Insights from the ASX 200 Market

The "Things I Learned from the Market Today" series provides insights from the ASX 200 updates, distilling key observations from company announcements and market trends.

The Impact of Guidance Downgrades

HMC Capital (ASX: HMC) faced a challenging trading session after revising its full-year operating EPS guidance down by 5.7%, from 70 cents to 66 cents, following fair value adjustments in its financial assets and HMCCP. Consequently, the stock opened 0.4% lower and experienced a decline of up to 7.9% throughout the day.

Despite entering the downgrade with a neutral perspective—considering the stock had halved since its February half-year FY25 results—market reaction was severe. Analysts’ commentary in subsequent sessions will be pivotal in assessing any adjustments to ratings or target prices based on this newest guidance.

NextDC Shows Strong Growth

NextDC (ASX: NXT) posted impressive gains, opening 3.7% higher and reaching a peak of 9.3% by midday, buoyed by a positive update on utilisation rates and a solid order book. Notable highlights include:

• Victoria’s data centres led in AI deployments, achieving 114MW in contracted utilisation—161% of the planned 70.5MW capacity by December 2024.
• A 30% increase in group-wide contracted utilisation to 228MW since December 2024.
• A significant 54% growth in the forward order book, amounting to 127MW, with new contract revenues expected to commence in FY27.
• An increase in FY25 capex guidance, now between $1.4 billion and $1.6 billion.

These results outstripped Goldman Sachs’ predictions while addressing past concerns regarding oversupply—especially following Microsoft’s cancellation of 2,000MW in projects. The 54% order book expansion in three months marks a record for the company, suggesting a potential rebound for NextDC’s shares, which had dropped approximately 30% since last October.

Monitoring Aftershocks from Disappointing Results

Endeavour Group (ASX: EDV) and Westpac (ASX: WBC) are still feeling the repercussions from disappointing earnings reports from the previous Monday. Westpac’s 1H25 results revealed:

• A net profit after tax (ex-items) decline of 1% to $3.5 billion, aligned with market predictions.
• A CET1 ratio at 12.2%, also as expected by the market.
• Flat year-on-year earnings per share at 101 cents, exceeding the UBS estimate of 98 cents.
• An interim dividend of 76 cents per share versus an expected 82 cents, marking a 7.3% miss.
• A decrease in the Group NIM to 1.88%, down 1bp, contrasting with the expected 1.94%.

For Endeavour, third-quarter results were similarly lacklustre with:

• A 1.3% drop in retail sales to $2.33 billion, below UBS estimates.
• A marginal 4.9% increase in hotel sales to $512 million, slightly above forecasts.
• Total group sales down by 0.3% to $2.84 billion, below expectations.
• Projections for flat to modest growth in fourth-quarter retail sales following a previous decline.

Following these results, shares for both companies continued to decline, with Endeavour and Westpac down 4.3% and 2%, respectively. This slump prompted broker downgrades, with target prices reduced by 3.1% for Endeavour and 2.2% for Westpac, highlighting the lingering effects of earnings misses on market performance.

The Dividend Effect on Southern Cross Media

Southern Cross Media (ASX: SXL) announced its intent to resume dividends in FY25—its first payout since March 2024—attributed to a strong operational and financial rebound. Key highlights included:

• Audio revenues surged nearly 9% in the first four months of 2025, surpassing expectations.
• Cost-saving measures have reduced non-revenue-related expenses to approximately A$265 million, below the earlier forecast of A$270 million.
• A projected leverage ratio below 1.5x by June 30, 2025.

Following this announcement, SXL’s shares opened 4.3% higher and closed with a notable 7.9% gain, breaking above the 200-day moving average for the first time since May 2024. The convergence of revenue growth, cost efficiencies, decreasing debt, and dividends returning creates an optimistic outlook for the company. As income-focused investors take notice, sustained upward momentum seems likely in the coming weeks.

In summary, the current ASX landscape reveals how companies navigate through guidance downgrades and earnings results, as well as the potential for recovery in the wake of positive developments.