Viewpoint: Bullish
The ASX200 continues to trade sideways in the face of a deteriorating COVID picture although it hasn’t actually been going anywhere since early June, well before the current Delta wave raised its head on our fair shores. Sydney registered its first case of this outbreak only 30-days ago on the 16th of June, it already feels a lot longer in the Gerrish household!
WHC +4.35%: Out with production numbers this morning and there were lots of moving parts as you’d expect after such a choppy period from an operational standpoint. The short of it is that operations are heading in the right direction with Narrabri expected to have a better FY22 however it’s really just the strong coal price tailwinds masking a lot of operational sins over the past year.
Chalice Mining Limited is an Australia-based gold ore mining and exploration company. It is engaged in greenfield platinum group element (PGE), nickel, copper, cobalt and gold discovery at its Julimar Project in Western Australia. Its projects include Julimar Nickel-Copper-PGE Project and Hawkstone Nickel-Copper-Cobalt Project. The 100%-owned Julimar Nickel-Copper-PGE Project is located 70 kilometer north-east of Perth. The Project is located, with road, rail, port and high-voltage power infrastructure nearby, plus access to a drive-in / drive-out mining workforce in Perth surrounds. The Hawkstone Nickel-Copper-Cobalt Project covers an area of 1,800 square kilometer in the west Kimberley region of Western Australia. It covers several known areas of Ruins and Hart Dolerite which are both considered prospective for magmatic nickel sulphides and other related metals. Its generative projects include Southwest Nickel-Copper-PGE Project, Barrabarra Nickel-Copper-PGE projects, others.
Chemical and explosive business ORI has not recovered from its COVID sell-off although we should note the stock started turning lower back in 2019. Mays half-year results had no major hidden surprises although it did disappoint delivering a 9% drop in revenue and a 25% decline in earnings, this could become a classic case of the worst is behind us.
Melbourne based steel business BSL has grown earnings across its main business areas which has been reflected by a stellar performance by its share price i.e. earnings in the first half came in over $530m, up 78% on the same COVID hit period of 2020.
Cloud based logistics software business is performing strongly even as the Tech Sector has started to miss-fire. The company is delivering where it matters with first half revenue up 16% to $238.7m and importantly positive guidance towards the full years.
Overnight saw a choppy session on Wall Street on a rare day where the large tech stocks dragged down the broader market, the selling wasn’t aggressive in the sector but it was across the board. Again the upside momentum is waning / muted but the uptrend clearly remains intact.
The medium-term technical picture for BHP in $US dovetails nicely with our view towards stocks and the reflation trade:
Victorian 4wd accessory business has been a favourite of MM’s for a while but alas we’ve been too pedantic on entry levels and the runaway train has kept on powering higher. Yesterday as so often occurs for stocks making new highs the board upgraded earnings by ~7%, considering they report in only one month we would assume they’ve got a got a solid handle on the numbers!
WBC slipped over 1% yesterday trading at its lowest level in 11-weeks taking its correction to ~8%, not enough to tempt us back into the stock / sector but a dip back under $24 could well see us start accumulating WBC, or another sector name depending on their respective levels.
