Afternoon Report / Lithium sector starts to heat up (ORI, ORE)

By Market Matters 09 May 19

Lithium sector starts to heat up (ORI, ORE)

Market Matters Afternoon Report 9th May 2019

WHAT MATTERED TODAY
A short note this afternoon after a busy day on the desk + I’m down a couple of foot soldiers today… the ASX had a reasonable session particularly considering the backdrop of weakness in US Futures and Asian markets which were down between 1 & 2.5% across the board. Trump did hit best this morning to derail the market tweeting about China breaking the deal, however a slight sell off early on was overcome with buyers positioning again for a rate cut domestically – the AUD trading down to 69.74 US/c a sign of that.

Overall today, the ASX 200 added +26 points or +0.42% to 6295. Dow Futures are trading down  -124pts / -0.48%.

ASX 200 Chart

 

ASX 200 Chart

CATCHING OUR EYE;

Orica (ORI) +5.63% a good session after a strong 1H19 result released this morning. At the profit line they came in around ~9% above limited consensus, however guidance was strong for the 2H + into FY20 in particular. The explosives business has been in a holding pattern for a while and todays move is what we’ve been looking for. We remain bullish

Orica (ORI) Chart

 

Lithium Stocks ++++ rallied today across the board with Kidman (KDR) trading up above the $1.90 bid price as Wesfarmers undertakes DD. The rest of the sector was higher with our recent purchase of Orocobre (ORE) starting to benefit – the stock up +4.64%. The mkt seems to be getting a sniff of a higher bid for KDR or more interest in the sector from potential overseas suitors. It seems to us that the WES bid will ignite others that have interest and the Lithium space could very well wake from its recent slumber – we certainly hope so.

Orocobre (ORE) Chart

 

Broker moves:  CSR downgraded from a couple of majors but finished up on the session – a bullish sign

·         Cromwell Property Resumed at JPMorgan With Neutral; PT A$1.15

·         Coca-Cola Amatil Cut to Underperform at Macquarie; PT A$8.15

·         CSR Downgraded to Hold at Deutsche Bank; PT Set to A$3.60

·         CSR Cut to Underperform at Credit Suisse; Price Target A$2.90

·         SCA Property Upgraded to Hold at Morningstar

OUR CALLS

We sold Telstra (TLS) from both portfolios today, and bought Bank of QLD (BOQ) in the Platinum Portfolio and CSR Limited (CSR) in the Income Portfolio.  

 

Have a great night

James & the Market Matters Team

Disclosure

Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.

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