BUSINESS FORECASTING – AUSTRALIA

Cold snap heats up store clearance sales

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Original article by Sue Mitchell
The Australian Financial Review – Page: 18 : 3-Jun-15

The mid-season clearance sales of Australian retailers are expected to benefit from a chilly start to winter across much of the country. The cold weather is likely to boost demand for warm clothing, allowing department stores and specialty retailers to reduce their winter inventory. Myer has commenced its clearance sale more than a week ahead of schedule, and aims to sell about $150m worth of stock, while David Jones is offering big discounts in its mid-year sale.

CORPORATES
MYER HOLDINGS LIMITED – ASX MYR, DAVID JONES LIMITED, WOOLWORTHS HOLDINGS LIMITED, PORTMANS PTY LTD, SABA, OROTONGROUP LIMITED – ASX ORL, DAVID LAWRENCE, CUE, CREDIT SUISSE (AUSTRALIA) LIMITED, WESFARMERS LIMITED – ASX WES, COLES GROUP LIMITED, KMART AUSTRALIA LIMITED, TOP RYDE SHOPPING CENTRE

China scopes local iron ore

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Original article by Tess Ingram
The Australian Financial Review – Page: 11 : 2-Jun-15

The iron ore price is trading at about $US63 per tonne, having shed nearly 50 per cent in the last year. Adam Handley of law firm Minter Ellison notes that the sharp fall in the price of the steel input has prompted Chinese companies to consider mergers and acquisitions in Australia, as well as debt and equity deals with embattled producers. He adds that Chinese investors have become more willing to pursue hostile takeovers.

CORPORATES
MINTER ELLISON, FORTESCUE METALS GROUP LIMITED – ASX FMG, CITIC LIMITED, SHANGHAI BAOSTEEL GROUP CORPORATION, RECORD POINT PTY LTD, SINO IRON PTY LTD, CITIGROUP PTY LTD, BC IRON LIMITED – ASX BCI, GRANGE RESOURCES LIMITED – ASX GRR, ARRIUM LIMITED – ASX ARI, CLIFFS NATURAL RESOURCES INCORPORATED, GINDALBIE METALS LIMITED – ASX GBG, MOUNT GIBSON IRON LIMITED – ASX MGX, MINERAL RESOURCES LIMITED – ASX MIN

Buy shares, not bonds, says Morgan Stanley

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Original article by Rose Powell
The Australian Financial Review – Page: 23 : 2-Jun-15

Morgan Stanley forecasts that Australian shares will deliver a return of 5.8 per cent over the next 12 months and 10.3 per cent in the longer-term. Meanwhile, the firm expects international shares to achieve a short-term return of 15.4 per cent and 10.3 per cent in the long-term. However, Morgan Stanley is bearish about the outlook for Australian bonds and global sovereign bonds.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, AMP CAPITAL INVESTORS LIMITED, UNITED STATES. FEDERAL RESERVE BOARD, PERPETUAL LIMITED – ASX PPT

Insurer’s premiums cast cloud

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Original article by Tim Binsted
The Australian Financial Review – Page: 18 : 1-Jun-15

Morgan Stanley’s Daniel Toohey values Medibank Private shares at $A1.85, compared with the issue price of $A2 for retail investors in the 2014 IPO. Morgan Stanley forecasts that Medibank’s lapse rate will rise from 10 per cent to 15 per cent, while Toohey says the growth of its budget-priced ahm brand may come at the expense of the main brand’s customer base. Medibank’s earnings are also likely to be affected by customers opting to reduce their health insurance coverage in order to save money.

CORPORATES
MEDIBANK PRIVATE LIMITED – ASX MPL, AHM HEALTH INSURANCE, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE SECURITIES PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD

Fortescue CFO hits back at Vale

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Original article by Perry Williams
The Australian Financial Review – Page: 15 & 20 : 1-Jun-15

The break-even price for iron ore producer Fortescue Metals Group was about $US60 per tonne in late 2014, but the group aims to reduce this to $US41 during the next three months. CFO Stephen Pearce says Fortescue expects its break-even price to fall slightly below that of Brazilian rival Vale in the near-term. He has also rejected suggestions by the China Iron & Steel Association’s Li Xinchuang that Fortescue will need to take on an equity partner.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, CHINA IRON AND STEEL INDUSTRY ASSOCIATION, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, DEUTSCHE BANK AG, MINERALS COUNCIL OF AUSTRALIA

Blackley back on board for SCM M&A bonanza

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Original article by Dominic White
The Australian Financial Review – Page: 35 : 1-Jun-15

Southern Cross Media Group chairman Peter Bush expects mergers in Australia’s media sector if cross-media ownership laws are changed. He says the industry expertise of new CEO Grant Blackley will be an asset when dealing with the new media landscape. Bush adds that one of Blackley’s key tasks will be to assess the group’s "peak value". Blackley is a former CEO of the Ten Network.

CORPORATES
SOUTHERN CROSS MEDIA GROUP LIMITED – ASX SXL, TEN NETWORK HOLDINGS LIMITED – ASX TEN, FREE TV AUSTRALIA LIMITED, KEYSTONE GROUP PTY LTD

Spotify adding 60,000 Australians per week

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Original article by Max Mason
The Australian Financial Review – Page: 37 : 1-Jun-15

Spotify estimates that about 25 per cent of Australians have used its music streaming service at some point. Spotify says it is gaining about 60,000 additional users in Australia each week, and the rate of conversion to its paid service is estimated to top 30 per cent. Spotify’s MD in Australia, Kate Vale, forecasts that some rivals will either merge or quit Australia in coming years, and she believes that the local market can sustain 3-4 players in the long-term.

CORPORATES
SPOTIFY LIMITED, VODAFONE AUSTRALIA LIMITED, UBER TECHNOLOGIES INCORPORATED, SONY CORPORATION, NOVA ENTERTAINMENT PTY LTD, RDIO INCORPORATED, PANDORA MEDIA INCORPORATED, COMEDY CENTRAL, AUSTRALIAN BROADCASTING CORPORATION

It’s ‘inevitable’ Fortescue will need a Chinese equity partner

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Original article by Perry Williams
The Australian Financial Review – Page: 17 & 22 : 28-May-15

The China Iron & Steel Association’s deputy secretary Li Xinchuang believes that Fortescue Metals Group will eventually need an equity partner in order to be globally competitive. He argues that a Chinese partner would make sense for Fortescue, and notes that the iron ore producer’s high level of debt could become a problem unless it takes on an equity partner. Fortescue CEO Nev Power has stressed several times that an equity partner is not on the group’s agenda.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CHINA IRON AND STEEL INDUSTRY ASSOCIATION, CHINA METALLURGICAL INDUSTRY PLANNING ASSOCIATION, SHANGHAI BAOSTEEL GROUP CORPORATION, CITIC LIMITED, AUSTRALIA. FOREIGN INVESTMENT REVIEW BOARD, VALE SA, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Low rates, yields to hit Suncorp, IAG

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Original article by Ruth Liew
The Australian Financial Review – Page: 18 : 26-May-15

The earnings of Australian-listed insurance companies are likely to be affected by low interest rates and bond yields. Investment income accounts for around 40 per cent of QBE Insurance Group’s profits, compared with 25 per cent in the case of Insurance Australia Group (IAG) and Suncorp. IAG CEO Mike Wilkins says most of the company’s insurance book comprises "short tail risk".

CORPORATES
QBE INSURANCE GROUP LIMITED – ASX QBE, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, SUNCORP GROUP LIMITED – ASX SUN, CREDIT SUISSE (AUSTRALIA) LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Banks, miners tipped for drop

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Original article by Tim Binsted
The Australian Financial Review – Page: 29 : 26-May-15

Credit Suisse notes that Australian-listed companies’ dividend payout ratios are at their highest levels in more than two decades. Richard Hitchens of Credit Suisse notes that investors recently sold down bank stocks after their interim dividends were lower than expected. He adds that groups such as Aurizon, GPT Group and Santos may also find it hard to increase their dividends.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, AURIZON HOLDINGS LIMITED – ASX AZJ, GPT GROUP – ASX GPT, SANTOS LIMITED – ASX STO, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, TELSTRA CORPORATION LIMITED – ASX TLS, DEUTSCHE BANK AG, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK