Banks lead the market higher for the week (CCP, ANZ)
WHAT MATTERED TODAY
A strong week for Aussie stocks (+2%) with the banks finally finding some form and bouncing from oversold levels while the resources chopped around par, however we continue to target another leg down before they present attractive buying.
Ramsay Healthcare (RHC) and Telstra (TLS) were big movers on the week (to the downside), earnings misses for both, while we’ve seen some corporate activity heat up with another bid for Gateway Lifestyle (GTY) - Brookfield now entering the battle with a $700m proposal. Meanwhile, there’s a lot happening around the outdoor advertising space - APN Outdoor (APO) has been bid for by French outdoor advertising company JCDecaux ( $1.1 billion) while APN itself is trying to acquire Here, There & Everywhere's Adshel with a revised bid of $540 million! A few corporate advisers earning good money out of this tussle!
Overall the ASX 200 lost -7 points today or (-0.11%) to 6225. After once again flirting with the 6250 region
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Credit Corp (CCP) $17.46 / -7.32%; The debt collection company was reinstated today after responding to a (sort of) random report that attacked their business model and accounting standards, initially falling ~20% before recovering to now trade ~6% below Wednesday’s close price. The report by Checkmate Research questioned the earnings history of Credit Corp, saying the company’s earnings have been too stable for such a high risk and volatile business. The report also questioned Credit Corps lending arm, considering it a ‘payday lender’ and using loopholes in legislation to avoid such a classification which would greatly increase regulatory oversight and funding costs – Westpac is just one of many lenders that refuse to provide capital to payday lenders. Credit Corp has since refuted all of the claims made against them from the report and reaffirmed guidance for the 2018 financial year.
Although the report has been refuted and doesn’t show clear evidence for many claims, no doubt many will start to question whether or not there is a soft underbelly to CCP, particularly relevant after the Glaucus’ attack on Blue Sky recently that has seen the stock price fall over 80%.
Credit Corp (CCP) Chart
ANZ Bank (ANZ) $28.65/ 2.87%; Was the outperformer today after they announced that they would double the size of their share buyback to A$3 billion after a series of asset sales has them flush with cash. Most analysts had that number already baked in + more again next year as they reward shareholders for patience. We think it’s the right move given shares are such a depressed level… ANZ saying “The progress of our transformation means we are able to return this surplus capital to shareholders while retaining appropriate flexibility to invest in our business and maintain unquestionably strong capital levels.”
ANZ Bank (ANZ) Chart
Weekly Moves – Stocks & Sectors;. The banks enjoying a rare week in the sun while the Materials lagged – a theme we covered last week which has started to play out nicely. As suggested before, another leg down in the miners and we may step up to the plate.
In terms of stocks, APN the star while TLS made new lows…
Stock moves over the week
Broker calls; a lot happening on the corporate front this week + a busy week for analysts…Morgans very quick to downgrade Credit Corp(CCP) after the Bluesky debacle!
· Sydney Airport Downgraded to Neutral at UBS; PT A$7.30
· Origin Energy Resumed Outperform at Credit Suisse; PT A$10.50
· Metcash Downgraded to Sell at Citi; PT A$2.50
· Precinct Properties Raised to Neutral at Forsyth Barr
· Costa Downgraded to Sell at Wilsons; PT A$6.80
· LendLease Upgraded to Neutral at JPMorgan; PT A$20
· Redbubble Rated New Buy at Goldman; PT A$1.90
· Fletcher Building Downgraded to Equal-weight at Morgan Stanley
· Credit Corp Cut to Hold at Morgans Financial; Price Target A$23
· Bellamy’s Downgraded to Hold at Morgans Financial; PT A$18.50
OUR CALLS
No trades in the MM Portfolio’s 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.
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