Sectors: Technology
The Materials Index is nothing new to the MM report over recent months as we look for Beijing to successfully turn around the world’s second largest economy. The story of the last 9 months has been a runaway Tech Sector dragging global indices higher but we believe this elastic band is becoming stretched and although we still see further gains from Big Tech we believe their relative outperformance is at/close to peaking.
The technology provider that underpins billing for key services like electricity and gas has sat on our hitlist for the Emerging Companies Portfolio since February, and we continue to like the story.
NXT –2.64%: A mixed result for the data centre operative today with a strong FY23 in the books but they guided lower for FY24 than consensus, initially pushing shares sharply lower, however, an explanation of the miss (investing in capacity) will ultimately have a positive impact on growth in outer years, which caused the stock to rebound. Data services revenue came in at $362m, up 25% YoY strong relative to $355m consensus and guidance of $350-360m, underlying EBITDA was inline and no dividend was declared, all as per programmed. They said FY24 underlying EBITDA would be $190-200m versus consensus of $210m, which was the issue, however higher costs will drive better growth in FY24 and beyond.
The reason for the 20% drop today their result seemed very good
Hi , I have these stocks and wonder what your view on them are?
Buy , hold , sell? While I think the reporting was just ok, they certainly are not shooting the lights out.
I had them before I joined MM, And I am slowly getting my portfolio to be close to your’s.
Hey James and Team
Thanks for your ongoing commentary.
My questions :
WTC – following Wednesday’s results you stated ” MM has no interest in WTC ” . At what price would you consider buying
MP1 – It is in an upgrade cycle . Would MM add to your position here?
General Advice only
Thank you
David
CAT offers technology and software solutions to sports teams, providing meaningful data to athletes and coaches regarding tactical decisions and conditioning levels. The NRL is an example with the packs that sit below the neck of a player supplied by Catapult. The space has seen significant investment over the last decade as the importance of data in professional sports becomes critical, with the market expected to grow ~20% a year to over $125b in 2026. After multiple years of investment and some clear disappointment along the way, Catapult is just starting to hit its stride now.
The largest internet conglomerate in Southeast Asia has been on our International Equities Hitlist since March, with their ability to ‘tweak’ the cost base in their business to drive profitability the main reason for inclusion. They have three key business lines in digital entertainment (online games), e-commerce & digital payments. Recently, however, they highlighted an important consideration for the broader technology sector, that while managing the cost side can drive profitability in the short term, the challenge is achieving it without impacting growth, and for now, growth from SE US has underwhelmed.
Online accounting stock XRO has drifted lower with the overall Tech Sector but we remain bullish following its excellent earnings update in mid-May which illustrated good progress as they work towards balancing growth and profitability i.e. XRO is still up over 65% year to date hence some consolidation is to be expected – XRO’s next scheduled report is in November.
TNE has been on our radar for a few months as it pulls back from its early June high, demand for their enterprise software solutions has remained very strong, and much like our thesis to own Microsoft, TNE is a major beneficiary of the growing digital transition as companies/Governments upgrade legacy IT footprints – TNE’s next scheduled report is in November.
