BUSINESS FORECASTING – AUSTRALIA

Rio closes in on $100 share price

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Original article by Nick Evans
The Australian – Page: 17 & 28 : 2-Apr-19

Shares in Rio Tinto closed 1.7 per cent higher at $99.63 on 1 April, putting the resources giant on track to breach the $100-per-share mark for the first time since mid-2008. Rio Tinto has advised that its iron ore production for 2019 is likely to be at the lower end of its guidance in the wake of Cyclone Veronica and a fire at its Cape Lambert processing plant in January. However, the iron ore price is likely to be bolstered by the recent global supply disruptions. BHP, Fortescue Metals Group and Roy Hill in turn should benefit more from any rise in the iron ore price than Rio Tinto, as Cyclone Veronica had less impact on Port Hedland than Cape Lambert.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP GROUP LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, ROY HILL HOLDINGS PTY LTD, VALE SA, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, MACQUARIE CAPITAL PTY LTD

5G ‘overhyped’: Credit Suisse telco chief

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Original article by Eric Johnston
The Australian – Page: 27 : 28-Mar-19

Optus launched 5G broadband services in February, while Telstra intends to begin selling 5G handsets within six months. However, Colin McCallum of Credit Suisse has downplayed the merits of 5G technology for consumers, arguing that existing 4G networks can cope with the demands of streaming video. He notes that deploying 5G technology will require significant capital expenditure, while the opportunities for increased revenue from consumers are quite limited at present.

CORPORATES
SINGTEL OPTUS PTY LTD, TELSTRA CORPORATION LIMITED – ASX TLS, CREDIT SUISSE AG, SAMSUNG ELECTRONICS COMPANY LIMITED, APPLE INCORPORATED

Retailers at risk as consumers tighten belts

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Original article by Sue Mitchell
The Australian Financial Review – Page: 20 : 25-Mar-19

Insolvency firm SV Partners has stated that 916 Australian retail outlets are at "high to severe risk of collapse" in the next 12 months. Its forecast is based on data from credit bureaus and providers. An online retailer with turnover of more than $1 billion is one of the businesses that are considered to be under threat. Deloitte Access Economics has stated that retail sales growth will fall to 1.6 per cent in 2019 as consumers curtail their spending; well-known retailers to have failed in recent months include Roger David and Shoes of Prey.

CORPORATES
SV PARTNERS PTY LTD, DELOITTE TOUCHE TOHMATSU LIMITED, ROGER DAVID STORES PTY LTD, SHOES OF PREY PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, ED HARRY MENSWEAR, NAPOLEON PERDIS COSMETICS PTY LTD, BEDS ‘R’ US PTY LTD

Boutique and robo models the new face of financial advice

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Original article by James Eyers, Elouise Fowler
The Australian Financial Review – Page: 17 : 21-Mar-19

Westpac CEO Brian Hartzer expects banks to focus on using automated solutions to provide personal financial advice in future, due to the high cost of providing such services. Hamilton Wealth CEO Will Hamilton agrees that so-called robo-advice may be the only option for banks if they are to continue to offer financial advice on a large scale. Hartzer adds that consumers will still be able to pay for bespoke personal finance advice via boutique firms.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, HAMILTON WEALTH MANAGEMENT PTY LTD, VIRIDIAN ADVISORY PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, BT FINANCIAL GROUP PTY LTD, KORDA CAPITAL, SIX PARK

Resources strength holds up reporting season

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Original article by David Rogers
The Australian – Page: 28 : 5-Mar-19

Paul Winter of UBS notes that Australia’s latest February reporting season featured more earnings downgrades than upgrades for the first time in the last four years. Hasan Tevfik of MST Marquee adds that while the reporting season was better than expected, this was largely due to a strong performance by the resources sector, which offset weakness in other sectors. Earnings-per-share growth for S&P/ASX 200 stocks is now forecast to be 6.3 per cent in 2018-19, compared with 7.6 per cent in 2017-18.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, UBS HOLDINGS PTY LTD, MST MARQUEE, MORGAN STANLEY AUSTRALIA LIMITED

House slump hits Harvey Norman

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Original article by Sue Mitchell
The Australian Financial Review – Page: 17 & 22 : 1-Mar-19

Furniture and electronics retailer Harvey Norman has posted a 2018-19 interim net profit of $222.8m, which is 7.3 per cent higher than previously. Its Australian franchised stores recorded sales of $2.95bn for the period, a decline of 1.7 per cent, and there was an 0.6 per cent fall in same-store sales. However, its overseas stores boasted sales of $1.07bn, an increase of 12.1 per cent. Chairman Gerry Harvey is confident that Harvey Norman’s overseas stores will eventually contribute 50 per cent of its earnings.

CORPORATES
HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, ALLERON INVESTMENT MANAGEMENT LIMITED, IKEA

RBNZ could end big four’s NZ super profits

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Original article by Sarah Turner
The Australian Financial Review – Page: 21 : 1-Mar-19

New Zealand has traditionally been a cash cow for Australia’s major banks, but experts warn that profit growth could be dampened by the Reserve Bank of New Zealand’s proposal to increase their capital requirements. Westpac has warned that any move to impose higher capital buffers could push up interest rates on loans and result in a downturn in deposit rates. The RBNZ has downplayed concerns that it proposal may prompt Australian banks to exit the NZ market.

CORPORATES
RESERVE BANK OF NEW ZEALAND, WESTPAC BANKING CORPORATION – ASX WBC, NEW ZEALAND INITIATIVE, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, JP MORGAN AUSTRALIA LIMITED

Will Rio take the plunge into M&A?

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Original article by Brad Thompson
The Australian Financial Review – Page: 19 : 1-Mar-19

Rio Tinto has signalled that it is open to acquisitions, but CEO Jean-Sebastien Jacques stresses that any deals must create value for shareholders. Ben Cleary of Tribeca Investment Partners has identified copper miner SolGold as a prime target for Rio Tinto, and he says other potential targets could include OZ Minerals and Freeport-McMoran. Glyn Lawcock of UBS cautions that the wrong acquisition could undo much of the progress Rio Tinto has made in restoring investors’ confidence in recent years.

CORPORATES
RIO TINTO LIMITED – ASX RIO, TRIBECA INVESTMENT PARTNERS PTY LTD, SOLGOLD PLC, OZ MINERALS LIMITED – ASX OZL, FREEPORT-McMORAN COPPER AND GOLD INCORPORATED, UBS HOLDINGS PTY LTD, BHP GROUP LIMITED – ASX BHP, NEWCREST MINING LIMITED – ASX NCM

Big four may mull NZ exit due to capital call

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Original article by Sarah Turner
The Australian Financial Review – Page: 19 : 28-Feb-19

Brian Johnson of CLSA and Jonathan Mott of UBS have warned that Australia’s four major banks could seek to divest their New Zealand subsidiaries if the nation’s central bank presses ahead with plans to increase their capital requirements. However, the Reserve Bank of New Zealand has downplayed such suggestions, arguing that the nation’s banks are among the most profitable in the world. Mott does not expect the RBNZ to back down on its proposal.

CORPORATES
RESERVE BANK OF NEW ZEALAND, CLSA AUSTRALIA PTY LTD, UBS HOLDINGS PTY LTD

Gas shortage to hit within three years

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Original article by Perry Williams
The Australian – Page: 19 & 22 : 27-Feb-19

EnergyQuest has forecast that states on the east coast of Australia will experience a shortage of gas by 2022, and they will have insufficient gas to meet peak demand by 2026. The consultancy has also warned that while Queensland will be able to increase supply to the east coast in the near-term, the state’s own production will begin to decline from 2025. EnergyQuest CEO Graeme Bethune says the expected shortfall means importing LNG is likely to be the best option. The looming gas shortage is also forecast to result in gas prices remaining high over the long-term.

CORPORATES
ENERGYQUEST PTY LTD, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN ENERGY MARKET OPERATOR LIMITED, SANTOS LIMITED – ASX STO, CREDIT SUISSE (AUSTRALIA) LIMITED