The Match Out: The market subdued on the surface, but a lot happening under the waterline

• The ASX 200 finished down -15pts/ -0.21% at 7336.
• The Material sector was best on ground (+0.61%) while Energy (+0.35%) was also strong.
• Communications (-1.18%) and IT (-1.10%) the weakest links.
• Altium (ASX: ALU) – 5.78% fell today after delivering 1H23 results after market yesterday, we covered this morning with the note available here
• Viva Energy (ASX: VEA) -2.97% fell after the petroleum retailer reported full-year results below expectations after weaker refining earnings.
• G8 Education (ASX: GEM) -3.11% fell ~6% early before recovering ~50% of the decline as COVID + Flooding hit FY23 profit – we’ll cover this in tomorrow’s Portfolio Report in more detail as it resides in our Income Portfolio.
• Austin Engineering (ASX: ANG) +1.33% was up after reporting a decent result – no upgrade as some were expecting.
• ARB Corp (ASX: ARB) -0.76% was flat having provided a trading update earlier in the month.
• Monadelphous (ASX: MND) -8.81% fell after guiding to lower revenue for FY23, saying the top line could be down by 5% to 10% on delays.
• BHP Group (ASX: BHP) -0.33% fell more early on a 1H23 profit result that missed forecasts, but the FY should be okay – rising costs were obvious but the SP tells you the market remains comfortable here.
• Johns Lyng (ASX: JLG) +13.21% ripped higher after it raised its EBITDA forecasts for the full year – Harry covered this in Markets @ Midday Podcast available here
• Tabcorp (ASX: TAH) +4% was solid after reporting underlying 1H NPAT of $47.3m
• HUB24 (ASX: HUB) +7.74% was strong after they reported 1H23 group revenue of $137.7m, around ~10% ahead of expectations while Underlying EBITDA at the group level of $49.9m was a ~5% beat - FUA growth was strong – a cracker from HUB!
• Seek (ASX: SEK) -1.73% was sold off early fairly aggressively (-6%) before recovering to be down only slightly following a 1H23 results that were inline from a revenue & profit perspective while they tightened guidance to be more towards the bottom of the previously guided range for the full year.
• Ingenia (ASX: INA) -13.42% tanked after seeing construction delays and a softening residential market.
• Stockland (ASX: SGP) -3.34% was lower after downgrading its residential settlement target for the year to 5500 lots after weather delays slowed building, and said there would be no material improvement in weaker sales volumes triggered by multiple interest rate rises until the outlook for rates stabilised.
• Iron Ore was ~3% higher in Asia today supporting Fortescue (ASX: FMG) +3.19% & RIO (ASX: RIO) +0.78%
• Gold was down a few dollars today to ~US$1837 at our close.
• Asian stocks were mixed, Hong Kong added +1.35%, Japan was flat while China was up +0.21%
• US Futures are all down, around -0.40%
• Reporting Tomorrow: A2b Australia Ltd. (ASX: A2B) | ARB Corp. (ASX: ARB) | Alumina Ltd. (ASX: AWC) | Austin Engineering Ltd. (ASX: ANG) | BHP Group Ltd. (ASX: BHP) | Clean Seas Seafood Ltd. (ASX: CSS) | Coles Group Ltd. (ASX: COL) | Costa Group Holdings Ltd. (ASX: CGC)| Estia Health Ltd. (ASX: EHE) | G8 Education Ltd. (ASX: GEM) | Monadelphous (ASX: MND) | Ramelius (ASX: RMS) | Stockland (ASX: SGP) | Viva Energy (ASX: VEA)| Seek (ASX: SEK) | Ingenia (ASX: INA)

ASX200

HUB24 (ASX: HUB) $29.09

HUB +7.74%: A very strong update from investment platform provider HUB 24 today (HUB) and the stock reacted accordingly. 1H23 group revenue of $137.7m was strong and around ~10% ahead of expectations while Underlying EBITDA at the group level of $49.9m was a ~5% beat. They provided an update to Funds Under Administration (FUA) as at 17 Feb of $58.5bn which infers +$2.7bn from 31-Dec. The market is up ~2.7% which accounts for some of this, but strip this out we get net flows of ~$1.3bn which is good momentum, particularly for that time of year as most advisers are away in early Jan. The Interim dividend of 14cps FF is up +87% on 1H22 dividend. This is a very strong update from HUB, a lot better than we expected, we have management on Thursday for more detail.

HUB24 (ASX: HUB)

Seek (ASX: SEK) $23.90

SEK -1.73%: Was sold off early on fairly aggressively (-6%) before recovering to be down only slightly following 1H23 results that were inline from a revenue & profit perspective while they tightened guidance to be more towards the bottom end of the previously guided range for the full year. Revenue of $627m compared to $617m consensus, EBITDA of $283m v $284m expected while underlying NPAT of $135m compared to $129m consensus, although a few bulge brackets were higher. An interim div 24.0cps was declared. In terms of guidance, they tightened revenue to the low end but the market was already at $1.25bn while they see NPAT at $250m v $260m consensus. An okay result under the hood, and like many, they are navigating the complex operating environment pretty well.

Seek (ASX: SEK)

BHP Group (ASX: BHP) $48.30

BHP -0.33%: Down early before recovering well later in the day after reporting 1H23 NPAT of US$6.6bn, which is below consensus $6.8bn. The dividend was in-line with expectations at US90c. Underlying revenue was solid and inline at US$25.7bnwhich shows costs were higher, although, their cost guidance was mostly unchanged for the full year. The acquisition of OZL for ~US$6.9bn has them within their net debt target range of US$5-15bn, and they remain positive on the demand outlook for the next 6 months and into FY24 on strengthening activity in China on the back of recent policy decisions. There was no material update on OZL with the OZL shareholder Scheme booklet due early March, before a meeting in April and the implementation date late April/early May subject to approvals.

BHP (ASX: BHP)

Coles Group (ASX: COL) $18.13

COL -0.93%: first half numbers for the supermarket company beat consensus today, however, shares fell thanks to the CEO stepping down. Sales were up 4% to $21.6b while EBIT jumped 14% to $1114m, 9% above consensus at $1023m. The beat was driven by a strong supermarket outcome which saw gross margins up 43bps. Liquor was a miss, offset by a beat in Express. Supermarkets have returned to growth since the turn of the new year, supporting a reasonable set-up to hit expectations for the 2H. The surprise came with CEO Steve Cain departing after 5 years in the role, to be replaced by Leah Wreckert, an executive that’s been with the company since 2011.

Coles (ASX: COL)

Calix (ASX: CXL) $5.57

CXL +6.1%: 1H numbers from the environmental industrial technology company helped drive shares higher today. Revenue beat, jumping 20%, while gross profit fell marginally to $2.6m. Calix continues to work towards a number of key milestones across multiple contracts, signing another agreement today to remove CO2 from the atmosphere. The company is well funded to deliver on a number of the projects it is a part of, with $88m in cash on the balance sheet and multiple recent grant wins showing Government support of their technology.

Calix (ASX: CXL)

Monadelphous (ASX: MND) $12.73

MND -8.81%: a strong 1H but weak guidance weighed on shares in the contractor today. Monadelphous saw Revenue fall 10% in the half, though this was at the top end of guidance of a 10-15% fall, while EBITDA of $58.2m was a 6% beat to consensus on improved margins. The maintenance performance was strong, though offset by weakness in Construction, a trend that is set to continue in the 2H. the company said revenue for FY23 is expected to be down 5-10% where consensus was looking for flat year on year. According to management, performance is set to improve from there as construction activity to pick up after a number of delays.

Monadelphous (ASX: MND)

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