch in Virginia in the US.
  • Western Areas (ASX: WSA) jumped after finally receiving a bid from Independence Group (ASX: IGO).
  • Gold was higher in Asia today by +0.27% to $US1781 at our close.
  • Iron Ore was better by 1% in Asia today.
  • Asian markets were higher today despite our weakness, Nikkei +1.65%, Hong Kong -0.67% while China +0.31%.
  • US Futures are up, Nasdaq was the best of them at +0.36%.

ASX 200 Chart

Western Areas (ASX:WSA) $3.42

WSA +5.56%: finally received a binding takeover offer from Independence Group (IGO) after months of talks. The $3.36/sh all cash offer was a surprise given a scrip deal was touted from the outset. The price is a 35.5% premium to the close on 18 August when news first broke of the potential tie-up. It’s an on message target for Independence Group which has been looking to build out their battery metals exposure with more substantial nickel production. The deal will be funded by cash reserves and debt and is expected to be cash flow accretive by FY24. Shares traded well through the offer price today. Andrew Forrest’s investment vehicle Wyloo Metals has been creeping up the substantial shareholder ranks throughout the second half of this year, currently sitting on a little over 6%. Many suggesting he will throw his hat in the ring now that Independence Group has shown their hand.

Qantas (ASX:QAN) $4.84

QAN -0.62%: the national airline provided a solid update today as they approach the end of the first half. The company expects EBITDA for the half to come in at a loss of between $250-300m, obviously heavily impacted by lockdowns however there was some positives in the update and light is appearing at the end of the tunnel. Domestic capacity is now running 17% ahead of pre-COVID levels in the fourth quarter after also beating pre-COVID levels in the third quarter by 2%. Freight is expected to deliver a record performance in the half and the loyalty business continues to contribute positively. International continues to lag and the company noted a slowdown in bookings following the emergence of the omicron variant. All in all a decent update, shares finishing marginally lower today.

MM is bullish QAN

Broker Moves

  • Santos Raised to Outperform at Macquarie; PT A$8
  • Stockland Cut to Underperform at Macquarie; PT A$4.21
  • CSL Raised to Buy at Citi; PT A$340
  • Santos Resumed Neutral at Citi; PT A$7.01
  • 29Metals Rated New Buy at Citi; PT A$3.20
  • Biome Australia Rated New Speculative Buy at Canaccord
  • CSL Raised to Positive at Evans & Partners Pty Ltd; PT A$315
  • South32 Rated New Buy at Investec; PT A$4.63
  • Macquarie Group Rated New Overweight at Barrenjoey; PT A$230
  • Alumina Raised to Overweight at JPMorgan; PT A$2.10

Major Movers Today

Have a great night

James, Harry and 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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