Viewpoint: Bullish
It’s easy to comprehend the struggles QAN has endured over the last 12-months but under $5 we must question if too much bad news is priced into the iconic airline. The exciting factor for QAN is the pandemic allowing the company to totally rebase their costs putting them in a position to emerge strongly from COVID.
Yesterday CTD popped almost 5% following an update which we felt was ok considering the obvious challenging conditions and moving forward we believe things look good as they continue to win new customers plus they acquired US Business Travel & Transport last September for $US200m – we love the concept of buying at the probable bottom of the cycle, even if they had to raise capital to do so
Markets regularly get ahead of themselves bringing to mind the old trading floor saying – “buy on rumour & sell the fact”. The chart below illustrates that the Australian Energy Sector roared higher in January before falling even as the oil price rallied, its actually failed to scale last months top even after the underlying commodity has rallied ~20%.
US stocks were again fairly quiet overnight as the tech space took a rest whereas the Dow still rallied 90-points / 0.3% – no major leads for the ASX.
Yesterday MM switched from our Costa Group (CGC) position to the battered a2 Milk (A2M) a move we have been flagging over the last few weeks.
We mentioned bond yields earlier and the US 10-years have made fresh 12-month highs this week but while we are bullish longer dated yields a period of consolidation wouldn’t surprise.
It has been an incredibly tough time for A2M over the past 12 months with the share price halving as a combination of management issues and demand reductions thanks to COVID at a time when the company was maturing, and growth was becoming more difficult. Costa on the other hand has enjoyed a strong resurgence over the past year with better production levels and demand for produce.
Super Retail Group (SUL) +1.99%: whirlwind of a day for SUL, closing marginally higher. The result was great, but largely as expected. Profit up 139% to $177m the big number, and an interim dividend of 33c fully franked plays into our holding in the income portfolio.
Whitehaven (WHC) -1.26%: Clawed its way back from some early selling, the headline $90m NPAT loss for the half was a touch worse than expected but the company defended its position well in the investor call and clearly, this half was the bottom point of the cycle.
EML Payments (EML) +16.39%: A decent 1H21 result here with revenue of $95.3m up from $59m in 1H20, i.e. top line growing at 61% while they reinstated guidance for the full year, for EBITDA of $50-54m inline with current consensus of $53m.
