Evening Wrap: ASX 200 back above 7,000 as resources, energy fire

Perhaps a little catch up today as the Aussie market shook off yesterday’s malaise and logged a welcome and solid gain. Energy and resources bounced back amidst plenty of results and AGM action.

Let's dive in.

ASX 200 Session Chart

Investors hope the 6,000's are done with forever (Source: Market Index)

Markets

Investors cheered today's modest gain on the S&P/ASX 200 (XJO) as a welcome resumption of November's encouraging rally. The heavy lifting was done by mining and energy sectors with gains broad-based across both.

In the miners, South32 (ASX: S32) +3.6%, Mineral Resources (ASX: MIN) +3.1%, Fortescue Metals Group (ASX: FMG) +2.7%, Iluka Resources (ASX: ILU) +2.7%, Alumina (ASX: AWC) +2%, and Rio Tinto (ASX: RIO) +2% each prospered.

Lithium plays such as Mineral Resources (ASX: MIN) +3.1%, Core Lithium (ASX: CXO) +2.7%, Sayona Mining (ASX: SYA) +2.6%, Liontown Resources (ASX: LTR) +2%, IGO (ASX: IGO) +1.8%, and Pilbara Minerals (ASX: PLS) +0.9% also bounced back.

Uranium favourites like Lotus Resources (ASX: LOT) +5.7%, Elevate Uranium (ASX: EL8) +5.6%, Paladin Energy (ASX: PDN) +5.4%, and Deep Yellow (ASX: DYL) +4.8% also got a run.

Perhaps the worst performing sector in the recent rally has been Energy, so it was a welcome reprieve from the selling today as Worley (ASX: WOR) +3.9%, Woodside Energy Group (ASX: WDS) +2.5%, Santos (ASX: STO) +2.5%, and Whitehaven Coal (ASX: WHC) +2.2% recovered.

Economy

The Westpac-Melbourne Institute consumer sentiment survey showed a sharp drop in November as respondents responded to last week’s 0.25% interest rate hike.

The NAB Business Confidence survey indicated conditions remained robust in October, but that the outlook among respondents deteriorated.

Markets are now bracing for the all-important CPI data due early Wednesday morning AEDT.

Latest news

Is Pilbara aiming for a tilt at Azure?

Source: Market Index

The market was rife with speculation Pilbara Minerals (ASX: PLS) could be amassing a strategic stake in Azure Minerals (ASX: AZS), and potentially could be looking to make a bid for the company.

According to an article in the Australian, sources told the paper there is speculation Pilbara Minerals could be behind today's rally the company sought to amasses shares in the takeover target.

Chile's SQM already has an offer to acquire Azure Minerals by way of scheme of arrangement at $3.52/share cash. But the Azure Minerals takeover saga has pulled in the likes of Mineral Resources (ASX: MIN) who on November 3 disclosed a 12.3% stake in the lithium hopeful, and Hancock Prospecting who has held its 18.9% stake since October 27.

No news from Pilbara today, and shares were roughly flat today on average volume - so little to confirm the rumours there. With potentially three other players in the mix for Azure now, SQM will either have to raise its bid to drag the blockers over the line, or pull out because they know they'll never be able to get them across.

The rise in the Azure price today suggests a higher bid is coming, or potentially a competing bid. Either way, watch this space!

Amazon drives Bubs FY24 progress, slow start in China

Source: Market Index

Bubs Australia (ASX: BUB) held its AGM today and provided an update on its FY24 progress.

The company noted it was tracking ahead of forecast net revenue guidance of $80M, and that gross margins, for which it has a 40% target, was broadly in-line with expectations.

The struggling infant formula producer's FY23 loss blew out by over 120% to $108 million, and it has paid a heavy price in the market with its shares trading down 80% from its 2022 high.

But the company expects to be cash flow positive with positive trading EBITDA in FY25, mainly on the back of Amazon which contributed 54% of Bubs' weekly US revenue by the end of October.

According to Bubs, its products were the 4th and 8th best-selling baby formula products on Amazon in September. Chinese sales are also improving after a slow start to the financial year.

Catapult on track for positive FCF in FY24

Source: Market Index

The sports tech company reported a first half NPAT of -$8.4 million vs -$22.6M for the corresponding period in FY23. This was slightly better than FactSet's consensus of $8.5 million. Revenues were up 20% year on year and average contracted value was up 20.6%.

Catapult (ASX: CAT) said it expected ACV growth to remain strong with low churn. It promised that ongoing improvement on costs would boost margins, and this would help the business achieve its goal of being cashflow positive in FY24 without the need to raise further capital from shareholders.

Interesting news and movers

Trading higher

• +15.0% Catapult Group International (CAT) - Reports H1 results, targeting positive FCF in FY24

• +9.4% Carnarvon Energy (CVN) - Responds to ASX speeding ticket, nothing material to report

• +9.0% AMA Group (AMA) - Tiga trading becomes substantial shareholder

• +8.5% ALS (ALQ) - Reports H1 results, issue FY guidance

• +8.0% Cobalt Blue (COB) - No news

• +7.8% Deep Yellow (DYL) - Part of broader uranium sector bounce, Initiated speculative buy at Canaccord Genuity

• +7.7% Lycopodium (LYL) - Guides FY24 numbers

• +5.7% Lotus Resources (LOT) - Part of a broader uranium sector bounce

• +5.7% Beach Energy (BPT) - Part of a broader energy sector bounce

• +5.4% Paladin Energy (PDN) - Part of a broader uranium sector bounce

• +4.4% Bannerman Resources (BMN) - Part of a broader uranium sector bounce

• +1.3% Azure Minerals (AZS) - Speculation Pilbara Minerals (PLS) is preparing for a rival bid to SQM's $3.52/share

Trading lower

• -10.5% OFX Group (OFX) - Reports H1 results, lowers FY guidance

• -9.4% APM Human Services International (APM) - Continuation losses post 10 Nov AGM

• -7.6% 4DMedical (4DX) - Pullback post spike 13 Nov on commercialisation news, Bell Potter Conference preso

• -3.2% Origin Energy (ORG) - AusSuper rejects last-ditch offer to join Brookfield, EIG bid

• -1.4% Elders (ELD) - Downgrade at Moelis CLSA post 13 Nov FY23 results

Broker notes

• AUB Group (AUB) initiated buy at Ord Minnett; Price Target: $3.20 from $2.70

• Boral (BLD) retained at sell at Citi; Price Target: $25.40 from $26.50

• Deep Yellow (DYL) initiated speculative buy at Canaccord Genuity; Price Target: $5.4

• Elders (ELD)

  • Downgraded to hold from buy at Moelis Australia; Price Target: $25 from $26

  • Downgraded to outperform from buy at CLSA; Price Target: $1.65

  • Upgraded to neutral from sell at Citi; Price Target: $7.92 from $7.45

• FleetPartners Group (FPR) upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $32.2

• MMA Offshore (MRM) initiated buy at Moelis Australia; Price Target: $6.00 from $7.30

• TPG Telecom (TPG) upgraded to buy from overweight at Jarden; Price Target: $4.60 from $4.20

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