• The ASX 200 mini streak is done, small caps crash hard
  • Brokers at Morgan Stanley downgrade property sector 
  • Titanium Sands pops on Sri Lankan prospects

 

Property, tech and healthcare stocks are leading losses up and down local markets on Wednesday. Weak US data, weaker overnight leads and some material intervention on the part of the big brokers are taking the big stick to the small cap index.

A double play all its own hit Wall Street overnight. The US Conference Board read on consumer’s sense of economic optimism revealed there is none, concluding that the US economy is at its lowest ebb in about a decade. Another indicator reflected a further loss in consumer confidence and sentiment.

There’s a fair bit of that going around as indices and indicators around the region retreated. South Korea’s consumer sentiment index is much lower for June, down a sharp 6.2 points on May’s print, according to the latest Bank of Korea survey. In Hong Kong, the Hang Seng was down 2% when we last looked but that proxy for all things COVID-in-China has been swinging like a lithium stock at a 1970s suburban party for bored somewhat-married couples.

The brokers have been busy, meanwhile.

BWX is still on its knees after analysts at Citi and Macquarie absolutely tore strips off its target price after the beauty product maker compounded a poor quarterly performance with its own downgraded forecasts.

Citi downgraded BWX to Neutral, from Buy, ripping 73% off its target to just 75 cents (from $2.74).

Macquarie has taken it to a 70 cent target, from $2.20.

Elsewhere Morgan Stanley downgraded earnings across the listed property names by as much as 10% on average for fiscal ’24 and ’25, on the near certainty of rising interest rates.

Some of the other notable downgrades today:

  • Morgan Stanley downgrades GPT Group to Underweight
  • Morgan Stanley downgrades National Storage REIT to Underweight
  • Credit Suisse downgrades Liberty Financial Group from Buy to Neutral

The benchmark XJO closed 0.9% lower, The Emerging Companies XEC index ended 2.2% down.

TODAY’S BIGGEST SMALL CAP WINNERS

(Stocks highlighted in yellow rose after making announcements during the trading day).

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BauMart Holdings (ASX:BMH) says it’s struck a conditional share sale agreement with APX Holdings to sell its wholly owned subsidiary Eco Pallets for a cash deal of $1 million.

BauMart’s executive director Ben Talbot says APX is actually a special purpose vehicle based in Melbourne and established to acquire Eco Pallets.

“This proposed sale of Eco Pallets is an important step in BauMart’s strategy to focus its capital resources on businesses and activities with a sustainable earnings profile and the pursuit of new opportunities. The board is continuing its strategic review and the assessment of synergistic opportunities aimed at delivering long-term growth for the company and its shareholders.”

The sale is contingent on shareholders playing ball, but the market likes the news; BAU gaining sharply on the announcement.

The decision follows a review of BauMart’s business which ultimately concluded Eco Pallets’ business ‘does not align’ with the  future direction of BauMart.

Eco Pallets is an import and distribution business critically reliant on a stable and predictable supply chain model. Under BauMart, the Eco Pallets’ business has not been able to gain sufficient traction to generate a sustainable earnings profile. What’s more,  BauMart’s also been managing the business from Perth – like, that place is miles from anywhere – especially when its key markets are on the sensible eastern coast of Australia.

Groovin’ Reuben says there’s movement afoot at Titanium Sands (ASX:TSL), despite remaining pretty mum about life at its flagship mineral sands project (‘Mannar’) in the economic basket case, but bloody good cricketing nation of Sri Lanka.

Reubs says earlier this month it started the last part of an infill drilling program that is required to increase the 93Mt at 5.24% THM high-grade zone resource from ‘Inferred’ to the higher confidence ‘Indicated’ category.

This is required by the bourse so TSL can release a revised Scoping Study, the first proper look at the economics of building a mine.

The $15m market cap stock is down 20% year to date. It had about $2.4m in the bank at the end of March.

In May, an insto placement for an initial $500,000 was done at 4.5c – a ~300% premium to the closing price of the company’s shares on 10 May.

Here’s a graphic representation of TSL’s day:

 

Elsewhere, there’s been a very luxurious hike for Grand Gulf Energy (ASX:GGE) after it confirmed a helium discovery at Jesse#1A, a potential company-making well at its Red Helium project in Utah. Gregor was right that Reuben was right. 

And HRL Holdings (ASX:HRL) is continuing to climb on the back of an acquisition proposal from ALS (ASX:ALQ), with the price climbing 15.0% to nudge the $0.16 valuation ALS has on the table.

 

TODAY’S BIGGEST SMALL CAP LOSERS

(Stocks highlighted in yellow fell after making announcements during the trading day).

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Tough times for Tyro Payments  (ASX:TYR), the payments tyro nose-dove almost 20% by lunch after word  CEO Robbie Cooke is jumping ship. And they’ve just six months to find a new Robbie, or they’re … cooked.

 

ANNOUNCEMENTS YOU MAY’VE MISSED

Space dudes (and dudettes, of course) EOS (ASX:EOS) have announced the company’s received binding commitments for an institutional placement to raise $15 million, at $1.20 per new share, to go towards its ongoing and fervent desire to build space things and fire them out into the Solar System.

EOS is also set to offer a share purchase plan to certain eligible existing shareholders to raise up to $2 million, to overcome delayed project costs, and a slow-down of new Important Government Space Business caused by the recent Federal election.

Select Harvests (ASX:SHV) says that while it’s not time to hit the panic button, there could still be an issue brewing with Australia’s bee population. Initial reports of a varroa mite detection near Newcastle, NSW, have – unfortunately – been followed by reports of a second, extremely small detection 65km away. In a sign of how intensely vigilant apiarists are being, the latest detection found just two (2) of the nasty little blighters.

Finally, in little bits and pieces, Iceni Gold Limited (ASX:ICL) says it’s got its 14 Mile Well project area UFF+ (it’s like UFF, but, like, heaps better) soil samples back from the CSIRO and found seven key sites to go drilling; and across the ditch, NZME (ASX:NZM) has hit a 100,000 paid digital subscription milestone. Bravo!

 

TRADING HALTS

Sunvest Corporation (ASX:SVS) – announcement of an equal access, off market share buy-back at $0.59 and a request for removal of the company’s securities from the official list.

Collection House (ASX:CLH) – Request for halt while the company completes discussions in relation to financing options.

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