ASX Small Caps Lunch Wrap: Who else is tired of making peanuts farming coconuts?
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The ASX has wobbled its way to a 0.35% pre-lunch dip, taking its lead from a choppy old night on Wall Street and an unusual damaging blow to some big Aussie lithium players.
There are some big winners among the Small Caps though, so it’s not all grim news.
But first, we’re heading for Thailand to address the elephant in the room for anyone who loves home-delivered meal plans, and coconut milk. Yum.
It has long been alleged that certain companies around the world are using sources of labour that are morally dubious at best, and outright criminal at worst.
The ongoing “too late to really be effective but we’re doin’ it anyway” protests against Qatar’s hosting of the FIFA World Cup in a week or so is just one example of how companies, and even entire nations, are being very publicly called out.
Which is why this particular call out is hardly surprising in one sense, but which blipped on our radar this morning, because it’s got monkeys in it.
German-based, publicly-traded food delivery company HelloFresh has been singled out and publicly shamed for using products from Thailand made with monkey labour.
The claim comes from PETA (because of course it does), which says that coconut farmers in Thailand capture and train the monkeys to do the hugely difficult and hazardous task of – *checks notes* – climbing trees and throwing things. Appalling.
Granted, there are farms where the monkeys are kept in horrifying conditions, caged up with only old tyres to play with and not even allowed to pop into town for a spot of karaoke and banana daiquiris on the weekend.
It should be noted here that attempts to unionise the Thai monkey workers have, to date, been unsuccessful. Negotiations recently broke down when organisers failed to agree on a suitable faeces-throwing policy during high-level talks.
Anyhoo… calling on consumers to stop using HelloFresh because it uses coconut products sourced from Thailand where monkeys might be part of the supply chain is possibly a long bow to draw.
And it’s not like HelloFresh is likely to remove coconut products from its offerings any time soon. I’ve got a mate who’s a customer of theirs here in Australia, and I am quietly certain that taking coconut out of the HelloFresh menu would slash about 60-70% of its meal options.
The coconut bolognese in particular is a real family favourite.
PETA’s got form for making unreasonable demands over trivial things, even here in Australia. In 2016, it launched a campaign to have Tasmania’s Egg and Bacon Bay name changed to something fruity that didn’t involve animal products.
Local Tasmanian man, “Doug”, was blunt in his assessment of the campaign: “These single-interest groups ought to go overseas and annoy the shit out of ISIS.”
Would PETA be better off spending its time protecting the wild animals of Arizona in the US, where local police have issued a warning to all residents not to get high and buy owls from strangers at a petrol station in the dead of night?
We should probably take a look at what the markets are doing before PETA figures out that the whole thing is powered by 16,000 hamsters in running wheels in a disused underground rail tunnel deep beneath the heart of the Sydney CBD, and start chaining themselves to giant vegan food pellets in Martin Place.
We weren’t expecting great things from the market this morning, and the ASX has not disappointed, delivering a 0.3% drop the moment the doors flew open, before staging a recovery around 11am.
By lunchtime, the benchmark was down around 0.34% – not great, but not a total disaster, either.
Broken down by sector, it’s a fairly even 6 up/5 down split this morning, with Financials leading the charge on a moderate 0.64% gain followed by Health Care (+0.53%) and Industrials (+0.42%).
Lagging behind are Materials (-1.43%) and Real Estate (1.06%), with the miners taking stepping back from a near two-week charge.
At the top end of town, industrial chemicals, fertiliser and explosives maker Incitec Pivot (ASX:IPL) has done exactly what it says on the side of the tin, going off with an 8.42% bang on the back of its FY2022 results.
Tellingly, the first statistic mentioned in CEO Jeanne Johns’ presentation is that the company has seen a “73% decline in injury severity (FY20 – FY22)”, an achievement worthy of a fireworks display, no doubt.
Oh, and IPL’s NPAT has topped $1bn because fertiliser prices are through the roof, so that might have something to do with it as well.
A few of Australia’s big lithium players are down this morning, though – both Allkem (ASX:AKE) and Pilbara (ASX:PLS) are down (11.8% and 10.4% respectively), because strange things are afoot in Lithium Land, and there are some rumblings about downgrades that suggest that lithium stocks might be about to get a little on the nose.
