Market Wraps

Evening Wrap: ASX 200 higher, China unexpectedly cuts rates, Life360 shares surge on earnings upgrade

Tue 15 Aug 23, 5:13pm (AEST)

The S&P/ASX 200 closed 28 points higher, up 0.39%. 

The ASX 200 finished higher on solid earnings from large cap names including CSL, Cochlear, Treasury Wines and Life360, China unexpectedly cut rates by most since 2020 as economic woes deepen, Japan's GDP grew much faster than expected in sign of resilience and a few Macquarie notes of interest.

Let's dive in.


Today in Review

Tue 15 Aug 23, 4:30pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,305.0 +0.39%
All Ords 7,520.4 +0.36%
Small Ords 2,861.9 +0.26%
All Tech 2,597.1 +1.05%
Emerging Companies 2,070.8 -0.76%
Currency
AUD/USD 0.6508 +0.32%
US Futures
S&P 500 4,512.0 +0.13%
Dow Jones 35,370.0 0.00%
Nasdaq 15,308.25 +0.25%
Name Value % Chg
Sector
Health Care 40,530.3 +3.16%
Information Technology 1,920.9 +1.76%
Consumer Staples 13,079.7 +0.40%
Industrials 6,854.0 +0.39%
Financials 6,422.0 +0.31%
Consumer Discretionary 3,109.2 +0.18%
Energy 11,943.5 +0.16%
Utilities 8,724.7 +0.11%
Communication Services 1,598.3 -0.22%
Materials 17,685.4 -0.27%
Real Estate 3,036.5 -0.49%

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ASX 200 Session Chart

ASX 200 intraday chart
ASX 200 finished higher but off best levels (Source: Market Index)

Markets

The ASX 200 finished higher but off best levels of 0.72%. Healthcare led to the upside thanks to better-than-expected results from CSL (+3.7%) and Cochlear (+5.7%). Tech names also rallied in-line with the Nasdaq's overnight outperformance and optimism around Life360's earnings (+12.3%). The Resource sector struggled for upside after China reported data that broadly missed expectations, notably industrial production and retail sales. The unexpected PBOC rate cut failed to buoy sentiment. From a seasonal perspective, the market is working its way through a recent low, ahead of the worst performing month of the year.

ASX 200 seasonality chart
ASX 200 seasonal performance between June 1992 to March 2023 (Source: Market Index)

Economy

Japan’s GDP growth accelerated to 6.0% year-on-year in Q2, up from 3.7% in Q1.

  • Well above analyst expectations of 3.1%

  • Marks the fastest rate of growth since Q4 2020

China’s central bank unexpectedly cut its one-year medium-term lending facility by 15  bps to 2.50% from 2.65% – marking the second cut in three months. 

China also reported July data that broadly missed expectations including:

  • Industrial production eased to 3.7% year-on-year in July from 4.4% in June and below the 4.4% increased analysts had expected

  • Retail sales up 2.5% in July, down from 3.1% in June and the 4.5% rebound analysts had expected

  • Fixed asset investment fell to 3.4% in July from 3.8% in June and below the 3.8% expected

  • Unemployment ticked up to 5.3% in July from 5.2%

  • The National Bureau of Statistics did not include the unemployment figure for young people, which soared to record highs in recent months


Latest news


Market Insights

A few interesting snippets from today.

Life360 (ASX: 360) posted a mean Q2 result:

  • Revenue of $70.8m, up 45% year-on-year

  • Net loss of $4.4m vs. $33.0m a year ago

  • Upgraded FY EBITDA guidance to $9-14m from prior $5-10m

  • Reiterates Life360 subscription growth of more than 50% year-on-year

  • Reiterates operating cash flow of $5-10m

It has a cracker chart and also rallied on its previous quarterly result (+11.7% on 16 May).

360 2023-08-15 16-54-40
Life360 daily chart (Source: TradingView)

Temple & Webster (ASX: TPW) posted a relatively mixed FY23 result:

  • Revenue of $395.5m, down 7.2% vs. $397m expected by analysts

  • Net profit of $8.3m, down 9.7% vs. $7.3m expected

  • Positive momentum in Q4 continued into FY24 with revenue between 1 July and 13 August up 16% on the prior period

  • Plans to continue $30m on-market buyback

The stock nosedived 17% in the first three minutes of trade, before experiencing a V-shaped rebound. Its worth noting that TPW has a pretty high short interest of 5.15%, which might have squeezed the stock (as shorts take profit).

