Viewpoint: Bullish
PPT -9.44% PDL +8.40%: The takeover took a more definitive step today as we thought it would on the day that Perpetual (PPT) reported FY22 results, which quickly became a secondary concern. The deal is framed as a takeover worth $6.016 for PDL based on yesterday’s close on PPT, however, as PDL shareholders, we’ll receive some PPT stock and…
We remain a fan of this $9.5bn nickel and lithium miner which resides in our Flagship Growth Portfolio with a 5% weighting. We’ve heard a few in the market talking about the prospects of Rio Tinto (RIO) making a play and while it would be nice, we view it as unlikely given valuations. OZL was trading at a 10-15% discount to the value of its asset base, whereas IGO is trading at a ~10-15% premium given the market’s more bullish stance towards lithium stocks but never say never as RIO must be feeling a little behind the curve at this point in time.
Good things don’t last forever but in stock markets, they often have a habit of going on further than many imagine and this has been the case with global energy stocks even as the underlying crude oil price has faltered. Similar to WDS we believe that Exxon Mobil (XOM) will make new 2022 highs over the coming weeks/months before we may switch our stance from bullish to neutral i.e. resources are cyclical businesses and this could easily be yet another “failed pop” move.
ILU has recovered strongly from its mid-July low and we can see a break of $12 over the coming months following the company’s strong quarterly update in July. This leading mineral sands operator has enjoyed rising prices due to elevated demand & tight supply for products like paints, tiles and batteries. We believe this stock is far better placed to hide from the Chinese property implosion than purer iron plays such as RIO mentioned earlier. Yesterday saw the stock soar almost 10% after delivering a stellar half-year result which included free cash flow of ~$350mn and a 25c fully franked dividend being paid on the 5th of September.
WDS rallied another +3.4% yesterday taking it within 3% of a new post-Covid high, a good performance considering crude oil is trading over 15% below its June high. Similar to BHP we are looking for WDS to maintain its strength until we see recession fears increase, assuming they do, and at this stage a break above its $35.77 high for the year feels inevitable. The stocks due to report next week and with a large…
CXL +4.85%%: full-year results out today were hardly about the numbers but more about the opportunity for environmental industrial solutions business Calix. They are developing technology that can reduce emissions and environmental impact across a range of sectors including biotech, minerals processing, cement & lime manufacturing and water treatment. They received…
WTC +12.38%: A very strong result today from the logistics technology business which is propelling the stock rapidly towards all-time highs above $60. Revenue of $632.2 million was up +25% YoY and above consensus of $626.2 million while EBITDA of $319m was a 3% beat , plus they forecast FY23 earnings growth of at least 21% which was above the 19% currently…
Hopefully, subscribers aren’t getting too bored of us discussing bond yields but they’re undoubtedly the train driving equities at present – Australian 3-year bonds broke above their July highs yesterday, less than 0.5% below fresh decade highs.
BRG -0.09%: Mostly an inline result across key metrics, profit up 16% was good with the Americas strong and getting better in the 2H, but weakness elsewhere. They do have an elevated inventory position that we knew about, although it does seem particularly high. They stressed that their products are not seasonal and will not need to be discounted in future. A solid update nonetheless but a few moving parts here ATM.
HUB -1.92%: A slight beat from the investment platform business today with total revenue of $192.5m up 78% YoY and around 4% better than our expectations. Underlying EBITDA of $70.4m was also a beat (~5%) while profit was around 30% ahead, although we are talking low numbers so it’s not that relevant. On the flipside, they did revise down their…
