Tim Boreham: Stocks that are now living Chalmed life after federal budget

Many ASX stocks are celebrating after the federal budget. But for most of us, what’s not in the document is as important as what is, says Tim Boreham.

No unexpected shock-horror nasty surprises, eh? We salute you too, Jim Chalmers. Picture: Getty Images

For investors in ASX companies, the nation’s annual fiscal housekeeping exercise was as directly relevant as the Coronation – albeit lacking in the regal event’s lavish production values.

Beyond the federal budget’s $2.4 billion oil and gas tax hike – which was more well-flagged than the UN Headquarters – there weren’t any big-ticket, shock-horror measures to move the valuation of particular stocks and sectors.

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Notably there was no mention by Treasurer Jim Chalmers of a franking dividend change beyond what had already been signalled, or a fringe benefit reform that would wipe out the salary packaging companies such as McMillan Shakespeare (ASX:MMS), Fleetpartners Group (ASX:FPR) and Smartgroup (ASX:SIQ). (Not that that was ever going to be on the agenda, given the stink raised when Kevin Rudd proposed to rein in the concession a decade ago).

In a rare loss for the Pharmacy Guild, the chemists failed to prevent a change in rules allowing patients to buy two months of medicine for the price of a single prescription.

Given the measure results in a vaunted $1.2 billion saving, it is poor medicine for drug distributor Sigma Healthcare (ASX:SIG), which owns the Amcal and Discount Drug Store banners.

The same applies to Priceline, which is now owned by Wesfarmers (ASX:WES) so any impact would barely be a line item in the $58 billion market cap conglomerate’s accounts.

While few would describe the Treasurer’s effort as a Chalm(ers) offensive, the winner’s list is longer – even if the likely benefits are muted or indirect.

Take the $2 billion Hydrogen Headstart incentive for green hydrogen producers, based on a per-kilogram price subsidy.

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This is expected to advantage Forrest Future Industries, the innovation arm of Fortescue Metal Group (ASX:FMG), if it can live up to the hype and actually produce the molecules.

The incentive also enhances the investment case for hydrogen developers such as Hazer (ASX:HZR), Pure Hydrogen (ASX:PH2), Frontier Energy (ASX:FHE) and Sparc Technologies (ASX:SPN).

Investors evidently think so, because on Wednesday these shares had surged by between 6 per cent and 11 per cent in an otherwise subdued trading session.

In the healthcare sector, some love for diagnostic imaging companies such as Sonic Healthcare (ASX:SHL), Healius (ASX:HLS), Australian Clinical Labs (ASX:ACL), Integral Diagnostics (ASX:IDX) and Capitol Health (ASX:CAJ).

Why? More GP consultations mean more pathology requests.

The budget also allows for $264 million for lung cancer screening programs over four years, which also should assist the aforementioned imaging majors.

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Also keep an eye on lung imaging software specialist 4D Medical (ASX:4DX), which is having a moment as it raises $35 million in a difficult climate for life science raisings.

Finally, the aged care sector is struggling to find workers, so listed exemplars Estia Health (ASX:EHE) and Regis Healthcare (ASX:REG) should be happy with a measure to extend the cap on the fortnightly hours that international students can work in the sector.

As with the monarch’s crowning, it was pretty much a Seinfeld-esque show about nothing.

But sometimes the “nothing” – the excluded measures – are more pertinent than the “something”. For example, investors will be relieved there weren’t any dividend franking nasties snuck in.

Meanwhile, Macquarie Equities’ number crunchers have worked out that, over time, midterm federal budgets have resulted in an average 1.4 per cent share market gain in the ensuing month.

Supposedly business-unfriendly Labor budgets have generated a 1.7 per cent gain … so hang in there.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Find more Tim Boreham wisdom at stockhead.com.au

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Originally published as Tim Boreham: Stocks that are now living Chalmed life after federal budget