The Match Out: ASX continues to slide on higher rates, Ramsay (RHC) back growing, just not by enough

• The ASX 200 finished down -70pts/ 0.96% at 7197
• The Communications sector was best on ground (+0.27%) while Staples (+0.05%) also finished higher.
• Energy (-2.13%) and Financials (-1.52%) the weakest links.
• Gold miners were the standout today as Gold trades comfortably (sort of) above US$2000/oz, Evolution (ASX: EVN) +3.74% and Newcrest (ASX: NCM) +1.82% both positive.
• Ramsay Healthcare (ASX: RHC) -4.83% talked up revenue growth for the first 9-months however it was below market expectations.
• Amcor (ASX: AMC) -9.53% hit after it downgraded full-year guidance, the market was already at the lower end, however, the adjustment still represents about a 5% miss to consensus plus they also talked to a tougher outlook around margins – seems further downside a strong chance.
• JB Hi-Fi (ASX: JBH) +1.95% said that 3Q Australia Same-Store Sales were down 0.1% YoY – not a surprise and the market was pricing a bigger hit – James discussed this on Ausbiz this morning as the results were dropping.
• Ooh! Media (ASX: OML) -23.93 hit hard as they lost share of a weaker ad market – a double whammy!
• Nine Entertainment (ASX: NEC) Flat despite providing EBITDA guidance for the first time which fell short of expectations. They are picking up market share which shows they’re doing (relatively) well in a tough environment.
• ARB Corp (ASX: ARB) -5.69% fell despite saying that their order book is ‘inline with FY22’, consensus was for sales to be flat YoY.
• Iron Ore still closed in Asia
• Gold was little changed in Asia at -US$2016 at our close.
• Asian stocks were weaker Hong Kong down -1.63%, Japan -0.93% while China remains closed.
• US Futures are all up, around +0.20%
• The US Federal Reserve is expected to raise rates a further 25bps when they meet tonight – this is well and truly factored into markets with surprises rare from the Fed (unlike the RBA). Commentary around a pause will be the key driver of markets.
• Of stocks we own, Barrick Gold (NASDAQ: GOLD) reports tonight while Apple (NASDAQ: AAPL) reports on May 5.

ASX200

Video Update

Lead Portfolio Manager James Gerrish discusses JB Hi-Fi (JBH), Woolworths (WOW) & Gold stocks this morning.

Ramsay Healthcare (ASX: RHC) $61.87

RHC -4.83%: The private hospital operator was sold down today despite what seemed to be positive headlines around revenue growth of 10.9% for the first 9-months of the year. That level of growth, while pleasing, was below where MM and the broader market expected it to be with consensus forecasting FY23 revenue growth of 13.6%, leaving them a lot to do in Q4. Furthermore, reported Earnings Before Interest & Tax (EBIT) of $751m for the 9 months, implies they did $202m in Q3 while they need to do more like double that in Q4 to meet the current consensus – which is highly unlikely. While the commentary is positive and the trends are heading in the right direction, the re-adjustment from the market today is warranted.

Ramsay Healthcare

Nine Entertainment (ASX: NEC) $2.03

NEC flat: one of many to present at the Macquarie Conference today, providing EBITDA guidance for the first time which fell short of expectations. The company said the advertising market declined 15% in the 3rd quarter, but they managed to pick up more than 2.5% in market share. They also expect a similar result in Q4 with a weak market partially offset by gaining market share across each of their platforms against their traditional rivals. Overall they expect to see EBITDA between $590-600m for the full year, ~5% below consensus. Despite the miss, Nine remains exceptionally cheap and shares outperformed the broader market today.

Nine Entertainment

oOh!Media (ASX: OML) $1.24

OML -23.93%: the advertising media company briefly fell to 2-year lows today after showing a drop in market share at an investor presentation. The slides used at the Macquarie Conference showed a noticeable shift in trends since mid-March. Market share in the Street segment, which is ~30% of the company’s revenue, dropped 2%, and management blamed the fall on a competitor’s new offerings in Sydney, though that market share drop seems excessive. Media was particularly soft in April, 10% below pcp though a rebound is playing out in May & June. Reading between the lines OML has struggled to start the year with little opportunity to improve performance before the 1st half is up.

oOh!Media

Broker Moves

• Culpeo Minerals Rated New Speculative Buy at Red Cloud
• Computershare Raised to Buy at CLSA; PT A$25.40
• PolyNovo Raised to Reduce at CLSA; PT A$1.75
• Healius Cut to Underperform at Jefferies; PT A$2.60
• Seven West Raised to Neutral at JPMorgan; PT 40 Australian cents
• Medibank Private Cut to Hold at Jefferies; PT A$3.70

Major Movers Today

Have a good night

The Market Matters Team

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