The Match Out: Healthcare finds some form ahead of the RBA tomorrow

• The ASX 200 finished up +19pts/ +0.28% to 6997
• The Healthcare sector was best on ground (+1.47%) while Consumer Discretionary (+0.62%) and Utilities (+0.54%) also did well.
• Energy (-0.97%), Industrials (-0.16%) and Communications (-0.10%) underperformed.
• MM is looking for Michele Bullock to leave the RBA Cash Rate at 4.1% on Cup Day, but it’s a close call, and we are against ‘consensus’ on this view– equities are likely to struggle for a few days if they hike.
• Westpac (ASX: WBC) +1.95% rallied on a broadly inline result v bearish positioning but a $1.5bn on-market buyback helped.
• Goodman Group (ASX: GMG) -0.41% reconfirmed FY24 guidance at their Q1 update this morning.
• Iress (ASX: IRE) +8.25% rallied on a positive note from JP Morgan – they see deep value in this turnaround play.
• Gold stocks enjoyed the session, Evolution (ASX: EVN) +5.13% a standout while Northern Star (ASX: NST) +3.18% was also solid – we own both.
• Consumer Discretionary caught our eye, interesting to think the RBA is odds on to hike tomorrow yet the retailers are rallying, Lovisa (ASX: LOV) +5.14%.
• Growing concern around the risks associated with Ozempic has helped Resmed (ASX: RMD) +3.11% today – sentiment is slowing turning back in their favour. We remain patient.
• Whispir (ASX: WSP) +61.67% ripped on a takeover from Soprano Digital pitched at 48c, closing today at 48.5c – the ex-Appen (ASX: APX) CEO behind the deal.
• Weebit Nano (ASX: WBT) +2.05% was higher, although finished a long way off highs after the $750m company recorded its first-ever revenue of $US100,000.
• Treasury Wines (ASX: TWE) +4.26% was up as the PM touched down in China.
• Magellan (ASX: MFG) -0.43% saw another $800m leave in October, although it seems like performance was okay for the period.
• Iron Ore was 0.5% higher in Asia, and miners were largely flat.
• Gold was higher over the weekend but gave back gains during Asian trade, -$US9 higher at $US1983
• Asian stocks were up to varying degrees, Hong Kong +1.5%, Japan +2.6% while China edged up +0.74%.
• US Futures are flat.

ASX200

Westpac (ASX: WBC) $21.92

WBC +1.95%: Rallied today after delivering a largely inline FY23 result, although the $1.5bn on market share buy-back announced was a positive surprise while they also made better progress on costs. Net Income of $7.2bn was up +26% YoY, a shade below consensus of $7.33bn while the 2H dividend of 72cps was ahead of expectations. Margins improved to 1.95% while a lot of focus was on the cost side, thexpense-to-income ratio of 49.4% vs. 55.1% last year was better than many of the pessimistic assumptions and shows they are now heading in the right direction. Capital is very strong with the Tier 1 ratio at 12.4% vs. 11.3% last year and above estimates of 12.1%, this has underpinned a solid share buy-back.

While earnings headwinds persist, a strong capital position and diligence on costs are supportive.

Westpac 

Goodman Group (ASX: GMG) $21.95

GMG -0.41%: the global industrial property company was out with a 1Q update which was largely as expected, though shares were slightly lower up against a small gain for the broader Real Estate sector. They completed $1b of work in the quarter, Net Property Income was up 4.9% on a like-for-like basis and occupancy remained strong at 99%. Goodman maintained FY24 guidance of operating EPS growth of 9% and total distributions of 30cps. The update included more commentary on their plans for a push into data centres, seeing unprecedented demand in the space. Their industrial portfolio has been performing well and Goodman’s low gearing could see them well placed to pick up over-leveraged, distressed assets on the cheap to further support growth.

Goodman Group

Broker Moves

• APM Human Services Rated New Buy at Canaccord; PT A$2.65
• Integral Diagnostics Raised to Equal-Weight at Morgan Stanley
• Integral Diagnostics Cut to Neutral at Jarden Securities
• Integral Diagnostics Raised to Buy at CLSA; PT A$2.50
• Iress Raised to Overweight at JPMorgan; PT A$7
• CSR Raised to Add at Morgans Financial Limited; PT A$6.75

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