Closing Bell: Small caps edge win as MSL, 1VG bring home the bacon
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- ASX 200 ends about 0.066% lower
- Small cap index fights way back, scrapes home with a brave win
- MSL, VG1 bring home bacon
Tuesday is a tale of two indices…
One, a tough little fighter:
The other, uncertain, lacking confidence and just riddled with self-doubt*
*Perhaps I’m reading into it a little.
Anyway, the small cap XEC index fell sharply at the open and just fought it’s brave little way into the green, while the ASX 200 index circled itself, before collapsing in a lunchtime heap before circling itself gain, finally deciding to make incremental gains but choosing to remain in the red.
The main banger on Tuesday came out of explosives and fertiliser maker Incitec Pivot (ASX:IPL), a record profit delivering a strong bump for the share price.
Lithium, you’ll be seeing, is not happy. Most certainly not Core Lithium (ASX:CXO) which took a downgrade (Neutral from Outperform) from the brokers at Macquarie.
While CXO remains confident of delivering first spodumene production in the second half of FY23, Macquarie is full of doubts, saying the high exec turnover, the cruddy weather, the increased risk of production delays at Finniss all suggest to Macquarie first production will be pushed way way back to FY24.
The target price was also trimmed to $1.80 from $1.90.
China’s retail and industrial production data for October just dropped this arvo and we’re slowing down.
Here’s China’s monthly retail sales:
Capital Economics said this of the weaker retail numbers:
“The October data points to a further loss of momentum, with retail sales dropping sharply amid worsening virus outbreaks. November is shaping up to be even worse. With exports cooling, the property sector still in the doldrums and the zero-Covid policy likely to remain in place longer than many hope, the near-term outlook is gloomy.”
The National Bureau of Statistics says China’s economy is facing pressures from an increasingly complex environment.
Advice from the NBS (always welcome), includes:
“…. (to) intensify its efforts to better implement the existing policies and effectively coordinate pandemic prevention and control with economic and social development in a scientific way.”
So do that.
October growth in industrial production and investment missed expectations, while consumption (retail sales) continued to show the impact of renewed COVID-19 restrictions, according to the NBS.
China’s value-added industrial output, a gauge of activity in the manufacturing, mining and utilities sectors, grew by 5% in October from a year earlier after a 6.3% rise in September.
Fixed-asset investment, a gauge of expenditures on items including infrastructure, property, machinery and equipment, increased by 5.8% in the January-October period year-on-year, compared with 5.9% rise in the first three quarters.
The NBS said China’s economy is facing pressures from a more complicated and grimmer environment, and the country will intensify its efforts to better implement the existing policies and effectively coordinate pandemic prevention and control with economic and social development in a scientific way.
Chinese markets had bigger fish to worry over, the Hang Seng, Shanghai and Shenzhen markets all slightly higher as investors were distracted by the likely talks between Chinese and US Presidents Xi and Biden.
Late last week China’s ruling Communists took the foot just a little off the throat of COVID-zero, even quitting broad virus testing in some regions which suddenly really need it.
The move might provide a little cover for just how fast infections are spreading in key Tier 1 and 2 cities from Beijing to Guangzhou, Shenzhen and (very likely) soon to be Hong Kong, how it might play out in the next months is anyone’s bet.
But on the positive side of the ledger – a 16-point plan to better back the ailing property sector. And the with 20-point smoke and mirror measures, supposedly to ease life under stringent zero-COVID rules.
I reckon the bigger problem (personally) is this:
China’s youth unemployment rate (16-24)
Imagine how you’d cope running a country where 1 in 5 of about 300 – 400 million pissed off kids don’t have a job.
Here are the best performing ASX small cap stocks:
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MSL Solutions (ASX:MSL) has entered into a cunning scheme of arrangement with Plutus Bidco under which Plutus will acquire 100% of the issued share capital of MSL for a cash price of $0.295 a pop.
