BUSINESS FORECASTING – AUSTRALIA

Santos export fears overdone, says Citigroup

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 17 : 21-Jun-17

Shares in Santos closed two per cent lower at $A2.98 on 20 June 2017, after the Federal Government committed to implementing the Australian Domestic Gas Security Mechanism. However, Citigroup believes that LNG export controls may have less near-term impact on Santos and its Gladstone LNG venture than has been forecast. Citigroup also suggests that the ADGSM may also prompt Santos and its partners in the project to develop new gas fields instead of sourcing gas from third parties.

CORPORATES
SANTOS LIMITED – ASX STO, GLADSTONE LNG PTY LTD, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, AUSTRALIAN ENERGY MARKET OPERATOR LIMITED, MACQUARIE RESEARCH EQUITIES, CREDIT SUISSE (AUSTRALIA) LIMITED

PE, capital flows bolster local M&A prospects

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 13 & 17 : 20-Jun-17

Data from Dealogic shows that $US44.1bn ($A57.9bn) worth of Australian mergers and acquisitions have been announced so far in 2017. This is 52 per cent higher than at the same time in 2016, and market watchers anticipate that M&A activity will remain strong in the second half of the year. Kate Towey of law firm Allens says overseas investors regard the Australian market as stable and attractive, while Alex Cartel of Deutsche Bank expects shareholder activism to have an increasing influence on the local market.

CORPORATES
DEALOGIC (AUSTRALIA) PTY LTD, ALLENS, DEUTSCHE BANK AG, TATTS GROUP LIMITED – ASX TTS, TABCORP HOLDINGS LIMITED – ASX TAH, ENDEAVOUR ENERGY LIMITED, ALINTA ENERGY (AUSTRALIA) PTY LTD, FAIRFAX MEDIA LIMITED – ASX FXJ, KKR AND COMPANY LP, VOCUS GROUP LIMITED – ASX VOC, PLATINUM EQUITY HOLDINGS, STAPLES AUSTRALIA PTY LTD, OFFICEMAX INCORPORATED, BHP BILLITON LIMITED – ASX BHP, ELLIOTT MANAGEMENT CORPORATION, JOHNSON AND JOHNSON, ACTELION, AMAZON.COM INCORPORATED, WHOLE FOODS MARKET INCORPORATED, MINTER ELLISON, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD

Jungle king tears into groceries

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Original article by John McDuling
The Australian Financial Review – Page: 1 & 8 : 19-Jun-17

Robert Luciano of VGI Partners says Australian retailers should be concerned by Amazon’s purchase of grocery retailer Whole Foods. Amazon announced on 16 June 2017 that it will acquire the US grocery retailer for $US13.7 billion ($A18 billion), and that Whole Foods will continue to trade under its current name. Luciano suggests that the purchase represents a major evolvement in Amazon’s business model. Amazon is due to commence operating in Australia in 2018, and it is expected to have a major impact on the earnings of local retailers.

CORPORATES
VGI PARTNERS PTY LTD, AMAZON.COM INCORPORATED, WHOLE FOODS MARKET INCORPORATED, SOUQ, MACQUARIE GROUP LIMITED – ASX MQG, AMAZON WEB SERVICES LLC, UBS HOLDINGS PTY LTD, JB HI-FI LIMITED – ASX JBH, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN

IPO tale: more floats, less cash

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Original article by Scott Murdoch
The Australian – Page: 20 : 19-Jun-17

A total of 137 companies listed on the Australian sharemarket during the first five months of 2017, compared with 113 for the same period in 2016. However, the total value of initial capital raised has fallen from $A22.6bn to just $A13.67bn, and the total value of secondary capital raised has fallen from $A43.5bn to $A35.5bn. Simon Poidevin of Bell Potter anticipates an upturn in secondary capital raisings in the new financial year as companies seek growth via acquisitions.

CORPORATES
BELL POTTER SECURITIES LIMITED, BINGO INDUSTRIES LIMITED – ASX BIN, OFFICEWORKS SUPERSTORES PTY LTD, ZIP INDUSTRIES AUSTRALIA, CRAVEABLE BRANDS LIMITED, RED ROOSTER FOODS, OPORTO PTY LTD, KELLY PARTNERS GROUP HOLDINGS LIMITED – ASX KPG, NUTRANO PRODUCE GROUP, STANDARD AND POOR’S ASX 200 INDEX, DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX

Commercial yields to tighten further: AMP

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Original article by Larry Schlesinger
The Australian Financial Review – Page: 34 : 16-Jun-17

Opinion is divided as to whether Australia’s commercial real estate sector is heading for a major downturn. Shane Quinn of Quintessential Equity says he can foresee "carnage" if banks decide to cut back on lending, but Adam Geha, the CEO of fund manager EG, says he cannot foresee a correction in the immediate future. Geha’s comments are echoed by AMP Capital chief economist Shane Oliver, who says a commercial property market crash looks to be unlikely.

