The Match Out: Stocks bounce, a big day for Nickel Mines (NIC), Aristocrat (ALL) update solid

James Gerrish

Market Matters

The choppy nature of the current market continued today with the ASX bouncing back from yesterday’s decline with all sectors finishing higher. After stabilising yesterday, the IT stocks found form today and if we’re going out on a limb, we’ll now see a decent bounce from here, while a rally in Telstra (TLS) supported the Telco’s.

  • The S&P/ASX 200 added +72points / +1.04% to close at 7053
  • IT (+3.19%) & Communications (+2.42%) led the line while Staples (+0.02%) and Energy (+0.14%) lagged.
  • 170 companies in the ASX 200 finished higher today showing the broad-based nature of the rally.
  • It was actually the best day in 3 weeks for the ASX, although the index is still down 600 points from the highs.
  • Nickel Mines (NIC) -4.75% was interesting with a big ~$40m line through aftermarket following a volatile morning and pause in trading - Harry covers off on this below.
  • IAG (flat) raised their expectations for natural perils claims for FY22 this morning but only by ~5% to $1.1bn, you’d call that a win. They maintained margin guidance although said the lower side of the 10-12% range was likely.
  • Aristocrat (ALL) +4% said they will have no material financial impact from their operations in Ukraine as they work to relocate ~1000 employees in a gaming division.
  • Origin Energy (ORG) +1.38% talked up opportunities associated with the energy transition at their strategy re-fresh today.
  • Gold was steady around US$2050 at our close.
  • Asian markets were mixed, Japan up +0.65% but weakness in Hong Kong -2.5% & China -2.33%.
  • US Futures are mostly higher.

Aristocrat Leisure (ALL) $35.20

ALL +4.02%: provided an update on it’s operations in Ukraine where it has around 1000 people working there in its Pixel United business which produces mobile first video games. They were working to relocate these employees however now material impact on the business was expected. They also said they were suspending video games into Russia and considering what to do with their Russian operations / employees. The stock has been weak over the past few months, today it bounced back.

Nickel Mines (NIC) $1.405

NIC -4.75%: briefly traded to a 4 month low early in the session before the ASX halted trading in the shares just before 11AM. Major shareholder Tsingshan has been short at least 200koz of nickel forcing the price significantly higher in the recent sessions with fears it would send the company into default and cause a significant overhang on Nickel Mines shares. Tsingshan is also a customer and joint venture partner with Nickel Mines, and is also on the verge of receiving another batch of NIC shares for a stake in the Oracle Nickel Project. The ASX queried the price movement today giving Nickel Mines the opportunity to ally some of the market’s fears. It said no operations had been impacted, nor a change to any Tsingshan’s intention to take shares or Nickel Mine’s nickel pig iron as contracted.

Origin Energy (ORG) $5.86
ORG +1.38%: Provided a ‘strategy refresh’ today and talked about the next leg of growth for the company, very much with the energy transition in mind. ORG are good at this, talking up future opportunities, they just have a bad habit of surprising on the downside when it comes to linking those opportunities with actual earnings. In any case, they did say they would buy back $250 million shares starting in April with more to come from there, they talked to adding 600k broadband accounts by FY26 (which is good for Aussie Broadband as they are a white label version of ABB’s offering) and said they would have 5000 electric vehicles under management by FY26. This 5 year aspirational timeframe is becoming quite popular in the market these days – not sure whether I like the trend or not!

Broker Moves

  • Nickel Mines Cut to Hold at Canaccord; PT A$1.60
  • Paladin Energy Raised to Speculative Buy at Bell Potter
  • City Chic Collective Raised to Buy at Citi
  • Rio Tinto Cut to Neutral at Citi
  • Mineral Resources Raised to Buy at Citi
  • Tabcorp Rated New Overweight at Jarden Securities; PT A$5.75
  • Xero Rated New Neutral at Barrenjoey; PT A$105
  • 3P Learning Rated New Overweight at Barrenjoey; PT A$2.05
  • Platinum Asset Raised to Hold at Bell Potter; PT A$1.90

Major Movers Today

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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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