Market Wraps

Evening Wrap: ASX 200 higher, PointsBet sells US assets, Elders shares tumble as profits halve

Mon 15 May 23, 4:27pm (AEST)

 The S&P/ASX 200 closed 10 points higher, up 0.14%. 

The market is flat for a fifth straight session, PointsBet decides to sell its US business for US$150 million despite spending more than $600 million on marketing in the past three years, Elders fundamentals catches up to its share price performance, UBS' ratings for Aussie banks and Goldman's take on QBE.

Let's dive in.


Today in Review

Mon 15 May 23, 4:16pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,267.1 +0.14%
All Ords 7,460.5 +0.10%
Small Ords 2,913.8 -0.16%
All Tech 2,282.1 -0.48%
Emerging Companies 2,088.2 -1.30%
Currency
AUD/USD 0.6681 +0.53%
US Futures
S&P 500 $4,146.0 +0.19%
Dow Jones $33,406.0 +0.15%
Nasdaq $13,417.0 +0.15%
Name Value % Chg
Sector
Real Estate 3,215.3 +0.85%
Materials 17,978.0 +0.78%
Energy 10,682.1 +0.63%
Consumer Discretionary 3,105.8 +0.48%
Industrials 6,922.9 +0.43%
Health Care 44,939.6 +0.32%
Utilities 8,572.7 +0.15%
Information Technology 1,613.0 +0.03%
Communication Services 1,558.8 +0.03%
Consumer Staples 13,454.0 -0.07%
Financials 6,117.9 -0.85%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
Market climbs from session lows to squeeze out a small gain (Source: Market Index)

Markets

Another sleeper session where the ASX 200 closed at best levels and off session lows of -0.30%. This is the fifth session in a row where the market refuses to down but it doesn't want to post some meaningful gains either.

Economy

No major economic announcements.


Latest news


Market Insights

PointsBet: Selling its US business

The US legalised sports betting in May 2018, when the Supreme Court struck down the Professional and Amateur Sports Protection (PASPA).

PASPA prohibited states from legalising sports betting, except for Nevada and a few other states. This opened up a landgrab situation, where new bookmakers were burning cash to obtain market share.

PointsBet (ASX: PBH) debuted in June 2019 at an IPO price of $2.00. It has since raised over $1.1bn from investors and spent over $600m in marketing alone in the US.

What's it got to show?

Well, it's selling its US business to Fanatics Betting for US$150m (A$222) and plans to return $1.07 to $1.10 per share back to shareholders.

The stock is down more than 20% on Monday, down 39% in the last twelve months and down 91% from all-time highs. Yikes.

Elders: That explains it

Elders copped a 23% selloff on 14 November 2022 after its FY22 results flagged a cautious outlook amid adverse weather conditions and softening commodity prices. Longstanding CEO Mark Allison also announced his retirement.

Nevertheless, Elders was still viewed as a defensive agricultural play and in February 2023, management reiterated a favourable cropping outlook.

Still, the stock continued to trend lower.

Elders chart
Elders price chart (Source: TradingView)

Elders posted its half-year FY23 results on Monday and it became clear as to why the 'defensive' stock couldn't stop falling.

Its revenue was up 9% to $1.66bn but underlying profits fell 45% to $50.6m amid softening livestock trading conditions, weaker crop input prices and unseasonably wet weather.


Interesting news and movers

Trading higher

  • +12.1% InvoCare (IVC) – Revised offer from TPG

  • +5.1% NewsCorp (NWS) – Earnings (last Friday)

  • +4.5% Develop Global (DVP)

  • Gold sector move: Evolution (+4.2%), Ramelius (+3.8%), Bellevue Gold (+3.1%), Gold Road (+2.9%), Northern Star (+2.9%)

Trading lower

  • -20.9% PointsBet (PBH) - Plans to divest US business

  • -14.1% Pact Group (PGH) – Guidance

  • -13.3% Elders (ELD) – Earnings

  • -8.9% Nanosonics (NAN) – Downgraded by JPMorgan

  • -2.8% Eagers Automotive (APE) – Downgraded by Macquarie

  • -1.7% REA Group (REA) – Downgraded by Morgans

  • Lithium sector move: Vulcan Energy (-6.6%), Patriot Battery (-5.7%), Argosy (-2.9%), Allkem (-1.9%), Pilbara Minerals (-1.1%)


Broker notes

UBS on Australian Banks

  • “As expected the Australian Banks reported record 1H 23 results of $15.6B, helped by 14 bps of margin expansion, a still benign credit cycle (ECL 9bps), 9% volume growth and cost discipline (+2.9% pcp).”

