Market Wraps

Evening Wrap: ASX 200 slips + Uranium stocks smashed on Namibia nationalisation rumours

Tue 30 May 23, 5:08pm (AEST)

 The S&P/ASX 200 closed 8 points lower, down -0.11%. 

The local sharemarket drifts lower in an uneventful session that had no US market lead, uranium stocks tumble after news that the Namibian governments is considering nationalising resource companies, Australian building permits tumble to levels not seen since 2012 and why buybacks are often a bad idea for commodity companies.

Let's dive in.


Today in Review

Tue 30 May 23, 4:45pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,209.3 -0.11%
All Ords 7,387.3 -0.11%
Small Ords 2,817.7 -0.34%
All Tech 2,385.6 +0.34%
Emerging Companies 2,037.1 +0.09%
Currency
AUD/USD 0.6516 -0.35%
US Futures
S&P 500 4,227.5 +0.34%
Dow Jones 33,186.0 +0.18%
Nasdaq 14,411.0 +0.55%
Name Value % Chg
Sector
Communication Services 1,566.7 +0.62%
Materials 17,599.1 +0.17%
Health Care 44,538.8 +0.12%
Industrials 6,849.0 +0.12%
Utilities 8,616.9 +0.00%
Consumer Discretionary 2,948.4 -0.04%
Consumer Staples 13,123.7 -0.08%
Information Technology 1,767.6 -0.14%
Financials 6,155.1 -0.35%
Energy 10,907.0 -0.67%
Real Estate 3,133.9 -0.88%

Enjoying the Evening Wrap? Sign up to get it sent directly to your inbox after every trading day.

ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 trends lower intraday to close near worse levels (Source: Market Index)

Markets

A bit of a lull session with the market drifting lower intraday. Telcos led to the upside after Telstra (+0.7%) closed near 7-year highs. Most other sectors finished red. Uranium stocks sold off heavily after rumours that the Namibian government might try to nationalise mining and energy companies (we'll look at that more below). The US markets were closed overnight so let's see how the go tonight and what kind of lead we get tomorrow.

Economy

Australian building permits fell 8.1% month-on-month in April and down 24.1% year-on-year.

  • "Total dwellings approved fell to the lowest level since April 2012. The overall decline was driven by a fall in approvals for private sector dwellings excluding houses, which fell 16.5 per cent, to the lowest level since January 2012," said Daniel Rossi, ABS Head of Construction Statistics

Japan's unemployment rate fell to 2.6% in April from 2.8% in the previous month.

  • Below economist expectations of a fall to 2.7%


Latest news


Market Insights

Buybacks gone wrong: Whitehaven Coal

Buybacks are great for many reasons. It raises earnings per share. It's the company signalling that its shares are undervalued and a positive outlook etc. But share buybacks are often a terrible idea for commodity companies. Especially when commodity prices start to unwind.

Whitehaven Coal (ASX: WHC) started buying back its shares in February 2022.

By February 2023, the company said it had brought back $593 million or approximately 7% of its issued capital. It also planned to buy back another $367 million more.

The stock is up around 90% since February 2022 but down almost 50% from October 2022 peaks. It's currently trading at a 10-month low.

This means that the majority of its buyback has taken place at a higher share price. Investors that didn't use the extra liquidity are now a little stuck.

Namibia might nationalise mining companies

Paladin Energy (ASX: PDN) and Deep Yellow (ASX: DYL) shares finished the Tuesday session down 19.6% and 5.7% respectively.

The stocks tumbled after reports that the Namibian government was looking to nationalise mining assets. Both companies are developing uranium assets in the country.

"We are making a case that local ownership must start with the state, which holds ownership of our natural resources. The proposed state ownership should take the form where the state owns a minimum equity percentage in all mining companies and petroleum production, for which it does not have to pay," Bloomberg reported comments from Namibia's Mines and Energy Minister, Tom Alweendo.

This joins the list of countries like Brazil, Chile and Indonesia trying to get a greater cut of their natural resources.

On 21 April, Chile's President Gabriel Boric said he would nationalise the country's lithium industry. This triggered a 17.7% selloff for Lithium Power International (ASX: LPI) on the day.

So what can we take away from this?

  • This is an ongoing theme but there's no clarification from governments

  • Markets hate uncertainty and this could act as an overhang on stocks in those jurisdictions

  • Does this risk see more inflows for domestic plays or stocks in Tier 1 jurisdictions like the US and Canada


Interesting news and movers

Trading higher

  • +34.1% Audio Pixels (AKP) - CEO Address

  • +21.8% Berkeley Energia (BKY) – Spain regional election results

  • +9.4% Leo Lithium (LLL) – Ganfeng premium placement (Mon)

  • +2.6 Challenger (CGF) – Guidance

Trading lower

  • -19.5% Paladin Energy (PDN) – Namibia considers stake in mining companies

  • -16.7% Netlinkz (NET) – Partner agreement with Spark NZ

  • -11.9% Sayona (SYA) – Placement

  • -8.8% Silk Laser (SLA) – API not exercising matching takeover rights


Broker notes

Macquarie notes of interest:

AUB Group (AUB) – Outperform with $29.78 target

  • “Recent guidance upgrade confirms attractive trading conditions and operating performance.”

