BUSINESS FORECASTING – AUSTRALIA

Fortescue chair Forrest’s dividend hit

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Original article by Peter Ker
The Australian Financial Review – Page: 18 : 20-Aug-18

Fortescue Metals Group posted a net profit of $US2.09bn in 2016-17, but the consensus of analysts is that its profit for 2017-18 will be around 49 per cent lower. JPMorgan is more bearish, forecasting that Fortescue’s net profit could fall by up to 59 per cent to just $US856m. The firm expects Fortescue to announce a full-year dividend of $0.20 per share, following an interim dividend of $0.11. Company founder and chairman Andrew Forrest received $467m worth of dividend payments in 2016-17, but this could fall to just $207.7m in 2017-18 based on JPMorgan’s numbers.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, JP MORGAN AUSTRALIA LIMITED, GLENCORE PLC, WHITEHAVEN COAL LIMITED – ASX WHC, MINERAL RESOURCES LIMITED – ASX MIN, EVOLUTION MINING LIMITED – ASX EVN, NORTHERN STAR RESOURCES LIMITED – ASX NST, HANCOCK PROSPECTING PTY LTD

Risks are real even in blur of reporting season

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Original article by David Rogers
The Australian – Page: 28 : 15-Aug-18

The earnings outlook for Australian companies has been encouraging so far in the August reporting season. There has been an 0.5 per cent increase in the consensus estimate for growth in earnings per share over the next year, based on financial results to date. Local investors have largely shrugged off global issues such as the downturn in the Turkish lira and continued trade tensions between the US and China. However, local shares – and other asset classes – remain vulnerable to external risks.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, COCHLEAR LIMITED – ASX COH, CHALLENGER LIMITED – ASX CGF, CSL LIMITED – ASX CSL, WOODSIDE PETROLEUM LIMITED – ASX WPL, WESFARMERS LIMITED – ASX WES, QBE INSURANCE GROUP LIMITED – ASX QBE, DEXUS – ASX DXS, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, SEEK LIMITED – ASX SEK, PERPETUAL LIMITED – ASX PPT, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, EUROPEAN CENTRAL BANK

JB Hi-Fi growth slows as competition intensifies

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Original article by Sue Mitchell
The Australian Financial Review – Page: 11 & 16 : 14-Aug-18

Consumer electronics retailer JB Hi-Fi has posted a 2017-18 underlying net profit of $233.2m, which is 12.3 per cent higher than previously. Group earnings rose 14.5 per cent to $350.6m, while its Australian division’s earnings were 11.4 per cent higher at $292.3m. Sales grew by 21.8 per cent in 2017-18, but expectations of competition from key rivals and fewer store openings have prompted the company to pare back its sales growth forecast to just 3.6 per cent in 2018-19. Shareholders will receive a full-year dividend of $0.132 per share.

CORPORATES
JB HI-FI LIMITED – ASX JBH, THE GOOD GUYS, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, AMAZON.COM INCORPORATED, MARTIN CURRIE INVESTMENT MANAGEMENT LIMITED, JP MORGAN AUSTRALIA LIMITED

RBA tips lithium, copper export boom

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Original article by Perry Williams
The Australian – Page: 19 : 13-Aug-18

Australia accounts for 12 per cent of the world’s copper reserves, along with around 25 per cent of global lithium reserves. The Reserve Bank of Australia predicts that exports of these commodities will increase to meet rising demand for renewable energy generation and electric vehicles. The RBA forecasts that lithium exports will triple over the next five years. However, the outlook for iron ore is not so clear, with demand from Chinese steel makers viewed as being somewhat mixed.