  • “These strong results however were not enough to offset a more challenging outlook, with the rate of NIM expansion (11bps of downgrades) and outlook disappointing relative to consensus.”

  • “Intense competition in mortgages (1H 23 impact) and deposits (2H expected impact) could result in NIMs contracting further 5bps into FY25E. Consensus EPS downgrades are currently running at -5% over the past few days post results, and are yet to find a floor, in our view.”

  • UBS was BUY rated for Macquarie and ANZ, NEUTRAL rated for Westpac and Commonwealth Bank and SELL rated for Bank of Queensland, Bendigo Bank and NAB

Goldman Sachs notes:

Aristocrat Leisure (ALL): Buy with $45.70 target price

  • “Key listed gaming peers in the US have reported 1Q23 results across the land-based space over the past couple of weeks.”

  • “Common themes across all results were continued strength in topline growth and shipments, i.e. flagging strong industry growth for the quarter.”

  • “For ALL, we expect the Americas division to report c. 18.2% growth YoY for 1H23.”

QBE Insurance (QBE): Buy with $17.45 target price

  • “QBE outlook for FY23 has been updated to reflect strong GWP growth trends over 1Q23.”

  • “Running yield still strong as expected and mark to market impacts broadly in line overall: Running yield was 4.3% at the end of Apr-23 v 4.1% at Dec-22.”

  • “While the update on PYD was a negative surprise, higher CAT costs over Apr-23 YTD were not entirely unexpected given peer commentary and elevated CATs over 1Q23.”


Scans

Top Gainers

Code Company Last % Chg
INP Incentiapay Ltd $0.013 +85.71%
WSR Westar Resources Ltd $0.051 +50.00%
WIA WIA Gold Ltd $0.037 +42.31%
RTG RTG Mining Inc $0.059 +31.11%
KAM K2 Asset Manageme... $0.072 +24.14%
View all top gainers

Top Gainers

Code Company Last % Chg
INP Incentiapay Ltd $0.013 +85.71%
WSR Westar Resources Ltd $0.051 +50.00%
WIA WIA Gold Ltd $0.037 +42.31%
RTG RTG Mining Inc $0.059 +31.11%
KAM K2 Asset Manageme... $0.072 +24.14%
View all top gainers

52 Week Highs

Code Company Last % Chg
KAM K2 Asset Manageme... $0.072 +24.14%
IVC Invocare Ltd $12.435 +12.13%
ENR Encounter Resourc... $0.28 +7.69%
WA1 WA1 Resources Ltd $3.52 +7.65%
PBP Probiotec Ltd $2.74 +4.98%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
EXR Elixir Energy Ltd $0.092 -29.23%
AIV Activex Ltd $0.022 -26.67%
TOY Toys'R'US ANZ Ltd $0.014 -22.22%
AV1 Adveritas Ltd $0.048 -20.00%
VN8 VONEX Ltd $0.025 -16.67%
View all 52 week lows

Near Highs

Code Company Last % Chg
FLT Flight Centre Tra... $21.42 -0.83%
SLA Silk Laser Austra... $3.01 0.00%
NHF Nib Holdings Ltd $8.11 +0.62%
MI6 Minerals 260 Ltd $0.475 -3.06%
CWP Cedar Woods Prope... $4.97 -1.19%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
AEE Aura Energy Ltd $0.185 -2.63%
MGX Mount Gibson Iron... $0.42 -1.18%
DDH DDH1 Ltd $0.778 +0.32%
SFC Schaffer Corporat... $16.95 -0.29%
COB Cobalt Blue Holdi... $0.24 -5.88%
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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