Evening Wrap: ASX 200 falls, Liontown raise speculation + 3 tech stocks withstanding the selloff

The Index didn't stand a chance against the rising yield backdrop, Australia's unemployment rate ticked down to 3.6% but there's more than meets the eye, Corporate Travel finishes around breakeven from a 5% selloff in early trade, Liontown could be raising $360 million at a 35% discount and three tech charts of interest.

Let's dive in.

ASX 200 Session Chart

ASX 200 lower and closed a little off worst levels (Source: Market Index)

Markets

The ASX 200 finished lower amid a broad-based selloff on Thursday. Markets have been trying to bounce but yields are saying 'not so fast'. The US 10-year yield is knocking on the door of 5.0% and we're continuing to see this 'good news is bad news' dynamic play out (which is a common characteristic in bear markets). The solid data continues to put one more rate hike in the table as more and more cuts are priced out of 2024 and 2025. It's a hard time to risk-on as yields continue to push towards quarter of a century highs.

Economy

Australia’s unemployment rate ticked down to 3.6% in September from 3.7% in August. The result beat analyst expectations of no change but there’s more than meets the eye:

• “It is important to remember that a fall in unemployment does not always mean much higher employment … The fall in the unemployment rate in September mainly reflected a higher proportion of people moving from being unemployed to not in the labour force.” – Kate Lamb, ABS Head of Labour Statistics

• “The recent softening in hours worked, relative to employment growth, may suggest an easing in labour market strength, though it also follows particularly strong growth over the past year.”

• Full time employment fell by 39,990 offset by a 46,500 rise in part time workers

Latest news

Corporate Travel's Wild Swing

Corporate Travel (ASX: CTD) provided a market update which said the first quarter of FY24 was "off to a great start" and on-track to meet its goals for the full-year. In the September quarter:

• Revenue up 36% to $187.9 million

• Underlying EBITDA up 157% to $56.6 million

The company said it expects net profit after tax in the first half of FY24 to be in the range of $40 million to $42 million, which falls short of Morgan Stanley's forecast of $43 million.

Macquarie analysts (who I assume are CTD bulls or just has really low expectations) expected $35.8 million in the first half.

You can see this bullish bearish dynamic play out in the intraday chart, with CTD shares down 5% in early trade and clawing back early losses to close 0.7% higher.

Corporate Travel intraday chart (Source: TradingView)

More Liontown Speculation

Sources told the Australian that Liontown (ASX: LTR) is working on a $360 million with it to likely price around $1.80 per share or a 35% discount to its last close ($2.79 on October 13).

The AFR earlier reported a potential $400 million raise with shares priced in the $2.20 to $2.60 range.

Liontown is the fourth most shorted stock on the ASX. So it'll be interesting to see how the stock trades amid this short covering vs. raise discount dynamic.

Tech Strength

Rising yields are expected to de-rate growth-oriented companies. This was evident in the ASX 200 Info Tech Index's 1.8% decline on Thursday, but a few companies performed exceptionally well. Here are the charts:

Megaport daily chart (Source: TradingView)

Audinate daily chart (Source: TradingView)

Dicker Data daily chart (Source: TradingView)

Interesting news and movers

Trading higher

• +6.8% Weebit Nano (WBT) – Licenses ReRAM

• +6.9% Aurelia Metals (AMI) – Reports Q1 production

• +3.6% Anson Resources (ASN) – Paradox lithium project MRE update

Trading lower

• -10.1% Telix (TLX) – Q3 result, Illuccix update, TLX591 study update

• -7.8% Netwealth (NWL) – Q1 funds under management

• -4.9% AMP (AMP) – Barrenjoey downgrade

• -3.9% Winsome Resources (WR1) – Quebec exploration update

• -3.9% Mineral Resources (MIN) – Completes restructuring agreement

• -3.8% Sims (SGM) – Morgan Stanley downgrade

• -4.4% Iluka Resources (ILU) – Reports Q3 production

Broker notes

A few Citi notes of interest:

AMP (AMP) – Neutral with $1.15 target ($1.14  at Oct 18)

• “Overall, AMP’s 3Q looks soft but nowhere more so than for its bank, with NIM expected to be below previous guidance of 130-135bps.”

• “This implies a 2H margin of below ~1.21% given the 1.39% recorded in 1H. The risk is this flows through to later years, with AMP seemingly needing to pull back from growth even to achieve this outcome.”

BHP (BHP) – Neutral with $44.00 target ($45.88 at Oct 18)

• “BHP SepQ production was a modest miss vs Citi. Met coal was the key shortfall given long wall move, maintenance and higher stripping.”

• “FY24 costs and production guidance reiterated. No material earnings changes from production result adjustments.”

Woodside (WDS) – Sell with $32.00 target ($36.88 at Oct 18)

• “We downgrade CY23-25 earnings by 5-7% largely due to lower production forecasts at Mad Dog 2 (slower ramp-up) and revision to realised prices.”

• “We believe the share price overly discounts the value of the dividends in the near term, to the extent commodity prices stay high, and have dislocated from fundamentals.”

Plus a few Macquarie notes of interest:

Credit Corp (CCP) – Neutral with $11.80 target ($11.97 at Oct 17)

• “Collection performance in the US Purchased Debt Ledge segment has caused an impairment and downgrade FY24 earnings guidance.”

• “FY24 Underlying NPAT (ex impairment) has been downgraded 10.5% (to $80-$90m) and FY24 Statutory NPAT downgraded 57.9% (to $35-$45m).”

• “The near-term performance for the US PDL and Consumer Lending segments are set to drive FY24 growth, with the AU/NZ PDL segment expected to be a drag until supply of PDL books improves.”

Evolution Mining (EVN) – Underperform with $3.50 target ($3.59 at Oct 18)

• “EVN reported its 1QFY24 result; production was 14% below our expectations while AISC was 5% higher.”

• “EVN reported a free cash outflow of A$26.4m for 1QFY24, which compared to our expectations of a A$1.4m free cash build.”

• “Incorporating the softer 1QFY24 operating performance sees our FY24 EPS estimate reduce 15%.”

Scans