Buyers dry up, oil tensions rise (PLS, RMD)
WHAT MATTERED TODAY
Early strength was sold into today, as the market finished lower despite a strong lead and a positive open. It was the IT sector that performed the best today, putting on an impressive 2% following the overnight move from the NASDAQ which rallied on Apple’s strong result. Energy also added a solid 1% with fears global supply may be restricted as US-Iran tensions rise and Iran steps up military exercises in key oil shipping lanes.
On the flipside, the bigger market weights of materials and financials dragged the market lower. After seeing some support early, the big names rolled over and sent the index into the red. CBA was up over 0.5% early, only to close -1.15%, while BHP was flat in the morning but seen -1.59% lower on the close.
Overall, the index closed down -0.1% or -6 points today to 6234 – down 66 points / -1.04% on the week
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Resmed (RMD) $14.45 / +0.35%; Resmed today announced their 4th quarter and full year results, with the full year coming in as a slight miss to consensus on the revenue and EBITDA lines however it was a beat at the Profit line. The respiratory and sleep disorder company is all about growth, so the revenue line here is important – for FY18 it grew by 12% which is a strong number for the year however the currency added around 2% of the gain. On a forward PE of 29.3x with the market expecting +9.5% growth in sales in FY19, RMD is in the expensive bucket.
Resmed (RMD) Chart
Pilbara Minerals (PLS) $0.90 / +6.51%; Lithium miner Pilbara has bucked the sectors weakness today to push higher following the release of a feasibility study for their Pilgangoora project. The mine looks to have a 17 year life, producing 800,000-850-000 tons of high-quality lithium containing spodumeme per annum. The Western Australian project has an expected capital cost of $231m, but is expected to generate $6.3b of EBITDA over the mine’s life. Other lithium names were flat to lower as lithium has come under some pressure recently over fears that future supply will outstrip demand in the immediate term.
Pilbara Minerals (PLS) Chart
Weekly Moves – Stocks & Sectors;. A mixed bag for Aussie sectors throughout the week – Energy remains strong, Telcos bounced back into fashion while some poor quarterly updates and weak prices saw materials lower.
Sectors over the past Week
At a stock level, a reasonable result from Creditcorp earlier in the week saw the stock rally hard while Regis’ poor quarterly has it languishing in last place.
Stock moves over the week
Broker calls;
· Ardent (AAD AU): Downgraded to Underweight at JPMorgan; PT A$1.54
· Money3 (MNY AU): Money3 Cut to Accumulate at Hartleys Ltd; Price Target A$2.14
· Netwealth Group (NWL AU): Netwealth Group Downgraded to Sell at Wilsons; PT A$6.49
· Pact Group (PGH AU): Pact Group Downgraded to Hold at Morningstar
· REA Group (REA AU): REA Group Upgraded to Hold at Morningstar
· Super Retail (SUL AU): Downgraded to Neutral at JPMorgan; Price Target A$9
OUR CALLS
No changes the portfolios today.
Have a great night
James / Harry & the Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
Disclaimer
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