ASX 200 morning report – RHC, QAN & BNPL shares in focus

The S&P/ASX 200 (INDEXASX: XJO) is tipped to slide when the market opens this morning. Here’s what’s making headlines across local and global sharemarkets.

ASX finishes higher, Qantas posts billion-dollar loss

The ASX200 finished 0.8% higher on Thursday following a strong US lead overnight, with healthcare and materials leading the way, up 1.7% and 1.4%, respectively.

Ramsay Health Care Limited (ASX: RHC) was the standout, jumping 7.7% after reinstating its dividend, at 48.5 cents per share. The private hospital operator reported a ‘resilient’ result, with revenue down 6.6% to $5.9 billion globally, but individual countries offering a glimpse of the pandemic response. Asia Pacific led the way with revenue falling just 0.5%, Europe in general fell 0.8% but the UK fell 82.5% with the government offering significant support in each case to ensure beds were always available for use.

Ramsay’s profit fell 12.5% to $226 million in what can only be described as a disastrous year for the healthcare sector, but management confirmed its key Australian operations are now running at around full capacity, offering hopes for a strong 2021 as a backlog of surgeries are completed.

Qantas Airways Limited (ASX: QAN) crashed to a $1.1 billion loss, down from a $445 million profit, after revenue dropped 75% in the first half of the year. The focus now is on the ‘certainty’ provided by the vaccine rollout with investors seeing the positive side, sending shares 1.5% higher.

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Battle of the BNPL giants, A2 Milk share price crunched

The battle of the BNPL giants continued yesterday, with both Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) releasing half-year results at the same time. Focusing on the growth, which is the most important for investors, Zip appears the standout, at least in the short-term and likely from a lower base.

Afterpay reported a 106% increase in platform sales, Zip 141%; platform income or company revenue increased 108% and 131%, respectively; and active customers continued their recent trends, jumping 80% and 217%. Scale is as important as ever in this line of business, with Afterpay’s 13.1 million customers twice the level of Zip’s at 5.7 million.

Afterpay shares went into a trading halt as management seek to raise US$1.25 billion via a convertible note whilst the Zip share price fell 7.7%, once again showing its volatile nature.

Port and infrastructure owner Qube Holdings Ltd (ASX: QUB) reported a 9.3% increase in profit for the half year, citing strong mining exports and a pickup in container volumes as the key drivers. Management announced a 2.5 cent per share dividend, a cut on the previous year, but positive given the environment and enough to send Qube shares 1.6% higher. The company announced that the property and warehousing portion of its Moorebank Terminal will be sold for $1.65 billion to LOGOS, a property investor, with the intermodal rail terminal to be retained.

A2 Milk Company Ltd (ASX: A2M) appears to be running dry with the share price falling 16.2% on half-year results, as revenue and profit fell 16% and 35%, respectively. The company clearly became too reliant on the less structured ‘Daigou’ channel in its efforts to expand in China, which were effectively shut down during the pandemic.

US markets tumble, Nasdaq remains under pressure

US markets fell in unison once again, with four stocks lower for every one that gained. The Nasdaq remains under extreme pressure, falling 3.5%, as US bond yields exacerbate valuation concerns on loss-making businesses. The S&P 500 fell 2.5% and the Dow Jones 1.8%, with consumer and energy companies unable to offset the falls.

Telsa Inc. (NASDAQ: TSLA) was one of the hardest-hit falling 8.2%, with chipmaker NVIDIA (NASDAQ: NVDA) also down 8.3%. The well-known ARK Innovation ETF (NYSE: ARKK), which is heavily invested in these well-known tech names, fell another 5.9% as outflows continue to surge.

Chip-maker NVIDIA reported record quarterly sales exceeding US$5 billion for the first time in its history, a 61% increase in 2019 levels. The company overcame weakness in the automotive chip business, which is facing product shortages and saw sales fall 11%, with 91% sales growth in its data centre business and 67% in its gaming business. The company is effectively powering the evolution of the digital economy with management highlighting the huge potential in products ranging from smart tractors and lawnmowers to air conditioners; all backed by a NVIDIA chip.

Back home on the ASX, expect reports from the likes of Kogan.com Ltd (ASX: KGN), Sezzle Inc (ASX: SZL), Openpay Group Ltd (ASX: OPY) and Nuix Ltd (ASX: NXL) today as reporting comes to a close.

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Low fees? Check.

Long-term growth potential? Check.

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This ETF makes investing in ETFs "Super-Easy".

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Disclosure: At the time of publishing, Drew owns shares in Zip Co.

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