Another positive sessions although IPO’s disappoint
What Mattered Today
A new high for the year on the market today with a typical Christmas trading session playing out - the market grinding higher throughout the day on light volume. This time some buying in the material space offset profit taking amongst the banks.
Elsewhere, some bright spots with A2 Milk (A2M) finally moving higher (+4.70%) after a tough few weeks, Vita Group (VTG) which we own rallied +4.7% to close at $3.12 (target of $3.40) while Sydney Airports (SYD) was weak following a couple of broker downgrades and more colour around the development of Sydney’s second airport – and in particular, the favourable funding agreement proposed by the Government which now seems to be in doubt. The stock fell 5% today to close at $6.07.
Vitagroup (VTG) Daily Chart
Sydney Airports (SYD) Daily Chart
Two IPO’s hit the boards today – the Watermark Global Fund which is a market neutral strategy in Global equities with the stock closing down 2.27% to $1.075 versus an issue price of $1.10. Volume was anaemic in that stock with just 79k shares changing hands.
Automotive Solutions Group (4WD) was a $1.00 IPO and closed at 93c – not a great start (obviously) but again volume was reasonably low with under $1m changing hands. This is actually a business we like and think todays weakness is an opportunity. From what we saw, one reasonable seller of the stock kept a cap on it for the day and although it’s unlikely to bounce back quickly given Christmas, we’re upbeat about the medium term prospects for this business. They raised $30m to undertake a roll up strategy of eight separate businesses involved in design, manufacturing, retailing and performance technology in accessories and performance upgrades for 4WD vehicles and SUVs. This is a big and growing market with sales of new 4wd’s booming in Australia – now accounting for 50% of all new vehicles sold.
The management are good, board is well credentialed and they’ve got skin in the game. They’ve listed on a reasonable valuation, have no debt and will grow earnings. Not a bad bet on our view.
ASX 200 Intra-Day Chart
ASX 200 daily chart
We had a range today of +/- 33 points, a high of 5628, a low of 5595 and a close of 5613, up +22pts or +0.40%.
Sectors
ASX 200 Movers
What Matters Overseas
FUTURES mixed….
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