Retail sales crumble (VOC, WBC)
WHAT MATTERED TODAY
Piggy backing of the strength in the US, the ASX spent some time above 6000 today for the first time since the 9th of March. The bounce to that level tops 36% in a little over 10 weeks. Ultimately though, the index finished 50 points off its highs, giving back half of the sessions gains to close below the 6000 marker. Retail sales data printed prior to lunch, the -17.7% sounds awful, but it was slightly ahead of expectations despite still being the worst month on month print ever recorded. Commentators suggesting a large part of the drop came as a result of the big March print on the back of panic buying. Consumer names saw some strength despite the drop.
The travel names were back in focus today. Alan Joyce announced Qantas (QAN) would be adding more flights to the roster, edging towards 40% of their pre-COVD numbers. Corporate Travel (CTD) saw the best return as a result of the announcement, jumping 8.8%. Energy names came off the boil today despite brent prices moving over $US40/bbl overnight. The strength in energy prices could continue for a few sessions yet – OPEC+ are likely to extend production cuts while a storm in the Gulf of Mexico will likely curb US production into next week.
Overall, the ASX 200 added +50pts / +0.84% today to close at 5991 - Dow Futures are trading up +14pts/+0.05%.
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE:
Vocus (VOC) +2.88%: tightened guidance today for the full year result, lowering the top end of the EBITDA guidance for a range of $359-369m. The market was already looking for $365m, around the mid-point of the revised guidance so not too much to change for the analysts there. The telco also reworked their debt, moving out their maturity profile with an average term of 3.5 years providing a little more balance sheet flexibility. They also managed to ease debt covenant restrictions to a maximum of 3.25x net debt to EBITDA. Currently running at around 2.8x, Vocus is clearly heavily leveraged but it looks to be making the right moves in terms of de-risking while maintaining earnings growth. The new set up shows confidence from the lenders, giving the telco the set up to take on the next phase of growth. We like Vocus, potentially looking to add it to the growth portfolio.
Vocus (VOC) Chart
Westpac (WBC) +1.28%: the bank updated the market on the AUSTRAC saga that is currently playing out behind the scenes. A reminder, the bank has had action taken over its reporting obligations and customer due diligence as many suspect transfers were allowed to pass through. They set aside $1b earlier in the year to fund a fine, though the exact number AUSTRAC will hit them for is unknown. It was a pretty messy read, and from all reports a resolution is unlikely this year. With money for the fine set aside, Westpac’s capital position is pretty reasonable shape though a dividend at the full year isn’t quite penned in just yet.
Westpac (WBC) Chart
BROKER MOVES:
· United Malt Resumed Outperform at Macquarie; PT A$4.72
· Alumina Raised to Buy at UBS; PT A$2.10
· Nufarm Cut to Underperform at Macquarie; PT A$4.85
· Nufarm Cut to Underperform at Jefferies; PT A$4.90
· Stockland Raised to Overweight at Morgan Stanley; PT A$4.30
· Metcash Cut to Sell at Morningstar
· OZ Minerals Cut to Hold at Morningstar
· Medibank Private Cut to Hold at Morningstar
· GWA Group Raised to Neutral at Credit Suisse; PT A$3.15
· Nufarm Cut to Reduce at Morgans Financial Limited; PT A$4.76
· Iluka Raised to Buy at Goldman; PT A$10.10
OUR CALLS
No changes to the portfolios today
Major Movers Today
Have a great night
James, Harry & the Market Matters Team
Disclosure
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