AU Morning Wrap: ASX Gains; Bega Warns Milk Prices to Rise Again in FY2024

Stock indexes drifted lower as Wall Street's pullback from its big recent rally carried into a second week.

Shares in KFC merchant Collins Foods climbed 8.8 per cent this morning after the group impressed analysts with its same store sales to start financial 2024. The group also warned on soaring cost inflation, but analysts shrugged off the news and said margins remained steady in Australia.

While Bega Cheese shares gained slightly after it warned farmgate milk prices will rise again in financial 2024, but confirmed EBITDA guidance for financial 2023.

The best performing sector this morning is tech, which is up 2.2 per cent with Westfield operator Scentre soaring 3.3 per cent and Goodman Group also advancing.

The miners and energy businesses are also higher, with tech the worst performing sector after Wall Street lost altitude last night.

As a result Bega, as one of Australia's largest buyers of farmgate milk, expects to impair the value of its bulk dairy business by between $180 million to $280 million.

The extra capital will remain in place until Medibank can complete a more detailed remediation plan, and APRA said it would also "conduct a targeted technology review" to ensure the company's systems are up to standard.

Medibank has sufficient existing capital to meet this adjustment. After application of this requirement Medibank will remain well capitalised with unallocated capital remaining at 30 June 2022 levels, which was $148 million.

- Cost pressures to persist during FY24

- Targeting FY24 EBITDA to be ~margin neutral with improvement in FY25.

- Supply chain, energy and menu pricing initiatives to mitigate inflation.

- Digital and delivery channels to drive further growth.

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