The Match Out: Local shares show some ticker, Megaport (MP1) burns shorts

The daily Match Out report for Tuesday 11 July from Market Matters' James Gerrish.
James Gerrish

Market Matters

Strong resilience was shown on the local market starting on the front foot today but highlighted by consistent intra-day buying, grinding higher throughout the session to put on more than 100 points. Just 7% of the index closed lower with all sectors adding more than 0.5%. Just like the US market overnight, the small-cap index (S&P Small Ords) outperformed with a 2.14% jump today. The mood was driven by talk of more economic support coming out of China as lenders were asked to ease loan terms to real estate borrowers.
  • The ASX 200 finished up +104pts/ +1.50% at 7108
  • The Tech sector (+2.60%) was the best on ground for the second consecutive day today
  • Real Estate (+1.94%), Consumer Discretionary (+1.88%) and Materials (+1.86%) were the other notable gainers.
  • All sectors closed higher, though Staples (+0.65%), Healthcare (+0.73%) and Utilities (+0.95%) were the only t=here that put on less than 1%.
  • Megaport (ASX: MP1) +33.78% upgraded guidance for FY23 and said there’s likely more to come in the new financial year at their results next month. More on that below.
  • Bowen Coal (ASX: BCB) flat sold a 10% stake in the Broadmeadow East mine for $13m + royalties and brought in a capital partner for the project. The deal frees up the balance sheet to put money to work across their other projects.
  • InvoCare (ASX: IVC) +1.69% gave PE firm TPG Capital another week to firm up their $13/sh takeover offer for the funeral home business.
  • Chorus (ASX: CNU) -0.26% NZ telco 4Q connections update was broadly in line, flagging a $7m hit to EBITDA as a result of the floods earlier this year, though repair & replacement capex is likely to be higher in FY24 as well.
  • Iron Ore was surprisingly lower -0.5% in Asia, though BHP, FMG and RIO were all more than 1% higher.
  • Gold was tracked higher in Asia, adding $US8/oz in the last 24 hours. Gold stocks were heavily featured in the top gainers today, led by Bellevue Gold (BGL) +15.22%.
  • Asian stocks were all higher, though the Nikkei (+0.04%) underperformed China (+0.45%) and the Hang Seng (+1.3%)
  • US Futures are pointing to 0.25% gain on the S&P500 when the market opens tonight.

ASX200 chart

ASX 200 chart for 11 July 2023.

Megaport (ASX: MP1) $8.99

MP1 +33.78%: network connectivity business Megaport saw shares rocket to a 9-month high today on a small upgrade to FY23 earnings and a strong runway into FY24. The business went through an aggressive cost-cutting program in FY23 which looks to be bearing fruit earlier than thought under the guidance of a new CEO just 8 weeks into the role. Normalized EBITDA is now expected to be between $19-21m, up 17% at the midpoint while also confirming they were net cash positive in Q4 despite $2.6m of redundancy payments due. Given the progress, Megaport said it is likely to upgrade FY24 guidance (EBITDA of $41-46m) at their FY23 results next month, and they have cancelled an expensive $25m debt facility with HSBC. More than 6% of MP1 shares were held short-sold before the announcement also supporting the squeeze higher.

Megaport (ASX: MP1)

Megaport chart 11 July 2023

Broker Moves

  • APA Group (ASX: APARaised to Overweight at JPMorgan; PT A$11.20
  • Hot Chili (ASX: HCH) Raised to Buy at Cormark Securities; PT A$2.27
  • Integral Diagnostics (ASX: IDX) Cut to Underweight at Morgan Stanley
  • De Grey Mining (ASX: DEG) Rated New Overweight at JPMorgan; PT A$1.60

Major Movers Today

Have a great night

The Market Matters Team


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James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

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