ASX Trading Wrap: Health stocks surge, Crown leaps and A2 Milk hits a multi-year low

ASX Trading Wrap: Health stocks surge, Crown leaps and A2 Milk hits a multi-year low

Overall, it was a good week for the local market, with a number of blue chip names helping the ASX 200 put on a gain of 1.7%. The rotation into ‘value’ plays, many of which account for a large portion of the local benchmark index, helped the ASX considerably outperform regional markets, with a weaker Australian dollar also helping. The ASX 200 closed today on 6,824.2 points.

 

Which shares excelled?

Making waves this week was Crown Resorts (ASX: CWN), which was the beneficiary of a takeover bid from US private equity group Blackstone. The offshore suitor has offered $8 billion for the casino and hotel operator, or $11.85 per share, however, the unsolicited, non-binding and indicative proposal would still need to pass a number of hurdles first. Crown shares ended the week 19.6% higher.

With its own good news to show for its strong performance this week, GrainCorp (ASX: GNC) surged 14.2% and hit a new multi-year high. The company announced that it anticipates a $25 million improvement in annualised EBITDA by 2023-24. Underpinning this upgrade have been efforts to expand the company’s bulk materials for export, higher utilisation rates at its processing facilities, plus a greater emphasis on its high-value food product mix. 

A solid earnings report from Premier Investments (ASX: PMV) helped it finish the week as one of the best-performing mid-to-large-cap stocks. The retailer reported its net profits rose 88.9% in H1 FY21, even though sales grew a more modest 7.2%. Criticism was levelled at the company for its decision to retain JobKeeper subsidies, however, the company argued that Victoria’s prolonged lockdown dented its in-store sales by $44 million and gross profits by $28.5 million, plus it would set aside the funds for staff payments amid any potential shutdowns in the future.

Another company reporting interim results was Brickworks (ASX: BKW). It delivered a 4% decline in group revenue to $432 million, while underlying EBITDA also slipped 4%, to $163 million. However, the result was well received thanks to the strong performance of the Australian building products division, and early signs of a recovery in demand out of the US.

Elsewhere, USD-earnings stocks like CSR (ASX: CSR), Amcor (ASX: AMC), Brambles (ASX: BXB) and Northern Star Resources (ASX: NST) all enjoyed a solid week on the back of the lower Aussie dollar.

Health stocks also saw some attention as investors rotated out of certain tech names in search of more defensive plays. Winners this week included Sonic Healthcare (ASX: SHL), Fisher & Paykel Healthcare (ASX: FPH) and CSL (ASX: CSL), up 9.7%, 4.8% and 5.3% respectively. 

Finally, blue-chip names in AGL (ASX: AGL) and Telstra (AX: TLS) put on solid weekly gains as they each unveiled the next steps in their efforts to transition and transform their companies, while Adbri (ASX: ABC), Nufarm (ASX: NUF) and Goodman Group (ASX: GMG) also saw their shares bounce this week.

 

 

Which shares dragged on the market?

A2 Milk (ASX: A2M) dragged on the local market this week, with shares in the infant formula and dairy business declining 4.9%. On Friday, the stock touched its lowest level since January 2018. In what has been a sour time for A2 Milk shareholders of late, the share price has slipped in 17 out of the last 18 trading sessions, with the one exception seeing the stock climb by a solitary cent. No news has sparked the latest grind lower, however, investors clearly remain worried about the impact a weak daigou sector is having on the company, and whether another downgrade is on the way. 

The shock resignation of billionaire tech mogul David Teoh as Chairman of TPG Telecom (ASX: TPG) reverberated on the stock today, sending it lower by 7.4% for the week. Mr Teoh was the founder of the telecoms group, with investors seemingly worried that his absence from the company may lead to potential issues down the track. 

A Friday rally wasn’t enough to help Netwealth Group (ASX: NWL) or Hub24 (ASX: HUB), with shareholders in both companies left nursing a sharp weekly loss. NWL shares slumped 14.1%, while HUB shares tumbled 11.8%. It was news from Netwealth that sparked the sell-off, with the wealth management platform announcing ANZ will terminate its contract with the company from which it receives interest on its total pooled cash transaction account. A new deposit arrangement is being negotiated, however, the high-margin rate is set to be a thing of the past.

Shares in buy-now pay-later companies Zip Co (ASX: Z1P) and Sezzle (ASX: SZL) came under pressure as the rotation away from tech stocks weighed on the duo. With tech volatility still proving a concern, some investors may have been repositioning their portfolios to lighten exposure. That theme also flowed through to high-growth ecommerce plays like Kogan (ASX: KGN) and Temple and Webster (ASX: TPW), which before today’s trading session, strung together four consecutive days in the red.

Lastly, travel stocks were caught on the wrong side of the momentum trade this week. Names like Flight Centre (ASX: FLT), Corporate Travel Management (ASX: CTD), Air New Zealand (ASX: AIZ), Qantas (ASX: QAN) and Webjet (ASX: WEB) all saw weakness. It came as expectations of a date for the New Zealand travel bubble were scuppered by NZ Prime Minister Jacinda Ardern, who said preparation wasn’t fully up to scratch as yet, and that a date is set to be announced on April 6.

 

We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!

 

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