  • “Capital raise associated with AUB retaining 100% of the Tysers Retail segment strengthens balance sheet.”

  • “Our $29.78 Target Price is set on FY24E earnings and a 20-30% premium to the Emerging Leaders Industrial PE Multiple of 16.5x.”

Leo Lithium (LLL) – Outperform with $1.55 target price

  • “LLL has announced an A$106m strategic placement to Ganfeng Lithium at a 6.5% premium to the previous close price.”

  • “The strategic agreement with Ganfeng Lithium could see Stage 2 of Goulamina accelerate and provide LLL with exposure to lithium hydroxide.”

  • “DSO shipments from Goulamina are likely to commence before the end of 2023 with first spodumene production by mid-2024.”

UBS notes of interest:

ALS (ALQ) – Neutral with $12.10 target price

  • “ALS delivered FY23 UNPAT +2% ahead of UBSe/VA consensus (including discontinued operations) and +2% ahead of the recently upgraded guidance.”

  • “FY23 earnings exceeded UBSe on lower interest/tax and a stronger than expected Commodities margin, which was offset by the weaker than expected Life Sciences margin.”

  • “We have lowered our FY24/25E EPS forecasts 5% respectively, due to a moderating

  • outlook for geochemistry volumes and weaker performance from Nuvisan.”

IDP Education (IEL) – Buy with $30.25 target price

  • “Canada's decision to allow competitors to enter the Student-Direct-Stream (SDS) component of student visas, marks the final stage of opening markets to competitors.”

  • “In the UK, opening to competitors resulted in 10% share loss - while Australia onshore market share loss was greater.”

  • “We remain positive on the structural thematics and potential acceleration of share gains in the student placement division, as a result of Fastlane. Even accounting for share loss, we forecast IEL to achieve 3yr (FY24-27E) EPS CAGR of 21%, while trading on a FY24E PE of 39.5x.”


Scans

Top Gainers

Code Company Last % Chg
TGH Terragen Holdings... $0.027 +35.00%
AKP Audio Pixels Hold... $12.20 +34.07%
MX1 Micro-X Ltd $0.12 +33.33%
VN8 VONEX Ltd $0.032 +28.00%
WC8 Wildcat Resources... $0.11 +27.91%
View all top gainers

Top Fallers

Code Company Last % Chg
MAG Magmatic Resource... $0.091 -30.00%
NYM Narryer Metals Ltd $0.115 -23.33%
PDN Paladin Energy Ltd $0.535 -19.55%
X2M X2M Connect Ltd $0.055 -19.12%
EQS Equity Story Grou... $0.033 -17.50%
View all top fallers

52 Week Highs

Code Company Last % Chg
WC8 Wildcat Resources... $0.11 +27.91%
BKY Berkeley Energia Ltd $0.475 +21.80%
WA1 WA1 Resources Ltd $5.59 +10.04%
LLL Leo Lithium Ltd $0.93 +9.41%
MAD Mader Group Ltd $5.42 +5.45%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
PDN Paladin Energy Ltd $0.535 -19.55%
X2M X2M Connect Ltd $0.055 -19.12%
EQS Equity Story Grou... $0.033 -17.50%
BTR Brightstar Resour... $0.012 -14.29%
KTA Krakatoa Resource... $0.023 -11.54%
View all 52 week lows

Near Highs

Code Company Last % Chg
USD Betashares U.S. D... $15.12 +0.53%
CSL CSL Ltd $308.24 +0.04%
IKO Ishares MSCI Sout... $100.74 +2.37%
WVOL Ishares Edge MSCI... $36.33 -0.03%
SWTZ Switzer Dividend ... $2.57 +0.78%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
AMA AMA Group Ltd $0.125 0.00%
BSX Blackstone Minera... $0.135 0.00%
VUL Vulcan Energy Res... $3.72 -4.37%
AEE Aura Energy Ltd $0.165 -2.94%
MGX Mount Gibson Iron... $0.395 -1.25%
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.

Get the latest news and insights direct to your inbox

Subscribe free

Get free post-market insights with our Evening Wrap

Create an account to receive our concise, data-driven post-market recap, sent directly to your inbox, every day.

Along with the Evening Wrap, you'll join 100k+ investors who receive our Morning Wrap and Weekend Newsletter.