Wild Wisetech: Board Quits, Stock Plunges, White Wins

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Welcome to Equity Espresso’s Market Recap.

The Aussie share market squeezed out a minor gain today despite a sharp sell-off on Wall Street on Friday, which saw the NASDAQ fall by over 2%. The S&P/ASX200 index started the day in negative territory but closed the day 12.0 pts. or 0.15% higher to finish at 8,308.20.

Six sectors finished the session higher, with Utilities (+3.24%) being the best performer thanks to a sharp rise from APA Group (+7.72%), whose shares rose after reaffirming its FY25 distribution guidance of 57¢ per security. The Financials (+1.89%) sector rebounded after a torrid week last week, with the Big Five banks posting gains, with CBA (+2.97%) being the biggest mover of the lot.

The Technology (-6.84%) sector was the worst performer of the day, with sector leader Wisetech crashing after four directors called it quits. Wisetech shares fell by 20.09% after the company announced that four independent non-executive directors - Lisa Brock, Richard Dammery, Michael Malone, and Fiona Pak-Poy - would step down from the board after the company's half-year results on Wednesday. The decision comes due to irreconcilable differences within the board and varying opinions regarding the ongoing role of Richard White, the founder and founding CEO.

The company has been engaged in crisis talks following reports of formal complaints made by more women, including a WiseTech employee and a contractor, alleging inappropriate behaviour by White.

WiseTech also said it anticipates revenue to be at the lower end of the guidance range ($1.2 billion - $1.3 billion) due to additional delays in launching its three Breakthrough Products. However, it expects its EBITDA margin rate (46% - 50%) to be near the upper end of the previously stated range.

ASX Company News

• Adairs' (-7.29%) statutory net profit rose 9.7% to $19.4 million in the first half of fiscal 2025, driven by strong sales, allowing a 30% increase in the fully franked dividend to 6.5¢. The retailer increased its FY25 capital expenditure guidance to $16-$18 million due to relocation costs.

• Ampol's (-2.82%) full-year benchmark net profit slumped 68% to $234.8 million, dragged down by its Lytton refinery's loss due to deteriorating global refining conditions and production issues. The company said its retail fuel, convenience, and commercial businesses remained resilient.

• APA Group's (+8.17%) statutory profit plunged to $34 million in the six months to December from $1 billion a year ago due to its Pilbara Energy System acquisition. The energy infrastructure company reaffirmed its FY25 distribution guidance of 57¢ per security and expects underlying earnings between $1.96-$2.02 billion.

• Aussie Broadband's (+3.92%) interim net profit rose 24% to $12.2 million, driven by new broadband customers, stake sale in Superloop, and income from Symbio acquisition. The telco upgraded its full-year underlying EBITDA guidance to $133-$138 million and will pay a special dividend of 2.4¢ and an interim dividend of 1.6¢ per share.

• Iress (-14.48%) shares fell after the company reported an adjusted EBITDA increase of 25% to $132.8 million, surpassing guidance while operating costs fell by 9.3%. The company declared a final dividend of 10 cents per share and provided FY25 guidance, projecting growth in NPATA and Adjusted EBITDA.

• Lovisa (-4.27%) shares fell after its 10.7% increase in earnings to $90.2 million and a 6.5% rise in net profit to $56.9 million failed to meet expectations.

• NextDC's (-2.82%) statutory net loss widened to $42.7 million in the six months to December despite revenue growing 13% to $167.8 million. The data centre operator affirmed its fiscal 2025 underlying earnings guidance of $210-$220 million while announcing a new remuneration package for executives and senior management.

• nib Holdings (+12.12%) reported a 26.7% decrease in Group underlying operating profit to $105.8 million for the six months to December 2024. The group's net profit after tax was $82.9 million, down from $103.9 million in 1H24, while revenue increased by 7.7%. The company will pay an interim fully franked dividend of 13 cents per share.

• Nuix's (-7.74%) first-half loss widened to $10.4 million from $4.8 million a year earlier. Underlying earnings slid 4.5% to $27.1 million despite a 6.9% revenue rise to $105.2 million. The company expects 11-16% ACV growth, revenue growth exceeding operating cost growth, and underlying cash flow positive for the full year.

• Reece Group's (-13.12%) first-half sales revenue fell by 3% to $4.4 billion, while net profit dropped 19% to $181 million, attributed to "challenging trading conditions." EBIT fell 17% to $305 million, while costs rose 3.6% due to acquisitions and new branches.

Wall Street

U.S. stocks plummeted on Friday as investors sought safer assets amidst concerns about a slowing economy and persistent inflation. The Dow Jones (-1.69%) and S&P 500 (-1.71%) saw sharp falls, while the Nasdaq (-2.2%) dropped by over 2%. The market's defensive posture was reflected in the S&P 500 sector ETF performance, with the Consumer Staples (+1.00%) sector being the sole gainer while all other sectors posted losses.

Economic data, including a steep drop in the University of Michigan consumer sentiment index, falling existing home sales, and a contraction in the U.S. services purchasing managers' index, fueled economic worries.

Walmart (-2.5%) shares fell for a second day after providing a weak forecast, further dampening consumer and economic outlooks. Novo Nordisk's (+5.18%) long-running U.S. shortage of blockbuster weight loss injection Wegovy and diabetes treatment Ozempic has been resolved after more than two years, according to the FDA. The decision threatens compounding pharmacies' ability to produce cheaper, unbranded versions, causing Hims & Hers Health (-25.79%) shares to plunge.

S&P500 Sector Performance

Economic Data

• Canadian Retail sales are expected to ease by 0.4% from the previous month in January of 2025, the first drop in seven months, according to preliminary estimates.

• U.S. Existing Home sales sank by 4.9% to a seasonally adjusted annualised rate of 4.08 million in January of 2025, the sharpest decline in seven months and missing market expectations of 4.12 million.

• New Zealand retail sales increased 0.9% on quarter in the last three months of 2024, the strongest gain in three years, following a revised flat reading in the previous period, and beating forecasts of 0.6%.

• The S&P Global U.S. Composite PMI dropped sharply to 50.4 in February 2025 from 52.7 in January, indicating a near-stagnation in the private sector,

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🌎️ Around The Globe

• 1X, a Norwegian robotics company, introduced Neo Gamma, a new prototype humanoid robot designed for home use, following the earlier Neo Beta model. Neo Gamma remains in the testing phase, with no immediate plans for commercial release due to cost, safety, and technology limitations.

• Apple is disabling its Advanced Data Protection feature for U.K. users after the government demanded access to user data. The end-to-end encryption tool ensures only account holders can view their stored photos and documents, making the data inaccessible to Apple.

• Bybit suffered the largest cryptocurrency heist in history when a hacker stole approximately $1.5 billion in Ethereum and staked Ethereum from its offline wallet.

• Celsius Holdings' shares surged on Friday as investors welcomed the company's record full-year revenue and its $1.65 billion acquisition of rival energy drink brand Alani Nutrition.

• OpenAI has banned accounts of users from China and North Korea who were allegedly using the company's A.I. technology for malicious purposes, such as surveillance and opinion manipulation.

• UnitedHealth Group is under investigation by the Justice Department for its Medicare billing practices, notably the recording of diagnoses that trigger additional payments to its Medicare Advantage plans

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*1-year, 3-year and 5-year returns are calculated as of January 31, 2025.

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