ASX back up above 6000pts (WOW, EHE, REG)
WHAT MATTERED TODAY
A strong end to a fairly optimistic week for Aussie stocks outpacing their global rivals….putting on +1.54% for the 5 days – trading above, but just closing a whisker below the 6000 mark (a 5999.8 close for the ASX 200!!!) The market has now put on 214pts or +3.7% from the intra-day low of 5786 on the 9th Feb and the buyers are well and truly back into the fray. We’ve outlined our ‘short term’ bullish stance into the seasonally strong April/May period and to date that’s playing our nicely, and today the market teased with the 6000 mark. A break over this mark on Monday should bring in a move towards ~6250 before we should be conscious of getting off the equity train…
For the week, CSL led the healthcare sector higher after a massive result, Woodside put the kibosh on the energy stocks following their cap raise while there was some big underlying moves in companies that reported results….Overall a very big week on the desk, more so in terms of analysis than action however that’s largely because we’re content with our current positioning.
On the market today, the ASX 200 followed a decent overseas lead rallying +49pts or 0.82% to close at 5999.8!!! For those glass half full types, you’d call that a close of 6000.
ASX 200 Intra-Day Chart (@3.55pm)
ASX 200 Daily Chart (@3.56pm)
CATCHING OUR EYE
1. Woolworths (WOW) $26.92 / -2.60%; A decent result however trends are easing for the supermarkets division… LFL sales growth in 2Q18 a strong 5.0% (market expectations of 4.0% to 4.5%) – taking 1H18 LFL number to 4.9% (1Q 4.9%, 2Q 5.0%). Very good result. EBIT margins in Supermarkets also strong: +26bp to 4.7%. However slowdown in train evident in 1st 7 weeks of 2H18 with LFL sales +3.7%. BIG W showing green shoots but still early days yet with sales +1%, EBITDA +122% (off a low base) to $29m. NPAT +15% on pcp however that was below the market expectations hence the sell off in the stock. We have no real interest in Woolies at current levels.
Source; Shaw and Partners
Woolworths (WOW) Daily Chart
2. Regis Health (REG) $4.12 / +8.42%; two of the aged care stocks reported and they were both good. Regis, arguably the highest quality operator in the listed sector was slightly above mkt expectations however the commentary was better and the stock rallied nicely. Estia (EHE) was also strong adding +4.42% to close at $3.54. They reported a 1H18 NPAT of $20.3m, with an underlying NPAT of $23.5m. Re-affirmed guidance of mid-single digit EBITDA growth YoY. The aspect the mkt liked was around their balance sheet capability if further govt regulations impact the sector. EHE has capacity to make acquisitions if / when the Govt changes the funding model, putting massive pressure on the smaller players and creating opportunity for the larger operators.
Estia (EHE) Daily Chart
REPORTING THIS WEEK
OUR CALLS
No changes to the portfolio’s today
Have a great night
James & 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
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 23/02/2017. 4.30PM
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