TPW 2023-08-15 17-01-52
Temple & Webster daily chart (Source: TradingView)

Interesting news and movers

Trading higher

  • +16.7% Lake Resources (LKE) – Completes stage 1 extraction and injection test campaign at Kachi

  • +14.9% GUD Holdings (GUD) – Earnings

  • +12.3% Life360 (360) – Earnings

  • +8.7% Reckon (RKN) – Earnings

  • +8.0% Delta Lithium (DLI) – 60m block trade (Mon)

  • +6.8% Azure Minerals (AZS) – SQM interest

  • +6.3% Sims (SGM) – Earnings

  • +5.7% Cochlear (COH) – Earnings

  • +4.2% Pro Medicus (PME) – Earnings

  • +2.8% Treasury Wine (TWE) – Earnings

  • +2.7% CSL (CSL) – Earnings

  • +0.9% REA Group (REA) – Upgraded by Macquarie

  • +1.3% National Australia Bank (NAB) – Earnings 

Trading lower

  • -33.3% Melbana Energy (MAY) – Drilling update

  • -4.5% Temple & Webster (TPW) – Earnings

  • -4.3% Seek (SEK) – Earnings

  • -4.3% Silex Systems (SLX) – Testing of second module

  • -3.0% Region Group (RGN) – Earnings

  • -2.9% Challenger (CGF) – Earnings

  • -0.8% Deterra Royalties (DDR) – Earnings


Broker notes

Macquarie’s take on recent earnings:

Aurizon (AZJ) – Outperform with $4.04 target ($3.70 as at 14 Aug close)

  • “FY23 was a tough year with coal volumes at record lows caused by weather and derailments.”

  • “The weather is getting drier and coal volumes are improving. UT5 reset is positive. The delta for AZJ share price is confidence in the growth from the bulk business and the broader set of opportunities.”

Beach Energy (BPT) – Neutral with $1.55 target ($1.67 at 14 Aug close)

  • “FY23 NPAT of $385m was an 8% beat to MRE, however the soft final dividend payout ratio was a disappointment vs our expectations.”

  • “BPT won't generate much free cash in FY24 — low/uncertain Otway nominations (Origin) and delays to Waitsia Phase 2 start.”

  • “Longer term, new management may be able to unlock value from BPT's contingent resource, exploration acreage and infrastructure positions in the East & West coast gas markets.”

Bendigo & Adelaide Bank (BEN) – Neutral with $9.25 target ($8.92 at 14 Aug close)

  • “BEN’s FY23 result was ~4% below our forecast, driven by weaker revenue trends and a miss on costs.”

  • “With a lower earnings profile over the medium term than major bank peers, we see BEN’s FY24E PE discount of ~11% to major bank peers (ex CBA) as adequate.”

  • “While not expensive at current levels, with a -5% cash earnings CAGR to FY26E, we see limited upside.”

JB Hi-Fi (JBH) – Underperform with $45.00 target ($47.21 at 14 Aug  close)

  • “JBH delivered a strong result, with a beat across both the top and bottom line, with market share gains and strong gross margins.”

  • “Cost growth has exceeded revenue growth, as wages and rents continue to rise, while the retail environment slows. Margins under pressure.”

  • “The key driver for our recommendation is the slowing macroeconomic environment, with mortgage resets peaking in the second half of CY23.”


Scans 

Top Gainers

Code Company Last % Chg
VSR Voltaic Strategic... $0.05 +25.00%
OPN Openn Negotiation... $0.012 +20.00%
CI1 Credit Intelligen... $0.185 +19.36%
LGM Legacy Minerals H... $0.155 +19.23%
AAU Antilles Gold Ltd $0.028 +16.67%
View all top gainers

Top Fallers

Code Company Last % Chg
MAY Melbana Energy Ltd $0.07 -33.33%
PEC Perpetual Resourc... $0.023 -17.86%
MXR Maximus Resources... $0.03 -16.67%
TTT Titomic Ltd $0.021 -16.00%
MRL Mayur Resources Ltd $0.24 -15.79%
View all top fallers

52 Week Highs

Code Company Last % Chg
OEL Otto Energy Ltd $0.021 +16.67%
GUD G.U.D. Holdings Ltd $11.70 +14.48%
SLB Stelar Metals Ltd $0.36 +14.29%
360 LIFE360 Inc $9.00 +12.22%
NWSLV News Corporation $32.00 +10.35%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
MXR Maximus Resources... $0.03 -16.67%
VBS Vectus Biosystems... $0.40 -11.11%
ACW Actinogen Medical... $0.026 -10.35%
HAL Halo Technologies... $0.095 -9.52%
ILT Iltani Resources Ltd $0.19 -9.52%
View all 52 week lows

Near Highs

Code Company Last % Chg
VVLU Vanguard Global V... $65.89 -0.59%
IHD Ishares S&P/ASX D... $13.15 +0.15%
KOV Korvest Ltd $8.60 -1.15%
FLT Flight Centre Tra... $22.48 -0.36%
BILL Ishares Core Cash... $100.53 0.00%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
RAC Race Oncology Ltd $0.89 +2.89%
LFS Latitude Group Ho... $1.185 0.00%
NHF Nib Holdings Ltd $7.885 +0.19%
CXO Core Lithium Ltd $0.545 -2.68%
RIO RIO Tinto Ltd $105.83 -0.65%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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