This is subject to all conditions being satisfied or waived (if applicable) including the Scheme being approved by MSL shareholders at the Scheme Meeting.
The MSL Board unanimously recommend the idea, after having “carefully considered the Scheme and concluded that it is in the best interests of MSL shareholders because it it offers immediate and certain value at a significant premium to MSL’s recent share prices.”
And it does: The Scheme Consideration per MSL share represents a significant premium to the recent historical MSL share price including 63.9% premium to the last ASX closing share price of $0.180.
Elsewhere, Whispir (ASX:WSP) says it’s on track to be “cash accretive from Q3 FY23”. WSP says the “sooner than expected transition to profitability and positive cash generation,” has come via cost cutting and less R&D investment, effectively adding $14.3mn to its bottom line.
In the resources space, Aussie explorer Victory Goldfields (ASX:1VG) says its ionic Aussie clay rare earths discovery at North Stanmore is “developing into a project of significant scale”.
The stock listed mid-2021 with a collection of 52 historic gold mines in the Cue region of WA, but soon diversified into lithium, IOCG (iron oxide copper gold) and rare earths exploration.
It completed the pivot to ‘mostly rare earths explorer’ after announcing a ‘high value critical rare earth element discovery’ at North Stanmore (also near Cue) in July this year.
New assay results from a recently completed 118-hole AC drill program confirm REE paydirt ~4km from this initial discovery. Shares are kicking it (I’m pretty sure.)
Best intersections include 16m at 2155ppm TREO from 21m, including 6m at 4,683ppm TREO, 32m at 1047ppm TREO from 36m, including 12m at 2038ppm TREO, and 12m at 1316ppm TREO from 24m, executive director Brendan Clark says.
As well as rare earths, Scandium – which is an important element for military applications like fighter jets, is in extremely high demand and has also been discovered at North Stanmore with grades up to 106ppm.
Here are the least performing ASX small cap stocks:
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No. Not gunna today.
The sure pair of hands that is Emma Davies reports the video-tech stock Linius (ASX:LNU) has clinched a deal with Cricket Australia to use its Archive Search & Edit platform to create new content experiences from its archive.
Cricket Australia has an extensive, high value video archive including all new and historical Australian cricket, including Australian Test, ODI, T20, Sheffield Shield and Big Bash competitions for men’s and women’s teams dating from 1980 to the present day.
In total there are over 20,000 hours of content and with this deal, Cricket Australia can easily search its archive for relevant content, quickly edit and publish it.
“Only the Linius LVS platform can support the creation of personalised video content from such a huge archive at this scale,” Linius CEO James Brennan said.
Dry season at the Côte d’Ivoire has brought heavy rigs with it for all-weather Aussie digger Mako Gold’s (ASX:MKG) to get cracking on a giant 25,000m auger drill program at its projects in the country.
Auger drilling will attempt to vector in on mineralised deposits which have the same auger signature or “footprint” as the Tchaga and Gogbala deposits to identify the next resource target.
Identifying new gold targets using auger drilling reduces the amount of more expensive reverse circulation and diamond drilling required to advance and accelerate resource growth.
The geology team is also mapping granites on its Napié and Korhogo projects to locate greenstone/granite contacts and potential pegmatites.
“The large multi-rig auger drilling program will provide a very useful tool to narrow down the large soil anomalies at Napié for further resource drilling and should help to unlock the district scale multi-million-ounce potential of the Napié Project,” managing director Peter Ledwidge said.
He explained that auger drilling is more cost effective than a fence of RC holes in finding footprints of other deposits similar to Tchaga or Gogbala across soil anomalies that can be up to 2km wide.
Caravel Minerals (ASX:CVV) – Capital Raise
Element 25 (ASX:E25) – Capital Raise
Bionomics (ASX:BNO) – BNO has an announcement on the way about the announcement outcome of its proposed US public offering of new American Depository Shares (ADSs), each representing 180 ordinary shares of Bionomics
Global Oil & Gas (ASX:GLV) – Capital Raise