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ASX 200 morning report – CGF, MP1 & BHP shares in focus

It was another positive day for the local sharemarket with retreating bond yields and more positive stock specific news sending the S&P/ASX 200 (ASX: XJO) another 0.3% higher.

In a surprising turn, both the materials and technology sectors underperformed, down 2.6% and 1.6%, respectively, while the real estate and industrial sectors added over 2%.

Challenger, Brambles surges on upgrades

The highlight was annuity seller and fund manager Challenger Ltd (ASX: CGF) which gained 9.8% after delivering a rosy earnings update.

Real profit, not earnings, are set to be at the upper end of the forecast $430 to $480 million range, with another 10% jump in lifetime annuity sales to $2.7 billion a key trigger, benefitting from higher bond rates.

It was a similar story for Brambles Limited (ASX: BXB), owner of CHEP pallets, who confirmed that the global pallet shortage is showing no signs of slowing down.

Higher input costs are generally being passed onto customers, boosting revenue to what will be 8 to 9% growth, a 30% upgrade, and now expected profit and free cash to follow sales higher.

Ramsay Foundation backs sale

Ramsay Health Care Limited (ASX: RHC) gained another 3.4% but remains $5 below the $88 price offered by KKR, with many suggesting it is still undervalued given the limited operating ability it has had during the pandemic.

This is a serious offer and may well bring other buyers out of the shadows.

Megaport share price tanks

Smaller cap technology favourite Megaport Ltd (ASX: MP1), which supports onboarding to cloud servers and private networks, fell by more than 20% after delivering a weak earnings update.

Revenue grew by just 5% in the third quarter to $27.9 million with the market clearly concerned about the pandemic bringing forward the technology spend.

Monthly recurring revenue was similarly 6% higher but clearly well below expectations of at least double digits.

BHP’s underwhelming production

BHP Group Ltd (ASX: BHP) fell 3% after an underwhelming quarterly production update. Management flagged lower production of nickel and copper than anticipated, hit by workforce and COVID-19 issues in South America, whilst coal and iron ore remain on track.

It was the opposite story at Santos Ltd (ASX: STO), which gained 1.7% after reporting a doubling of sales for the March quarter despite volume growth of just 3%; higher oil prices were the sole driver.

ASX 200 today

Looking ahead, the ASX 200 is expected to open lower this morning, following a negative lead from US stock markets overnight. To find out more, check out my US stock market report.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

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Disclosure: At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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