CORPORATES
QUINTESSENTIAL EQUITY PTY LTD, EG CAPITAL PTY LTD, AMP CAPITAL INVESTORS LIMITED, RESERVE BANK OF AUSTRALIA

ASX ripe for activist investors: Credit Suisse

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Original article by David Rogers
The Australian – Page: 27 : 15-Jun-17

Hasan Tevfik of Credit Suisse expects more activist investors to target Australian-listed stocks in the wake of Elliott Management’s push for a restructuring at BHP Billiton. He says activist investment is gaining momentum in Australia and it is inevitable that local superannuation funds will adopt this strategy given the returns achieved by activist hedge funds in North America. Caltex, AMP, News Corporation and Lendlease are among the companies that are seen as potential targets for activist investors.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, BHP BILLITON LIMITED – ASX BHP, ELLIOTT MANAGEMENT CORPORATION, CALTEX AUSTRALIA LIMITED – ASX CTX, AMP LIFE LIMITED, NEWS CORPORATION – ASX NWS, LEND LEASE GROUP LIMITED – ASX LLC, CSR LIMITED – ASX CSR, MYER HOLDINGS LIMITED – ASX MYR, AMP CAPITAL INVESTORS LIMITED, TRIBECA INVESTMENT PARTNERS PTY LTD, ESCALA PARTNERS LIMITED, ARDENT LEISURE GROUP – ASX AAD, BRICKWORKS LIMITED – ASX BKW, WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED – ASX SOL, PERPETUAL LIMITED – ASX PPT, FEDERAL COURT OF AUSTRALIA, LIM ADVISORS LIMITED, AMP CAPITAL CHINA GROWTH FUND

Credit Suisse chief’s cautionary IPO tale

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 17 : 5-Jun-17

Some high-profile IPOs in Australia have been withdrawn in 2017, and Credit Suisse John Knox says the market needs some successful IPOs in order to boost float activity. He adds that private equity firms are unlikely to be behind the majority of IPOs in the near-term. Knox is upbeat about the outlook for mergers and acquisitions activity during the remainder of 2017, while he has welcomed a move by the Foreign Investment Review Board to provide greater clarity regarding offshore bidders.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD, OFFICEWORKS SUPERSTORES PTY LTD, WESFARMERS LIMITED – ASX WES, ZIP INDUSTRIES AUSTRALIA, ALINTA ENERGY (AUSTRALIA) PTY LTD, CHOW TAI FOOK ENTERPRISES LIMITED, ICON GROUP, QIC LIMITED, GOLDMAN SACHS PRIVATE EQUITY, PAGODA INVESTMENTS, TPG CAPITAL LP, FAIRFAX MEDIA LIMITED – ASX FXJ, DEALOGIC (AUSTRALIA) PTY LTD, AMAZON.COM INCORPORATED

Wesfarmers faces hit from Amazon

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Original article by Sue Mitchell
The Australian Financial Review – Page: 22 : 2-Jun-17

Morgan Stanley forecasts that Amazon’s entry to the Australian market could slash Wesfarmers’ earnings by more than $A400m a year by 2026. The firm expects the Kmart and Target discount department stores to be more vulnerable than specialist retailers such as JB Hi-Fi. Morgan Stanley has reduced its valuation for Kmart and Bunnings, while it now has a zero valuation on Target. It share price target for Wesfarmers has been downgraded from $A41 to $A36.

CORPORATES
WESFARMERS LIMITED – ASX WES, AMAZON.COM INCORPORATED, MORGAN STANLEY AUSTRALIA LIMITED, KMART AUSTRALIA LIMITED, TARGET AUSTRALIA PTY LTD, BUNNINGS GROUP LIMITED, JB HI-FI LIMITED – ASX JBH, SUPER RETAIL GROUP LIMITED – ASX SUL, MYER HOLDINGS LIMITED – ASX MYR, COLES SUPERMARKETS AUSTRALIA PTY LTD, WOOLWORTHS SUPERMARKETS

REITs at risk in housing slowdown

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Original article by Elizabeth Redman
The Australian – Page: 25 : 1-Jun-17

Data from CoreLogic shows that residential property values across five Australian capital cities fell by 1.1 per cent in May 2017. Analysts and fund managers warn that listed real estate investment trusts could be vulnerable to a slowdown in the housing market. Stuart Cartledge of Phoenix Portfolios notes that developers that have pre-sold apartments will not be hit by any downturn, although future sales volumes may be affected.

CORPORATES
CORELOGIC AUSTRALIA PTY LTD, PHOENIX PORTFOLIOS PTY LTD, STOCKLAND – ASX SGP, MIRVAC GROUP – ASX MGR, LEND LEASE GROUP LIMITED – ASX LLC, CEDAR WOODS PROPERTIES LIMITED – ASX CWP, AVJENNINGS LIMITED – ASX AVJ, VILLA WORLD LIMITED – ASX VLW, RESOLUTION CAPITAL LIMITED, CLSA AUSTRALIA PTY LTD, FOLKESTONE MAXIM ASSET MANAGEMENT LIMITED

Santos cuts intake of gas amid export curb threat

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Original article by Matt Chambers
The Australian – Page: 20 : 1-Jun-17

The Gladstone LNG project reduced its average daily gas intake to 723 terajoules in May 2017, to the lowest level in a year, while the intake was 20 per cent lower than in March. However, GLNG operator Santos has declined to comment on whether the Federal Government’s proposal to impose LNG export controls contributed to the reduced gas intake. Meanwhile, Nik Burns of UBS says GLNG is unlikely to meet the most bullish forecasts for total exports of six million tonnes in 2017.

CORPORATES
SANTOS LIMITED – ASX STO, GLADSTONE LNG PTY LTD, UBS HOLDINGS PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, ORIGIN ENERGY LIMITED – ASX ORG, AUSTRALIA PACIFIC LNG LIMITED, AUSTRALIAN ENERGY MARKET OPERATOR LIMITED, TOTAL SA, PETRONAS GAS BHD, KOREA GAS CORPORATION