The Match Out: Real Estate and Financials support a rally to 2-month highs, St Barbara (SBM) falls on recut deal

The local market kicked off the new week by adding to recent gains, hitting a 2-month high in the process. Financials continued their recent form to boost the index, rallying on the back of a better-than-expected start to the quarterly updates from their US peers. Real Estate was the best sector today as the major constituents rallied in unison. Energy was the major laggard with weaker commodity prices, though much of the weakness can be explained by New Hope Coal (NHC) going ex-dividend.

• The ASX 200 finished up +19pts/ +0.27% at 7381
• The Real Estate sector was best on ground (+1.32%) while Consumer Discretionary (+0.74%) and Tech (+0.715) were outperformers.
• Energy (-0.31%) and Utilities (-0.30%) the weakest links.
• St Barbara (ASX: SBM) -5.43% struggled after releasing details of a new deal with acquirer Genesis (GMD). The market clearly thinks Genesis got the better end of the stick as their shares rallied 10%.
• EML Payments (ASX: EML) +13.91% hit two-month highs after their CEO departed and banks were hired to do a strategic review of assets likely leading to a sale.
• Lake Resources (ASX: LKE) +18.48% hit first production at their Kachi Lithium project in Argentina, producing 3,500kg of carbonate
• Regis Resources (ASX: RRL) -11.16% downgraded production guidance after issues at three of their assets in the 3Q. Costs and CAPEX were also revised higher.
• Portfolio Manager Harry Watt was on Ausbiz this morning discussing the gold sector – Watch Here
• Iron Ore was down -0.77% in Asia, though the major miners were all higher in our session, recovering from early session weakness.
• Gold was trading at US$2012 at our close, a small bounce on Friday night’s dip.
• Asian stocks were higher, Nikkei +0.07% underperforming the Hong Kong Hang Seng +1.45%.
• US Futures are higher, Nasdaq +0.1% while S&P futures pointing up 0.17%.

ASX 200 Chart

St Barbara (ASX: SBM) 61c

SBM -5.43%: traded for the first time in 2 weeks after announcing terms for a recut deal with Genesis (GMD). The deal sees St Barbara hold on to the troublesome PNG & Canadian assets, however, they will receive a large cash component in the sale of their Leonora asset, earning $370m in the sale as well as picking up ~$170m in Genesis shares. St Barbara will end up with a ~15% stake in the company, with an additional ~4.5% earned if certain production hurdles are met. The cash component will allow the company to pay down their debt, ending up with $197m in cash providing some balance sheet flexibility to turn the rest of the company’s assets around. The market still sees plenty of risk around the execution of the deal, and SBM’s ability to use the balance sheet boost to effect.

Broker Moves

• Woodside Energy Raised to Neutral at Jarden Securities
• Hansen Tech Rated New Neutral at Goldman; PT A$5.20
• Evolution Cut to Hold at Morgans Financial Limited; PT A$3.70
• a2 Milk Raised to Reduce at CLSA

Major Movers Today

Have a great night

The Market Matters Team

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