Aged care stocks spring to life
What Mattered Today
The RBA kept rates on hold at 1.5% (as expected), most analysts revised down their Aussie GDP forecasts for tomorrow (consensus now sits at -0.10% QoQ & 2.2% YoY) following lower than expected Government spending figures out today, while the Aged Care stocks were best on ground following reports that the Assistant Minister for Health Aged Care made comments at a conference today that the ACFI (aged car funding instrument) changes announced in the last budget – which were the catalyst to see a big sell off in the shares prices of Japara (JHX), Estia (EHE) and Regis (REG), will now NOT go ahead. Originally the Government was looking to make savings of ~$1.2bn and although some form of the changes will obviously proceed, the structure of the changes will be amended to be ‘more palatable’ for the industry.
In short, the new proposal moves the burden of the savings target from purely high care operators and spreads it across the industry more broadly – which is a net benefit for the listed players. The other important aspect here is clarity around the funding environment, probably sooner than most in the industry thought. The sector was looking for clarification early in 2017 and this development should be a very positive development.
We saw some big moves across the sector after news broke at the conference, with initial reports fairly sketchy before confirmation from the Minister’s office (and an article appeared on the AFR website at 4.05pm). More details will flow and we then should see a revision of expectations, however on first read through, the update looks pretty favourable – or at least a lot better than was first scheme that was proposed. Big volume through on the match today suggests this might just get the sector back in the spotlight. Keep on the radar
Estia (EHE) Daily Chart
Japara (JHX) Daily Chart
Regis (REG) Daily Chart
Another stock we have on the radar is Vita Group (VTG) – which we wrote about back on the 30th November looking for a pullback in to the $2.50/$2.60 region – we satisfied that today and it seems like a very good low is in place for that stock. Subscribers should watch for alerts…
Vita Group (VTG) Daily Chart
TPG Telecom (TPM) Weekly Chart
TPG was a higher risk short term trade that had a stop on a close below ~$6.90 which was achieved yesterday. Given continued weakness today we suggested to stop out of that holding for a ~5% loss
We had a range today of +/- 51 points, a high of 5451, a low of 5400 and a close of 5429, up +28pts or +0.52%. As we wrote this morning, we get an excellent technical buy signal if the market can close over this 5,450 area, targeting at least 5550 into 2017.
ASX 200 Intra-Day Chart
ASX 200 daily chart
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