Ingenia raises $150 million (ASX:INA): Aus shares 3.9% lower at noon

Market Reports

by Katrina Bullock

The Australian share market opened lower following negative economic headwinds from the US and has continued to track lower in the first 2 hours of trade. All of the sectors are in the red, with Energy weighing heaviest on the market.

The S&P/ASX 200 index is 214 points down or 3.9 per cent lower at 5,309. On the futures market the SPI is 241 points lower.

Local economic news

CoreLogic data shows that Australian housing activity plummeted in April, while housing values stayed steady. Although most regions recorded a rise in home values through April, the national monthly pace of growth more than halved, dropping from 0.7% in March to 0.3%. The capital city markets generally showed a weaker performance relative to the regional markets.

The ABS released its producer price indexes for the March quarter. Demand excluding exports rose 0.2 per cent for the March quarter, following a 0.3 per cent rise the previous quarter.

AiGroup published the Performance of Manufacturing Index for April. Australian PMI was down 17.9 points (seasonally adjusted terms) to 35.8. This indicates that Australian manufacturing contracted at its worst pace since April 2009. It is the largest month-to-month fall in this index in the history of the series, dropping from 53.7 points the previous month. Manufacturers cited a range of COVID-19 issues in April, with the most prevalent including: no new sales due to shutdowns; major customers cancelling orders; supply chain problems with inter-state freight movements, and delays; and increased prices for raw materials.

Broker moves

Macquarie has rated Woolworths (ASX:WOW) as an outperform with a 12 month price target of $39. The broker says that higher volumes in March triggered additional operating expenditure of around $220-275 million for the June quarter. Additionally, the hotels business is losing $30m in EBIT per month from forced government closures. Woolworths have indicated that April was too volatile to provide a real guide to the fourth quarter but Macquarie believes there will be a more pronounced top-line benefit over the remainder of the quarter. Shares in Woolworths (ASX:WOW) are trading 2.1 per cent lower at $35.01 at noon.

Company news

Lifestyle and holiday communities provider, Ingenia Communities Group (ASX:INA) has successfully completed the institutional component of its $150 million placement. Under the fully underwritten Institutional placement the company will issue approximately 39.1 million new securities, at an issue price of $3.45 per security with a view to raising $135 million. The capital raising will be used to provide funding flexibility to grow the group’s asset base as opportunities emerge to acquire tightly held, quality assets. The company’s CEO, Simon Owen says “we continue to see high occupancy across our seniors rental and land lease communities and expect strong tailwinds in domestic tourism once travel restrictions ease. With significant funding flexibility and a strong balance sheet, [he believes] Ingenia is ideally placed to build a sector leadership position. Shares in Ingenia Communities Group (ASX:INA) are trading 3.5 per cent lower at $3.56 at noon.

Best and worst performers

The best-performing sector is Utilities, shedding 1.3 per cent, while the worst performing sector is Energy, losing 5.6 per cent.

The best performing stock in the S&P/ASX 200 is Janus Henderson Group (ASX:JHG), rising around 10 per cent to $27.06, followed by shares in Resmed (ASX:RMD) and Fisher & Paykel Healthcare (ASX:FPH).

The worst performing stock in the S&P/ASX 200 is Austal (ASX:ASB),dropping 17.3 per cent to $2.78, followed by shares in Virgin Money UK (ASX:VUK) and Southern Cross Media Group (ASX:SXL).

Asian markets

Japan’s Nikkei has lost 2.1 per cent, Hong Kong’s Hang Seng and China’s Shanghai Composite are closed.

Commodities and the dollar

Gold is trading at US$1,688 an ounce.
Iron ore price rose 1.9 per cent to US$84.04.
Iron ore futures are pointing to a rise of 2.5 per cent.
One Australian dollar is buying 64.64 US cents.