Saturday, 25 February 2023

Weekly Small Caps and IPO Wrap: ASX suffers the wobbles as earnings sow chaos the length of the bourse

by Berkeley Lovelace

  • ASX 200 benchmark was rubbish this week, down 1.39%.
  • ASX Emerging Companies (XEC) falls 1.43% because it hates you.
  • Connexion Telematics takes line honours with a 71% reach for the stars.

While it’s far from the worst week the ASX has ever seen, it’s still been all a bit crap since the markets opened on Monday morning.

The writing was very much on the wall when the benchmark rolled into lunchtime, groaning under the unbearable weight of a 0.006% pre-lunch gain – and for the next three days it was harder to get out of bed than a pissed-up frat boy with lovin’ on his mind.

From Tuesday through Thursday, the benchmark wilted like spinach on hot spinach, despite multiple efforts to get things moving, and it wasn’t until today that things started to come right.

The end result was a 1.39% drop for the benchmark, only marginally better than the 1.43% fall by the ASX XEC Emerging Companies index, where all of our lovely Small Caps like to gather.



The market is – like my parole officer – a complicated and highly-aggravating beast, and I’m often at a loss to fully understand either of them.

But there were some clear motivations for the distinct unease that has had investors very much on edge throughout a busy-busy earnings week.

On a macro level, all this business about inflation and recession and pie charts and spreadsheets that the US Fed has been thumping the tub about relentlessly has thrown the wettest of blankets over their market, and ours.

On Tuesday, after a handy long weekend, Wall Street dropped a 2.0% bundle that shook things up tremendously – and as always, none of it was helped by representatives from the Fed talking to us like taxi drivers about how more rate rises are inevitable.

Locally, though, there was a bunch of data that should (hopefully) help RBA Guvnor Philip Lowe (who hates being singled out as the source of all our mortgage stress… so that’s why I’m doing it) decide to go a little easier on us when the board holds its next $20,000-a-plate luncheon next month.



Reporting season was hugely unkind to a number of the Big Bizzyness types this week.

The highlights (or mostly lowlights) included health insurer NIB (ASX:NHF) taking an almost-instantaneous -10% nutshot, despite reporting NPAT at +12.8% to $91.6 million, with earnings per share up a similar percentage and an interim dividend jump from 11 to 13 cents per share (footy franked).

BlueScope Steel (ASX:BSL) sh-t the bed after an eye-bleeding 64% NPAT fall, screeching out all manner of dire warnings that the Green Steel revolution is still a long, long way from happening as it plummeted into the abyss.

But the prize turkey this week was without a doubt Star Entertainment Group (ASX:SGR), when it reported that combination of poor judgement, even poorer management and a handful of fines capable of crippling a small Pacific Island nation (New Zealand) meant that it had essentially set fire to $1.2 billion.

The market appears to be taking the view that this is absolutely rock-bottom for the beleaguered casino operator – it’s rounded out the week up 3.4% because realistically, that was the only direction it could have taken.



Here are the best performing ASX small cap stocks from 20-24 February:

Swipe or scroll to reveal full table. Click headings to sort:


Smart car tech company Connexion Telematics (ASX:CXZ) took the Gold Gong for Persistent Excellence in Adding Value this week, soaring 71% since Monday after it confirmed that its major US customer General Motors had signed a contract extension that will see its tech in all manner of fancy-ish left-hand-drive vehicles for at least the next five years.

Likewise, eCargo (ASX:ECG) went all magico-ballistico (that’s Italian for “going off like a frog in a sock”), adding better than 54% for the week, but for absolutely no reason at all.

ECG hasn’t spoken a word to the ASX or the market in general since 25 October last year – but it’s still managed to climb… *rubs glasses*… 264.3% over the past month.

It feels like someone, somewhere knows something – but the ASX did send ECG a speeding ticket during the week, and got a “LOL. NFI. Soz.” reply in return, so it’s gonna remain a mystery for now.

Magnis Energy Technologies (ASX:MNS), tore the wrapping off a massive bit of Tesla-related good fortune, with some huge implications for the Aussie battery metals player.



MetaRock (ASX:MYE) added 48.0% this week on news that it’s settled its beef over the the Gregory Crinum contract with Japan’s Sojitz Corporation, and will pocket $11.1 million plus make use of the door that’s now open for the company to sell off a bunch of equipment it brought in for the project but is now surplus to requirements.

And last one worth a mention is Mt Monger Resources (ASX:MTM), which stacked on 40.0% this week on news that it’s joined the rapidly-growing list of Aussie miners buying up lithium plays in Canada.

MTM entered into a binding option agreement to acquire the Pomme REE-Nb project in Quebec, Canada from TSX.V listed Geomega Resources, securing a known carbonatite intrusion with exceptional results from limited drilling, showing enrichment in rare earth elements (REE) and niobium (Nb).

It’s considered an extremely prospective exploration target, thanks to intercepts drilled in 2012 that turned up 508.3m at 0.43% TREO, 413ppm Nb2O5 and 1.48% P2O5, from 73.7m depth; and 478.1m at 0.12% TREO, 340 ppm Nb2O5 and 2.14% P2O5, from 25.9m to EOH.

And lastly, it should be noted that Pivotal Systems (ASX:PVS) managed to bang out a nominally top spot result with a +80% for the week, but the company is about to up just past the top of the thighs in the de-listing process soon, so… not 100% sure that it counts. Still, bravo!



Here are the least best performing ASX small cap stocks from 20-24 February:

Swipe or scroll to reveal full table. Click headings to sort:


ASX IPOs this week:

SQX Resources (ASX:SQX) strode out to swing its hips around the barn for its debutante ball on Monday 20 February, after rounding up $4 million at $0.20 a pop after being delat

SQX’s current focus is on copper and gold mineralisation at its Ollenburgs and Scrub Paddock Prospects, in the underexplored Esk Basin in southeast Queensland and situated near major regional infrastructure and population centres.

Scrub Paddock has been identified as a potential gold-copper porphyry, and features more than 20 mine workings and an area of comparable scale to Cadia/Ridgeway.

The company intends to drill high priority targets immediately upon listing, with the aim of defining an economic mineral resource.

It wasn’t long, however, before it was moving at the mercy of the week’s sour mood, down to $0.155 by Thursday but finishing a little stronger to $0.16 at Friday’s close of play.


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