ASX 200 cracks back up above 6300 (BKL, CTX)
WHAT MATTERED TODAY
The local market followed the US higher today following their ~1% move higher overnight, buoyed by the trade deal workings of Donald Trump and Mexico. The banks once again found some form today as the distraction from Canberra wains, while resources continued their bounce – Rio is now up over 3% from its Friday lows with our $71 downside target looking the goods at the moment.
Reporting season threw up some more curve balls. Satellite comms provider Speedcast fell from the sky today on a soft first half and downgraded guidance, down a huge -37%. Elsewhere, Blackmore’s vitamins are working, the stock up strongly on the result & Caltex was under the pump – more on these later on.
Overall, the index closed up +35 points or +0.57% today to 6304.
Some big variance in company reports / reactions today; For a full list of company reporting dates – click here
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves;
· Adairs (ADH AU): Upgraded to Buy at Goldman; PT A$3.10
· Iress (IRE AU): Rated New Hold at Morgans Financial; PT A$14.52
· Kelly Partners Group (KPG AU): Raised to Add at Morgans Financial
· Mayne Pharma (MYX AU): Upgraded to Hold at Wilsons; PT A$1.02
· NetComm (NTC AU): Downgraded to Hold at Canaccord; PT A$0.90
· Reliance Worldwide (RWC AU): Downgraded to Hold at Bell Potter; PT A$5.40
· Transurban (TCL AU): Rated New Sell at Insight Investment Research
Caltex (CTX) $30.68 / -7.87%; the first half result missed market expectations for Caltex and the stock has traded sharply lower throughout the day. The numbers were weak, showing the falling appetite for premium fuel, lower refining margins and a soft retail sales result within the business which posted a first half profit of $296m, sneaking into the bottom end of guidance at $295-315m. Key to the result was convenience retail earnings falling 14% to $161m, while acquisitions in NZ and the Philippines were not enough to offset the issues.
The result also came with commentary around its property and fuel portfolios as company conducts asset reviews in an attempt the extract value from current assets. Caltex owns around $2b worth of freehold petrol stations, and announced plans to begin selling down its stake to retail real estate investors rather than going down the IPO route others have used. Initially looking to sell a $500m stake, Caltex eventually plans to be a minority holder of the property business it now owns, seeing strategic property partnerships the way forward to sustainable growth.
Caltex (CTX) Chart
Blackmores (BKL) $162.00 / +11.53%; This morning Blackmores reported their full year results and they were above market expectations, with revenue rebounding strongly from FY17 to FY18 (up 9%) and NPAT increasing by 19%. It’s been a volatile few years for the vitamin maker however it seems management have now re-aligned the business, optimised the cost structure and are now pushing hard into Asia.
The composition of the result was interesting, with Q4 revenue a strong point while they also had the added benefit of expanding margins.
Blackmores (BKL) Chart
OUR CALLS
No changes to either portfolios today.
Have a great night
James / Harry & the Market Matters Team
Disclosure
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