Global markets were mixed overnight, with subdued trading ahead of the Thanksgiving break with Wall Street indices staying near record levels.
Yesterday we noted that the Tech sector has been in the leadership position for some time with several companies producing remarkable earnings growth. In both the US and China, Major Technology stocks have provided the impetus for markets of late.
In Australia and NZ, while we are relatively light in terms of Tech exposures, several Australasian companies have been performing very well – such as Wisetech Global which we discuss below.
Stock in Focus: Wisetech Global (WTC:AX)
Shares in Wisetech Global continued their amazing run yesterday following a positively received AGM, which we detail below. The logistics software as a service company has been one of the best performing stocks on the ASX this year, and reached a new all-time high on Wednesday.
WTC’s AGM revealed strong momentum of the 2017 financial year is being carried over into 2018. Its low attrition rate, and recent acquisitions in the Netherlands and North America, has seen management upgrade its full-year revenue guidance. In August the company gave full-year guidance of between $200 million and $210 million in revenue, with operating earnings (EBITDA) expected in the range of $71 million and $75 million. This has now been upgraded to revenue between $207 million and $217 million, up 35% to 41% year-on-year.
This was no doubt a positive announcement, and we believe WTC is a best in class software as a service provider. However, at its current premium valuation it is being “priced for perfection” and we remain patient in terms of potentially buying the stock.
We currently have a HOLD rating on WTC.
Members should look out for a full update on WTC to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market made gains on Wednesday (ASX 200 index +0.38%) but the ASX 200 index remains slightly below the 6000 level. Australian shares were caught up in a wave of renewed investor enthusiasm which markets from Wall Street to Hong Kong to fresh highs. The resources sector, which has been a prime driver of the ASX this year, gained further momentum following recent weakness. Most commodities climbed yesterday which saw major miners Rio Tinto and BHP move higher.
The New Zealand market traded higher yesterday (NZX 50 index +0.20%) led by A2 Milk and Port of Tauranga, while Fisher & Paykel Healthcare weakened further after its first half results yesterday. A2 was the best performer for the second day in a row, after the milk marketer said that both revenue and net profit jumped in the first four months of the current financial year as it continues to benefit from strong demand for its infant formula.
3 Things Markets Will be Watching this Week
1. The US Federal Reserve Chair makes a speech on Wednesday, with minutes from the last meeting released on Thursday
2. US Politics with Tax Reform taking centre stage.
3. The Reserve Bank of Australia releases minutes from its last meeting on Tuesday
Have a Great Day,
Team