Macquarie downgraded Core Lithium (ASX:CXO) last night, and a bunch of other stuff happened which – frankly – I don’t have time or space to get into right now… but we’ve got Top Men and Women on the case, so keep an eye out for analysis here shortly.
In more immediate ‘this happened this morning and I can prove it’ news, though, Allkem released a “no surprises in here” report at its AGM this morning, and announced that it and its 75% owned Japanese partner Nahara had produced a few big bags of “lithium hydroxide chemical product”.
It’s definitely a start for Allkem and Nahara, and the company admits there’s work to do in terms of quality and quantity – but it’s a milestone nonetheless.
Trade on Wall Street last night was choppier than the waters of Port Phillip Bay in the grip of a solid sou’wester, as the market paused for breath after the flat-out sprint we saw late last week.
Early Bird Eddy reported this morning that losses across the board were accelerating towards the closing bell, leaving all three major stock indices finishing lower – the S&P 500 by 1%, the Dow Jones by 0.63%, and tech heavy Nasdaq by 1.12%.
US Fed Vice Chair Lael Brainard briefly lifted sentiment when she told Bloomberg that it would be appropriate for the central bank to “soon” slow its pace of rate hikes.
But she left investors in limbo by not explicitly committing to a lower rate hike in December, nor elaborating what she meant by “soon”.
Still, it’s a better result than letting her boss do the talking – perhaps Mr Powell heard our pleas two weeks back and has decided to stop tanking the market every time he opens his yapper.
In Asian markets, and Japan’s Nikkei has opened with about as much fizz as a hand-pumped room temperature British brown ale, hovering around -0.06% in early trade.
Meanwhile, Hong Kong is going its own way again today, up 1.61% in early trade, while Shanghai puddles along cautiously behind it, up 0.23% so far.
In Crypto, it’s come as no surprise that there are a number of Aussie ETFs hitting the pause button – but our very own (and very clever) Nadine McGrath has unpicked the issue with news on who’s keeping their ETF doors open and who’s bottling out.
Meanwhile, Rob “Mr Skinny Fingers” Badman has the good oil on Crypto.com’s massive $400m fat-finger mistake and all the rest of the crypto news you can handle, over at Mooners & Shakers.
Here are the best performing ASX small cap stocks for November 15 [intraday]:
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Among the ASX Small Caps, it looks like some navel-gazing at Whispir (ASX:WSP) HQ has actually been effective, with the company announcing a “sooner than expected transition to profitability and positive cash generation” – news that the market has greeted with open arms and even opener wallets.
Whispir says it’s on track to be “cash accretive from Q3 FY23”, through the simple expedience of firing a bunch of people (80 people down, roughly 30% of its workforce) and reducing spending on R&D to add $14.3 million to its bottom line (factoring in the $1.8 million it’s going to cost the company to restructure) until the business is in a more stable position to begin rebuilding.
Also on the tech tip, MSL Solutions (ASX:MSL) has also rocketed up this morning on news that Plutus Bidco, an entity controlled by Pemba Capital Partners is going to buy 100% of MSL at $0.295 per share – waaaay above MSL’s overnight close of $0.165, so it’s trading 71.2% higher.
And rounding out our Top Three for the morning, it’s Victory Goldfields (ASX:1VG), up a staggering 55.6% on some fabulous assay results confirming high grade ionic clay REE extension from its North Stanmore tenure.
The results confirm that Victory’s uncovered Heavy Rare Earth Oxide (HREO) enriched with a HREO/TREO ratio of 34% – fantastic news seeing that the HREO basket price of US$88.11 per/kg which is potentially up to 350% more valuable compared to Light Rare Earth Oxide (LREO) hard rock deposits.
Plus, there’s still assays pending over the remainder of the REE anomalous area of approximately 9km2.
HOLD THE PRESSES! – Victory has retracted part of its announcement this morning (an appendix showing basket price comparisons against a bunch of other ASX-listed miners) but it’s likely the rest of the announcement including the assay results will stand.
Here are the most-worst performing ASX small cap stocks for November 15 [intraday]:
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