ASX 200 drops, Brickworks soars, Woolworths falls

The ASX 200 dropped today, though Brickworks soared on profit valuation increases.

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The S&P/ASX 200 Index (ASX: XJO) fell 0.3% today to 7,270 points.

Here are some of the highlights from the ASX:

Brickworks Limited (ASX: BKW)

The Brickworks share price went up more than 10% today after announcing a revaluation profit within it is joint venture industrial property trust. Brickworks’ share is expected to be around $100 million. This is expected to contribute to record underlying earnings before interest and tax (EBIT) of between $240 million to $260 million for FY21, up from $129 million in FY20.

Brickworks also said that its building products divisions in Australia and North America are both expected to record higher EBIT in FY21 in local currency returns. The ASX 200 share is benefiting from a rapid re-opening of the economy across the US, though there’s still uncertainty such as the newly imposed lockdowns in Melbourne.

The Brickworks managing director Mr Lindsay Partridge said:

Since the end of the first half, there has been a number of significant industrial property transactions in western Sydney. The pricing of these transactions has reinforced the strong investor appetite for prime industrial property assets.

Given the number of sales and the steep movement in transaction pricing, an independent valuation of our property trust assets has been completed, and this process has resulted in further compression of capitalisation rates across our portfolio. As such, a revaluation profit of around $100 million will be recorded in the second half, representing Brickworks’ 50% share of the valuation gain.

In addition, property earnings are expected to be boosted further by the completion of developments at Oakdale East, current forecast to occur in July.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price dropped around 2% today after a report into its Darwin Dan Murphy’s store.

According to reporting by the Australian Financial Review, Woolworths has said it will fix its corporate governance and strengthen its engagement with stakeholders before it opens new stores after an independent review.

That review, which was done by Gilbert+Tobin managing partner Danny Gilbert, said Australia’s largest retailer had “failed to take into account the challenges facing Aboriginal communities in the Northern Territory, put profits above public interest, lobbied the NT government for law changes that led to fair processes being ignored, and did not meet the standards expected of a leading corporate citizen when it pursued plans to open the store in the face of overwhelming community opposition.

The proposed Dan Murphy’s was 10 times larger than the ASX 200 share’s existing BWS store in Darwin.

Woolworths CEO Brand Banducci, according to the AFR, said:

I’d like to apologise…for us not actively listening as much as we should have. Where we need to materially change our governance is how we empower our First Nations team members and our advisory board to have a lot more carriage in terms of their mandate to give us advice. Our commitment is to reflect, to engage and do a much better job of taking First Nations issues into consideration in all our actions going forward. The buck stops with me…I’ve learnt a lot.

Afterpay Ltd (ASX: APT)

The buy now, pay later business was also in the news today.

According to reporting by the Australian Financial Review, the broker UBS thinks that Afterpay’s growth rate in Australia is going to fall a lot later this year as it reaches maturity in its first market.

The broker continues to think that the ASX 200 BNPL business is going to attract more attention from the Reserve Bank of Australia as merchants pay around eight times more than debit cards.

UBS thinks that the Afterpay share price is too high because of rising competition, regulation and uncertainty of the execution of growth plans, as well the high Afterpay valuation. 

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Brickworks, and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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