CORPORATES
RESERVE BANK OF AUSTRALIA, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG

Cashed-up PE firms prowl ASX for deals

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 13 & 16 : 13-Aug-18

The value of announced mergers and acquisitions involving Australian-listed companies has topped US$39.3bn so far in 2018. Private equity investors have been particularly active; US$11.4bn ($15.6bn) worth of such deals involving both listed and unlisted assets have been announced so far in 2018, which is 47 per cent higher than at the same time in 2017. Experts anticipate that the private equity sector will continue to pursue listed companies, with Tom Story of law firm Allens noting that suitors and their targets have been more willing to agree on price in 2018.

CORPORATES
ALLENS, DEALOGIC (AUSTRALIA) PTY LTD, INVESTA OFFICE FUND – ASX IOF, THE BLACKSTONE GROUP LP, SIRTEX MEDICAL LIMITED – ASX SRX, CDH INVESTMENTS FUND MANAGEMENT COMPANY, BWX LIMITED – ASX BWX, SINO GAS AND ENERGY HOLDINGS LIMITED – ASX SEH, SANTOS LIMITED – ASX STO, HEALTHSCOPE LIMITED – ASX HSO, OAKTREE CAPITAL MANAGEMENT LLC, BILLABONG INTERNATIONAL LIMITED, PACIFIC EQUITY PARTNERS PTY LTD, LIFEHEALTHCARE PTY LTD, CITIGROUP PTY LTD, BGH CAPITAL PTY LTD, BAIN AND COMPANY, I-MED RADIOLOGY, ACCOLADE WINES LIMITED, CHAMP PRIVATE EQUITY PTY LTD, THE CARLYLE GROUP, MANUKA HEALTH, IXOM, PEMBA CAPITAL, DEVICE TECHNOLOGIES AUSTRALIA, GOLDMAN SACHS AUSTRALIA PTY LTD, UBS HOLDINGS PTY LTD, AMCOR LIMITED – ASX AMC, NEW YORK STOCK EXCHANGE

Time for companies to splash the buyback cash

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Original article by David Rogers
The Australian – Page: 27 : 10-Aug-18

Berowne Hlavaty of JP Morgan says key indicators suggest that the August reporting season in Australia will be a strong one. The firm’s poll of analysts shows that 33 per cent of stocks are expected to post an earnings surprise on the upside, while only 17 per cent of stocks will surprise on the downside. JP Morgan has identified a number of companies that could potentially announce share buybacks during the reporting season. They include BHP Billiton, Westpac, Woolworths, Insurance Australia Group and Vicinity Centres.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, BHP BILLITON LIMITED – ASX BHP, WESTPAC BANKING CORPORATION – ASX WBC, WOOLWORTHS GROUP LIMITED – ASX WOW, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, VICINITY CENTRES – ASX VCX, BLUESCOPE STEEL LIMITED – ASX BSL, ANSELL LIMITED – ASX ANN, MIRVAC GROUP – ASX MGR, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, SUNCORP GROUP LIMITED – ASX SUN, PLATINUM ASSET MANAGEMENT LIMITED – ASX PTM, WESFARMERS LIMITED – ASX WES, PERPETUAL LIMITED – ASX PPT, SIMS METAL MANAGEMENT LIMITED – ASX SGM, SEVEN WEST MEDIA LIMITED – ASX SWM, NATIONAL STORAGE REIT – ASX NSR, CHARTER HALL LONG WALE REIT – ASX CLW, LYNAS CORPORATION LIMITED – ASX LYC, IRESS LIMITED – ASX IRE, GROWTHPOINT PROPERTIES AUSTRALIA – ASX GOZ, CHARTER HALL RETAIL REIT – ASX CQR, PERSEUS MINING LIMITED – ASX PRU, CROMWELL PROPERTY GROUP – ASX CMW, PROPERTYLINK GROUP LIMITED – ASX PLG, TASSAL GROUP LIMITED – ASX TGR, CARDNO LIMITED – ASX CDD, MYOB GROUP LIMITED – ASX MYO, MAGELLAN FINANCIAL GROUP LIMITED – ASX MFG, CROWN RESORTS LIMITED – ASX CWN, STANDARD AND POOR’S ASX 200 INDEX, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

SEEK warns of flat profits, seeks loyalty

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Original article by Max Mason
The Australian Financial Review – Page: 11 & 14 : 7-Aug-18

Shares in employment classifieds and services company SEEK fell by 8.8 per cent on 6 August, after it announced a profit downgrade and writedown. SEEK will write down $178 million on its investments in Mexico and Brazil, while its expects its 2018-19 net profit after tax to be around the $200 million result it achieved in 2017-18. A survey of analysts by Bloomberg had forecast a 2018-19 result of $240 million. SEEK CEO Andrew Bassat notes that it is reinvesting revenue in preference to targeting profit growth; SEEK expects its 2018-19 revenue to grow by between 16 and 20 per cent.

CORPORATES
SEEK LIMITED – ASX SEK, BLOOMBERG LP, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD, ZHAOPIN LIMITED

Murdoch needs to get in quick to secure free-to-air TV stations

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Original article by Max Mason
The Australian Financial Review – Page: 29 : 6-Aug-18

Media experts believe that Rupert Murdoch’s News Corporation will eventually bid for Seven West Media following the proposed Nine-Fairfax merger and Ten Network’s sale to CBS. However, News Corp would have to satisfy the "minimum voices" rule, which was not affected by cross-media ownership reforms in 2017. It requires major newspapers, TV stations and radio stations in metropolitan areas to be held by five different owners. A Murdoch bid for Seven would breach the "voices test" in Adelaide if a rival media company moved first by acquiring HT&E’s Australian Radio Network.

CORPORATES
NEWS CORP AUSTRALIA PTY LTD, NEWS CORPORATION – ASX NWS, SEVEN WEST MEDIA LIMITED – ASX SWM, SEVEN NETWORK LIMITED, NINE ENTERTAINMENT COMPANY HOLDINGS LIMITED – ASX NEC, FAIRFAX MEDIA LIMITED – ASX FXJ, TEN NETWORK HOLDINGS LIMITED, CBS CORPORATION, AUSTRALIAN RADIO NETWORK PTY LTD, HT&E LIMITED – ASX HT1, NOVA ENTERTAINMENT PTY LTD, FOXTEL MANAGEMENT PTY LTD, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Imports the only cure for gas headache

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 15 : 25-Jul-18

Mark Samter of MST Marquee says industrial gas users on Australia’s east coast should support plans to build LNG import terminals, as gas prices will keep rising. Samter has downplayed a recent report from the Australian Energy Market Operator which suggested that the gas crisis on the east coast is likely to ease due to higher production in coming years. He argues that gas prices are unlikely to fall without the proposed import terminals.

CORPORATES
MST MARQUEE, AUSTRALIAN ENERGY MARKET OPERATOR LIMITED, CREDIT SUISSE (AUSTRALIA) LIMITED

Myer to shed head office jobs but keep stores

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Original article by Sue Mitchell
The Australian Financial Review – Page: 25 : 20-Jul-18

Department store group Myer has reduced staff numbers at its head office in Melbourne’s Docklands precinct by about 30 per cent in recent years, and CEO John King is expected to seek further job cuts. However, sources have rejected suggestions that up to 50 per cent of head office staff could be retrenched. King also intends to reduce the number of Myer stores, although he is expected to wait until existing leases expire. Meanwhile, David Jones has posted 2.2 per cent growth in sales for the first half of 2018, and growth of 2.7 per cent in same-store sales. Full-year sales were 0.9 per cent lower than previously.

CORPORATES
MYER HOLDINGS LIMITED – ASX MYR, DAVID JONES LIMITED, WOOLWORTHS HOLDINGS LIMITED, HOUSE OF FRASER HOLDINGS PLC, SEARS HOLDINGS, KMART CORPORATION, LATITUDE FINANCIAL SERVICES LIMITED, PREMIER INVESTMENTS LIMITED – ASX PMV, VICTORIA RACING CLUB LIMITED