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ASX back in the red as miners, banks drag on bourse

Daily Market Update (13)

Reporting season sends ASX lower, Appen, A2M tank, Woolworth’s surprise buyback

The ASX200 (ASX: XJO) pushed lower on Thursday as the reporting season losers outweighed the winners.

All eyes were on the consumer sectors with staples falling 0.8% and discretionary adding 0.3% as Woolworth’s (ASX: WOW) delivered a strong result.

Two midcaps popular with brokers and DIY investors alike continued to disappoint, with Appen (ASX: APX) falling 21.4% after reporting a 55% fall in profit and A2 Milk (ASX: A2M) which fell 11.8% after reporting another 30% fall in revenue.

It was more positive news for Woolies though with the company reporting a 5% increase in revenue and 77% increase in profit with the contribution from BIGW near quadrupling in a boon for shareholders.

The company saw a significant jump in profit as finance costs reduced and online sales continued to grow at a 50% rate.

The highlight by far was the 55-cent final dividend, up 15% for the year, and the announcement of an off-market buy back to return excess franking credits to shareholders; shares were 0.4% higher.

Shares in the vertically integrated financial advisory group IOOF Ltd (ASX: IFL) also fell 10.4% as advisers continue to depart.

Link’s PEXA weakness, Qube delivers despite lockdowns, Ramsay on the mend

Link Administration (ASX:LNK) fell another 12.6% with the company now trading well below the offer price of 2020’s private equity takeover deal.

Having held the company before, we saw great value in the PEXA platform which LNK continues to own but a challenged environment for their core administration and servicing businesses.

This was proven correct by the 6% fall in revenue and 18% fall in profit after the company was forced to write-down the value of their loan servicing business.

The dividend was flat on 2020’s pay-out. Port operator Qube Holdings (ASX: QUB) increased its dividend by 15% despite a ‘messy’ year. 

Revenue improved by 140% to $2.2 billion, but earnings fell 11% due to a number of asset sales. Profit was up 31% to $159 million which was a new record driven by bulk commodities, forestry, grain and container volumes.

The company highlighted a strong grain harvest as a tailwind for 2022 along with the expected recovery in global trade and shipping.

Shares in private hospital operator Ramsay Healthcare (ASX: RHC) were 1.8% higher after the company returned to pre pandemic level dividends, announcing a 103 cent payment, on the back of a 13% increase in earnings to $2.05 billion.

Revenue has begun to recover as the UK and parts of Australia reopened, growing 7.3% to $13.3 billion. Management flagged a growing pipe of growth opportunities.

US markets pause, bombing in Kabul, Dell delivers, GDP confirmed

US markets all closed between 0.5% and 0.6% lower, led by the Nasdaq which was down 0.6%. It was a wait and see session ahead of Jerome Powell’s impending policy speech.

Markets also digested an unexpected bombing at Kabul airport, which saw increased volatility and a short-term spike in the gold price.

On the positive side GDP was confirmed at 6.6% and shares in Dell (NYSE: DELL) finished flat after a strong earnings result.

The group reported a 15% increase in sales, an acceleration of the April quarter, with product outperforming services, up 16%, as businesses ramp up their upgrades, whilst PC sales smashed expectations finishing 27% higher.

Profits were 18% higher to US$1.8 billion.

Treadmill and bike seller Peloton (NASDAQ: PTON) a huge beneficiary of lockdowns, fell 2%, after flagging a significant slowdown in sales, reporting a quarterly loss of US$313 million, showing the trends of yesterday are not guaranteed to continue.

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