Australia shrugs off global turmoil (A2M)
WHAT MATTERED TODAY
The local market shrugged off weakness seen overseas to rebound strongly today, recovering all of yesterday’s losses and some! The market grinded higher, albeit on low volumes as has been experienced all week. Banks were the main driver of the index, but CBA’s daily volume was 28% lower than the 20 day average! For the first time, CSL cracked the $200 mark, gaining 2.6% to $200.60. AGL and Origin rebounded from recent declines as investors absorb what an ACCC crackdown in the energy sector could mean for the pair, with JP Morgan saying shares price action had overshot the mark. Energy names however – not of the retail supplier kind – didn’t fare as well, as oil slumped. Energy being the worst sector in the market today.
Overall, the ASX200 added 52 points, or 0.85% to close at 6268 – or 10 points higher than when Trump took to twitter for his detailed communication regarding further trade restrictions!
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves;
· Insurance Australia (IAG AU): Insurance Australia Reinstated Sell at Shaw and Partners; PT A$7
· Lovisa (LOV AU): Lovisa Downgraded to Underweight at Morgan Stanley; PT A$9.50
· Spark Infrastructure (SKI AU): Spark Infrastructure Cut to Underperform at Credit Suisse
· Sydney Airport (SYD AU): Sydney Airport Cut to Underperform at Credit Suisse; PT A$6.75
· Telstra (TLS AU): Telstra ADRs Raised to Outperform at Bernstein; PT Set to $14.94
A2 Milk (A2M) $10.50 / -2.96%; A2 released an unaudited revenue number for FY18, beating expectations with $922m vs $914m expected, up 68% for the year. The release also signalled that EBITDA will be around $276m, ~30% of revenue, above consensus estimates of $270m – so in all respects the stock should be up right? Well, investors sold into the result because of shady guidance for current financial year, with the company saying they expect to continue to grow but will realize a number of one off costs as new CEO Jayne Hrdlicka steps into the role from Monday. A2 Milk has been notoriously vague when providing an outlook for the year ahead, and that theme continued today. The announcement lacked clarity around any forward estimates, and detail is something the market loves. Investors should expect “further growth in revenue particularly in respect of nutritional products.”
A2 Milk (A2M) Chart
OUR CALLS
No changes to the portfolios today.
Have a great night
Harry & the Market Matters Team
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