BUSINESS FORECASTING – AUSTRALIA

IPO drought expected to continue into the new year

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Original article by Michael Bleby
The Australian Financial Review – Page: 18 : 30-Jan-20

Research by HLB Mann Judd shows that 28 companies with a market capitalisation of less than $100m listed on the Australian sharemarket in 2019, compared with 72 in 2018. In total, just 62 companies debuted on the local bourse in 2019, collectively raising $6.91bn. The downturn in IPO activity has carried over into 2020, and HLB Mann Judd partner Nicholas Guest says many owners of high-growth businesses are likely to seek private equity backing rather than an IPO in the current environment.

CORPORATES
HLB MANN JUDD

Miners to bear the brunt of China woes

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Original article by Nick Evans
The Australian – Page: 25 : 29-Jan-20

The coronavirus crisis has weighed on the shares of Australian resources groups that have exposure to China. Shares in Rio Tinto have closed below $100 for the first time since mid-December, while BHP, Fortescue Metals Group, OZ Minerals and Sandfire Resources also retreated on 28 January. The prices of iron ore and base metals have also fallen in response to the coronavirus outbreak. Macquarie notes that based on the SARS pandemic, base metal prices may take 3-5 months to recover from their recent losses.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP GROUP LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, OZ MINERALS LIMITED – ASX OZL, SANDFIRE RESOURCES NL – ASX SFR, MACQUARIE GROUP LIMITED – ASX MQG

Tourism’s $6.5bn pain: our worst summer ever

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Original article by Emily Ritchie, Lisa Allen
The Australian – Page: 1 & 4 : 23-Jan-20

Tourism Australia will launch a new domestic marketing campaign to bolster the local tourism industry in the wake of the bushfires crisis. Industry executives have estimated that the bushfires have cost the sector about $2bn to date; this takes into account factors such as lost revenue, cancelled bookings, and facilities that have been damaged or destroyed. It is also forecast that the impact of cancelled bookings by international tourists could potentially cost the economy an additional $4.5bn over the next 12 months.

CORPORATES
TOURISM AUSTRALIA PTY LTD, AUSTRALIAN TOURISM INDUSTRY COUNCIL

Henry sharpens BHP’s iron will

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Original article by Nick Evans
The Australian – Page: 15 & 20 : 22-Jan-20

BHP still expects its 2019-20 iron ore production in the Pilbara to be within the range of 273 to 286 million tonnes, after reporting output of 137 million tonnes for the first half. This suggests that production in the second half could be up to 149 million tonnes. BHP received an average of $US78.30 per tonne for iron ore in the first half, which is 41 per cent higher than previously. Meanwhile, BHP has advised that production at its Mount Arthur coal mine in New South Wales was affected by the drought and bushfires during the first half.

CORPORATES
BHP GROUP LIMITED – ASX BHP

Banks to bear cost of blazes: Morgan Stanley

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 16 : 14-Jan-20

Morgan Stanley has warned that the bushfires crisis will have a direct financial cost on Australian banks, including an increase in insurance claims and loan losses. S&P expects loan arrears to increase in the wake of the bushfires, although rival ratings agency Moody’s says the proportion of loans that are affected by the bushfires is likely to be relatively small. Morgan Stanley adds that factors such as the impact of the bushfires on retail spending will have the biggest impact on bank earnings.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, S&P GLOBAL RATINGS, MOODY’S INVESTORS SERVICE INCORPORATED

ASIC puts insurers on notice over bushfires

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Original article by Max Maddison, Joyce Moullakis
The Australian – Page: 13 & 14 : 10-Jan-20

Suncorp has estimated that its bushfire claims for the current financial year have cost between $315 million and $345 million to date. Around 9,000 bushfire insurance claims have been made across New South Wales, Victoria, Queensland and South Australia since September, while the Australian Securities & Investments Commission has urged insurers to deal with bushfire claims fairly and efficiently. ASIC has warned consumers to be on the lookout for fraudulent tradespeople and repairers offering to help them with insurance claims.

CORPORATES
SUNCORP GROUP LIMITED – ASX SUN, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, RESERVE BANK OF AUSTRALIA

Bushfires likely to impact Australian retailers, analysts say

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Original article by Dominic Powell
The Age – Page: Online : 9-Jan-20

Bryan Raymond of Citigroup says the bushfires crisis is likely to have a near-term impact on major retailers, as the smoke blanketing large cities will reduce foot traffic and some stores in bushfire-affected areas have closed temporarily. Hardware and outdoor equipment retailers are expected to be among the hardest hit, although Raymond notes that they may receive a boost as the nation rebuilds after the disaster. He adds that there is unlikely to be much impact on the sales of grocery giants Coles and Woolworths.

CORPORATES
CITIGROUP PTY LTD, COLES GROUP LIMITED – ASX COL, WOOLWORTHS GROUP LIMITED – ASX WOW, WESFARMERS LIMITED – ASX WES, BUNNINGS GROUP LIMITED, METCASH LIMITED – ASX MTS, SUPER RETAIL GROUP LIMITED – ASX SUL, JB HI-FI LIMITED – ASX JBH, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN

2020 should deliver some good news for traditional media

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Original article by Max Mason
The Australian Financial Review – Page: 15 : 8-Jan-20

GroupM expects Australia’s advertising market to record growth of about five per cent in 2020, compared with four per cent in 2019. Nicola Lewis of Group expects major digital platforms such as Facebook and Google to drive growth in the sector. She also expects traditional media companies to record "modest" growth in advertising revenue. Lewis adds that there could be further growth in the broadcast video-on-demand market as consumers upgrade to new TVs.

CORPORATES
GROUPM COMMUNICATIONS PTY LTD, IPG MEDIABRANDS, FACEBOOK INCORPORATED, GOOGLE INCORPORATED, OZTAM PTY LTD

Wild firestorms to trigger $700m in insurance losses

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Original article by Cliona O’Dowd
The Australian – Page: 13 : 7-Jan-20

Australia’s insurance industry is expected to be hard hit by the bushfires, with some estimates suggesting that the total cost of claims could top $700m. The Insurance Council of Australia has advised that the industry has received more than 6,000 bushfire-related claims since September, with the bulk of them having been submitted between November and 3 January. S&P Global Ratings says insurers could ultimately receive more than 10,000 bushfire-related claims.

CORPORATES
INSURANCE COUNCIL OF AUSTRALIA LIMITED, S&P GLOBAL RATINGS

Japan tipped to lead inbound M&A

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Original article by Lucas Baird
The Australian Financial Review – Page: 14 : 6-Jan-20

Alex Cartel of Deutsche Bank expects Japanese companies to pursue more takeover deals in Australia during 2020, following bids for Carlton & United Breweries and DuluxGroup in 2019. He notes that Japan has replaced China as a key driver of inbound mergers and acquisitions deals in the last several years. Simon Ranson of JP Morgan adds that offshore private equity firms are cashed up, noting that factors such as the low Australian dollar will make the nation attractive to them.

CORPORATES
DEUTSCHE BANK AG, JP MORGAN AUSTRALIA LIMITED, CARLTON AND UNITED BREWERIES, DULUXGROUP LIMITED, ASAHI GROUP, NIPPON PAINT, HERBERT SMITH FREEHILLS PTY LTD, BELLAMY’S AUSTRALIA LIMITED, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION