Yesterday, we looked at the rumours swirling around the then-upcoming federal budget, and what it could mean for ASX shares. Specifically, we looked at a potential cut in the fuel excise rate, and which ASX companies would stand to benefit the most.
Well, Tuesday night has come and gone, and with it, rumours have been replaced with reality. We indeed saw the government announce a temporary six-month cut in the rate of fuel excise tax.
If you weren't aware (or you missed our article yesterday), excise is a specific type of tax that the government levies on petroleum-based fuels, i.e. petrol and diesel, as well as some other goods. Before today, the excise was set at 44.2 cents per litre for both petrol and diesel road fuel.
Normally, this rate is indexed to inflation and rises twice a year. However, the government announced during its budget last night that this rate would be halved for the next six months. This means motorists will now only pay 22.1 cents per litre in fuel, rather than 44.2 cents.
Apart from the obvious benefit for all motorists at the pump, let's see how this temporary change could affect ASX shares.
Yesterday, we covered how a cut in fuel excise would be a boon for any company with an extensive road transport-based freight or logistics network.
Some ASX winners from the budget's fuel excise cut
Well, let's expand on that today. According to reporting in The Age today, broker UBS has outlined a list of ASX shares that it sees as poised to benefit from this cut to fuel tax.
UBS analysts are pointing to "retailers that served 'less affluent' consumers" as the prime beneficiaries. These reportedly include Coles Group Ltd (ASX: COL) and Adairs Ltd (ASX: ADH). As well as City Chic Collective Ltd (ASX: CCX), Collins Foods Ltd (ASX: CKF) and Super Retail Group Ltd (ASX: SUL).
Grocer Coles and homewares retailer Adairs are both household names. But Collins Foods is the company behind the Kentucky Fried Chicken (KFC) fast-food chain in Australia. Super Retail Group in turn is the name behind the retail brands of BCF, Super Cheap Auto, Macpac and Rebel.
UBS strategist Richard Schellbach said the one-off $250 payments that the budget was directing to pensioners, carers, veterans and job seekers, would boost retail spending, as would the cut in fuel excise.
Schellbach also named automotive shares like Ampol Ltd (ASX: ALD), Bapcor Ltd (ASX: BAP) and Eagers Automotive Ltd (ASX: APE) as direct winners from the fuel excise cut too.
That might help explain why many of the shares listed here are enjoying some strong gains on the ASX boards today. Adairs seems to be the biggest winner on this list as it currently stands. Adairs shares are presently up close to 5% at $2.97 a share.
