What's next for the APA Group share price with its CEO planning his exit?

About Latest Posts Brendon LauBrendon's passion for shares started by accident in 2003 and he has worked in various roles …

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The APA Group (ASX: APA) share price tumbled lower today after its long serving chief executive announced his retirement on the day that defensive stocks fell out of favour.

The APA share price fell 1.4% to $8.79 on Thursday as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index inched up 0.1% as investors regained some of their risk appetite due to rising optimism of an easing in the global trade war and a smooth Brexit.

This meant that stocks that performed well during times of uncertainty, like utilities and telecommunications, underperformed.

At least APA's share price fall is nothing compared to the 17% flogging TPG Telecom Ltd's (ASX: TPM) share price received today or the 3.3% plunge by Telstra Corporation Ltd's (ASX: TLS) share price.

APA's CEO Mick McCormack announced that he will be stepping down before the end of 2019 after holding the role for more than 13 years.

"Mick's record speaks for itself in terms of his contribution to APA's success and to the Australian energy industry since taking over as CEO and Managing Director in 2005," said APA's chair Michael Fraser.

"Over that time APA Securityholders have enjoyed compound annual total securityholder return of 14.9% making APA one of the ASX's top performing entities."

The gas pipeline group also announced that it was terminating its contract with a subsidiary of RCR Tomlinson Ltd (ASX: RCR) after RCR fell into receivership.

The RCR subsidiary was working on APA's Darling Downs Solar Farm, which has an offtake agreement with Origin Energy Ltd (ASX: ORG).

The collapse of RCR shows how tricky it can be to invest in the construction and engineering sector despite the boom in infrastructure type projects.

The failure of RCR and the profit warning by Lendlease Group (ASX: LLC) have weighed on the sector with the LLC share price and Downer EDI Limited (ASX: DOW) share price coming under pressure recently.

APA said it will pay an interim dividend of 21.5 cents a share and the company reiterated its FY19 guidance last month following the failed takeover of the company by a Chinese consortium after the federal government blocked the deal.

I am underweight on utilities and other defensive sectors as I believe the bulls have at least one last puff left. The markets should perform well into early 2019 and that will leave defensive stocks behind.

Motley Fool contributor Brendon Lau owns shares of Telstra Limited and TPG Telecom Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »