BUSINESS FORECASTING – AUSTRALIA

AGL could face savage hit to earnings

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 6 : 25-Oct-18

Morgan Stanley estimates that the federal government’s proposed measures to reduce electricity prices could potentially slash the 2020 EBITDA of AGL Energy and Origin Energy by up to $361m and $426m respectively. Matthew Blumberg of Hayberry Global Fund adds that government intervention in the electricity sector could in fact result in reduced competition and enable the major players to increase their market share.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, AGL ENERGY LIMITED – ASX AGL, ORIGIN ENERGY LIMITED – ASX ORG, HAYBERRY GLOBAL FUND, AUSTRALIA. DEPT OF THE ENVIRONMENT AND ENERGY, ENERGYAUSTRALIA PTY LTD, CLP HOLDINGS LIMITED, CITIGROUP INCORPORATED, AUSTRALIAN ENERGY REGULATOR

BHP dials down copper target after unplanned outages

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Original article by Peter Ker
The Australian Financial Review – Page: 19 & 24 : 18-Oct-18

BHP Billiton’s production report for the September quarter shows that the resources giant has scaled back its forecast for copper output in 2018-19. BHP expects full-year production to be within the range of 1.62 million to 1.705 million tonnes, compared with previous guidance of 1.67 million to 1.77 million tonnes. The downgrade has been attributed to disruptions at the Olympic Dam mine in South Australia and the Spence project in Chile. Meanwhile, BHP’s iron ore shipments totalled 69.42 million tonnes during the quarter, and the company still expects Pilbara iron ore volumes of 273 million to 283 million tonnes for the full year.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, UBS HOLDINGS PTY LTD, RBC CAPITAL MARKETS

Nine, Fairfax cuts won’t hit newsrooms

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Original article by Max Mason
The Australian Financial Review – Page: 27 : 15-Oct-18

Grant Samuel & Associates has deemed Fairfax Media’s proposed merger with Nine Entertainment Company to be in the best interests of the newspaper publisher’s shareholders. The scheme booklet for the merger indicates that the deal is expected to generate cost synergies of about $50m a year, primarily by combining the sales teams and back-office functions, and by using shared technology platforms. The scheme booklet has emphasised that there are no plans to combine the Fairfax and Nine newsrooms or retrench journalists. However, it concedes that job losses in other areas are likely.

CORPORATES
FAIRFAX MEDIA LIMITED – ASX FXJ, NINE ENTERTAINMENT COMPANY HOLDINGS LIMITED – ASX NEC, GRANT SAMUEL AND ASSOCIATES PTY LTD, STAN ENTERTAINMENT PTY LTD, DOMAIN HOLDINGS AUSTRALIA LIMITED – ASX DHA

Foxtel’s critical year: News Corp has Plan B

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Original article by Max Mason
The Australian Financial Review – Page: 27 : 15-Oct-18

News Corporation has declined to comment on suggestions that it could divest Foxtel if the pay-TV company’s financial performance does not improve. Kane Hannan of Goldman Sachs recently met with News Corp executives in the US, and he has told clients that he was left with the firm impression that the media giant may be open to selling Foxtel. The upcoming launch of Foxtel’s sports-focused streaming video service is likely to be crucial to any turnaround. Hannan expects Foxtel’s average revenue per user to fall by six per cent a year to $57 by 2022-23, compared with around $77 in 2017-18.

CORPORATES
NEWS CORPORATION – ASX NWS, NEWS CORP AUSTRALIA PTY LTD, FOXTEL MANAGEMENT PTY LTD, GOLDMAN SACHS AUSTRALIA PTY LTD, FOX SPORTS AUSTRALIA PTY LTD, TELSTRA CORPORATION LIMITED – ASX TLS, 21ST CENTURY FOX INCORPORATED, WALT DISNEY COMPANY, AMPLIFY, MYSPACE

Bidders are swinging hard for assets in M&A frenzy

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 17 : 10-Oct-18

Data from Dealogic shows that some $US88bn ($124bn) worth of mergers and acquisitions have been announced in Australia so far in 2018. This compares with $US89.3bn for the whole of 2017. Bankers and lawyers expect M&A activity to remain strong, with cashed-up local private equity firms competing with foreign players. Recently announced M&A transactions include KKR’s bid for MYOB and Affinity Equity Partners’ deal to buy Scottish Pacific Group.

CORPORATES
DEALOGIC (AUSTRALIA) PTY LTD, KKR AND COMPANY LP, MYOB GROUP LIMITED – ASX MYO, AFFINITY EQUITY PARTNERS (AUSTRALIA) PTY LTD, SCOTTISH PACIFIC GROUP LIMITED – ASX SCO, PACIFIC EQUITY PARTNERS PTY LTD, LIFEHEALTHCARE GROUP LIMITED, NEXTDC LIMITED – ASX NXT, ASIA PACIFIC DATA CENTRE GROUP – ASX AJD, APA GROUP – ASX APA, CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD, TRANSURBAN GROUP LIMITED – ASX TCL, WESTCONNEX, WESTFIELD CORPORATION, MINTER ELLISON, SIRTEX MEDICAL LIMITED, CDH INVESTMENTS FUND MANAGEMENT COMPANY, GREENHILL AND COMPANY, NM ROTHSCHILD AUSTRALIA HOLDINGS PTY LTD, WESFARMERS LIMITED – ASX WES, UBS HOLDINGS PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE CAPITAL PTY LTD

Wesfarmers to outline Coles move

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Original article by Eli Greenblat
The Australian – Page: 19 : 4-Oct-18

There is speculation that Wesfarmers could release the scheme booklet for its proposed demerger of Coles before 15 October, when the supermarket chain will announce its sales figures for the first quarter of 2018-19. JPMorgan has upgraded its forecast for same-store sales growth from 2.5 per cent to four per cent. In contrast, the firm has scaled back Woolworths’ same-store sales growth expectations from 1.8 per cent to 1.3 per cent. However, Shaun Cousins of JPMorgan expects Woolworths to outperform Coles in the medium-term.

CORPORATES
WESFARMERS LIMITED – ASX WES, COLES SUPERMARKETS AUSTRALIA PTY LTD, WOOLWORTHS SUPERMARKETS, WOOLWORTHS GROUP LIMITED – ASX WOW, JP MORGAN AUSTRALIA LIMITED

Risk of credit crunch is real and rising, UBS warns

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Original article by James Frost
The Australian Financial Review – Page: 16 : 2-Oct-18

Jonathan Mott of UBS has told clients that Australian banks’ profits are likely to come under pressure in the next several years as a result of the financial services royal commission. He says the risk of a credit crunch has been heightened following the release of the inquiry’s interim report. Mott adds that amongst other things, the final report is likely to recommend extending responsible lending obligations to small and medium enterprises and an overhaul of the way banks verify the expenses of borrowers.

CORPORATES
UBS HOLDINGS PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Beach Energy shares soar on growth plans

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Original article by Matt Chambers
The Australian – Page: 22 : 28-Sep-18

Beach Energy currently produces 26-28 million barrels of oil equivalent each year, but it has outlined plans to increase this to 34-40 million boe by 2022-23. The company will also seek to lift its free cash flow to $2.3bn within five years. The Lattice Energy assets, which Beach bought from Origin Energy for $1.59bn in 2017, will be a major growth driver. Beach took on $US1.58bn worth of debt to finance the acquisition, but CEO Matt Kay expects the company to be almost debt-free by the end of 2019-20.

CORPORATES
BEACH ENERGY LIMITED – ASX BPT, LATTICE ENERGY LIMITED, ORIGIN ENERGY LIMITED – ASX ORG, NEW ZEALAND OIL AND GAS LIMITED, OMV AG, SANTOS LIMITED – ASX STO

Santos planning to double gas output by 2025 thanks to Quadrant buy

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Original article by Matt Chambers
The Australian – Page: 17 & 27 : 27-Sep-18

Oil and gas major Santos has forecast that its annual production could top 100 million barrels of oil equivalent by 2025. The proposed acquisition of Quadrant Energy and its Dorado oil find will be the main driver of growth in output. Santos has also told analysts that production in the Cooper Basin could rise by around 20 per cent by 2025, while MD Kevin Gallagher says the Narrabri coal seam gas project could further boost the company’s output if it receives government approval.

CORPORATES
SANTOS LIMITED – ASX STO, QUADRANT ENERGY PTY LTD, WOODSIDE PETROLEUM LIMITED – ASX WPL, HARBOUR ENERGY LIMITED, BEACH ENERGY LIMITED – ASX BPT, CREDIT SUISSE (AUSTRALIA) LIMITED

China looks to Australian gas in trade war

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Original article by Glenda Korporaal
The Australian – Page: 19 & 27 : 26-Sep-18

Wang Shouwen, China’s vice-minister of commerce, has signalled that the nation could increase its LNG imports from Australia as a result of the trade war with the US. China retaliated to the Trump administration’s latest round of tariff hikes by imposing a tariff of 10 per cent on US LNG imports, and this could rise to 25 per cent. The tariff on US LNG will give Australian producers a price advantage, and could ensure that new LNG projects in Australia and Papua New Guinea proceed.

CORPORATES
CHINA. MINISTRY OF COMMERCE, WOODSIDE PETROLEUM LIMITED – ASX WPL, CHEVRON CORPORATION, SANTOS LIMITED – ASX STO, OIL SEARCH LIMITED – ASX OSH, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT