BUSINESS FORECASTING – AUSTRALIA

Towering infernos of cash

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Original article by Brad Norington, Ben Wilmot
The Australian – Page: 1 & 4 : 22-May-20

Citigroup has forecast that the value of office buildings in Australia’s major CBDs could fall by more than 15 per cent in the wake of the coronavirus pandemic. Demand for centralised office space is likely to fall if the shift to working from home is sustained once the crisis abates. This in turn could put downward pressure on office rents. Meanwhile, JLL has forecast that the total amount of vacant office space across the nation’s CBDs will rise from 1.46 million square metres prior to the pandemic to about 1.88 million square metres by the end of 2020.

CORPORATES
CITIGROUP PTY LTD, JONES LANG LASALLE AUSTRALIA PTY LTD

China pays more for iron ore

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Original article by Peter Ker
The Australian Financial Review – Page: 1 & 16 : 19-May-20

The iron ore price has risen by more than 13 per cent since the end of April, and futures pricing suggests that further gains are likely. The price of the steel input has been resilient during the coronavirus pandemic, due to factors such as continued strong demand for iron ore in China and the fact that major producer Brazil has been hit hard by the virus. Citigroup’s analysts expect the continued strong price of iron ore to result in the resources sector paying out $14.4bn in dividends for 2019-20. The banking sector in turn is tipped to pay out $14.7bn.

CORPORATES
CITIGROUP PTY LTD, RIO TINTO LIMITED – ASX RIO, BHP GROUP LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG

Beijing options limited to Australian iron ore

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Original article by Elouise Fowler
The Australian Financial Review – Page: 7 : 15-May-20

China imported 62 per cent of its iron ore from Australia in 2019, compared to only 21 per cent from Brazil. However, a report in a state-owned Chinese newspaper has raised the possibility that China could replace iron ore from Australia with iron ore from Brazil as part of the growing trade tensions. However, Glyn Lawcock of UBS notes that the global iron ore market is very tight at the moment. Fortescue Metals Group CEO Elizabeth Gaines expects Chinese demand for Australian iron ore to continue to rise.

CORPORATES
UBS HOLDINGS PTY LTD, FORTESCUE METALS GROUP LIMITED – ASX FMG

China unlikely to target iron ore in virus blame game

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Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 13-May-20

Commonwealth Bank commodity strategist Vivek Dhar does not expect China to reduce imports of Australian iron ore despite the growing trade tensions between the two nations. He contends that China is too reliant on iron ore from Australia, noting that 85 per cent of its iron ore imports are sourced from Australia. Dhar adds that exports of commodities such as coal are at greater risk, as they can be sourced more easily from other countries. Analysts also expect any economic stimulus measures in China to boost demand for steel, and therefore iron ore.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Our global LNG leadership is under threat

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Original article by Dennis Shanahan
The Australian – Page: 4 : 8-May-20

A report from Wood Mackenzie has warned that the nation’s status as the world’s biggest LNG exporter is at risk. The report, which was produced on behalf of the Australian Petroleum Production & Exploration Association, notes that increased regulation, the downturn in the oil price and growing international competition in the sector are among the threats facing the local industry. Wood Mackenzie adds that any changes to the LNG industry’s tax regime could deter future investment in the sector.

CORPORATES
WOOD MACKENZIE, AUSTRALIAN PETROLEUM PRODUCTION AND EXPLORATION ASSOCIATION LIMITED

Westpac dividend chance good as zero

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Original article by James Frost
The Australian Financial Review – Page: 19 : 6-May-20

Victor German of Macquarie and Matthew Wilson from Evans & Partners are among the analysts who do not expect Westpac to pay an interim dividend for 2019-20. However, German believes that Westpac could pay a final dividend of $0.40 per share, and Wilson forecasts a payout of $0.35. Brendan Sproules of Citigroup is more bullish, forecasting a final dividend of $0.65. Citi has a share price target of $26 for Westpac.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG, EVANS AND PARTNERS ASIA FUND – ASX EAF, CITIGROUP PTY LTD

Mag queen tips Bauer will axe Pacific titles

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Original article by Lilly Vitorovich
The Australian – Page: 19 : 4-May-20

Bauer Media completed a $40m deal to acquire Seven West Media’s Pacific Magazines division on 1 May. Magazine industry veteran Deborah Thomas expects Bauer to suspend the print editions of some Pacific titles due to the coronavirus-induced downturn in the advertising market. Four of the print editions of Bauer’s own titles were recently put on hold, and some industry executives doubt that several of them will resume publication. Bauer has also stood down or laid off up to 140 employees in Australia, while its New Zealand operations were shut down in April.

CORPORATES
BAUER MEDIA AUSTRALIA PTY LTD, PACIFIC MAGAZINES PTY LTD, SEVEN WEST MEDIA LIMITED – ASX SWM, BAUER MEDIA KG, BAUER MEDIA (NZ) LIMITED

Bad debts hang over Westpac dividend plans

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Original article by James Frost, Aleks Vickovich, James Eyers
The Australian Financial Review – Page: 15 & 19 : 4-May-20

Westpac’s dividend payout is likely to be a key focus for investors when its half-year financial results are released on 4 May. Westpac has already advised of $1.6bn in impairment charges for coronavirus-related loan losses. Matt Williams of Airlie Funds Management says Westpac should not pay an interim dividend, arguing that investors expect companies to preserve capital in the current environment. David Walker of Clime Asset Management in turn expects Westpac to pay a much lower half-year dividend and opt for a dividend reinvestment plan.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AIRLIE FUNDS MANAGEMENT PTY LTD, CLIME ASSET MANAGEMENT PTY LTD

Are Australia’s big four banks equipped for recession?

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Original article by Ian Verrender
abc.net.au – Page: Online : 4-May-20

The general expectation is that Australia’s major banks will ride out the coronavirus-induced economic downturn relatively unscathed. However, contrary to popular opinion, the nation’s financial system did not cope well with the global financial crisis; indeed, the federal government had to underwrite bank loans and guarantee deposits. Meanwhile, Australia’s banks now have significant exposure to the residential and commercial property sectors. With unemployment likely to reach double digits, there will be growing pressure on already heavily indebted households; demand for office space will also fall as more people become jobless or work from home permanently, which will in turn reduce commercial property values.

CORPORATES

Fortescue upbeat as cash rolls in

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Original article by Nick Evans
The Australian – Page: 16 : 1-May-20

Fortescue Metals Group has advised that it ended March with a net cash position for the first time since it commenced iron ore exports in 2008. It had a net cash position of $US100m, compared with net debt of $US2.9bn previously. Fortescue’s production report for the March quarter also shows that its shipments rose by 10 per cent to 42.3 million tonnes during the period. It now expects total shipments of up to 177 million for 2019-20; its previous guidance was for export volumes of up to 175 million tonnes.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG