CAPITAL INVESTMENTS – AUSTRALIA

Too early to say goodbye to tough times

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 20 : 2-Dec-16

AWE Limited CEO David Biggs says that oil and producers are unlikely to increase their capital investment until the longer-term impact of OPEC’s production cuts on the crude oil price is known. He believes that a sustained price above $US60 per barrel will be needed for oil companies to commit to increased spending. Beach Energy director Jim McKerlie agrees that the OPEC deal will not be a "gamechanger" for oil and gas producers.

CORPORATES
AWE LIMITED – ASX AWE, BEACH ENERGY LIMITED – ASX BPT, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, HORIZON OIL LIMITED – ASX HZN, SANTOS LIMITED – ASX STO, OIL SEARCH LIMITED – ASX OSH, ORIGIN ENERGY LIMITED – ASX ORG, WORLEYPARSONS LIMITED – ASX WOR, WOODSIDE PETROLEUM LIMITED – ASX WPL, FAR LIMITED – ASX FAR, RBC CAPITAL MARKETS

BHP and Rio shareholders focus on debt

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 18 : 28-Nov-16

The rally in the price of iron ore and coal during 2016 has boosted the earnings of BHP Billiton and Rio Tinto, prompting speculation of capital management initiatives. However, Jason Kururangi of Aberdeen Asset Management argues that BHP should prioritise debt reduction and investment in new projects rather than returns to shareholders. Meanwhile, Jason Beddow of Argo Investments suggests that BHP and Rio should consider increasing returns to shareholders if commodity prices remain at a similar level in 12 months’ time.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, ABERDEEN ASSET MANAGEMENT LIMITED, ARGO INVESTMENTS LIMITED – ASX ARG, DEUTSCHE BANK AG, SOCIETE GENERALE AUSTRALIA LIMITED, CREDIT SUISSE (AUSTRALIA) LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED

Origin Energy in recovery mode after $25b APLNG venture

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 17 : 20-Oct-16

Just 3.02 per cent of votes cast at Origin Energy’s 2016 AGM rejected the group’s remuneration report, although an equities grant to outgoing CEO Grant King attracted a "no" vote of 16.21 per cent. King told shareholders that the company’s investment in the Australia Pacific LNG project had taxed its resources, and a stake of 30 per cent rather than 37.5 per cent may have been appropriate. However, King is upbeat about Origin’s outlook. He will be succeeded by Origin veteran Frank Calabria.

CORPORATES
ORIGIN ENERGY LIMITED – ASX ORG, AUSTRALIA PACIFIC LNG LIMITED, RBC CAPITAL MARKETS

Explorers splash cash as prices improve

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Original article by Tess Ingram
The Australian Financial Review – Page: 16 : 22-Sep-16

Data from accounting firm BDO shows that Australian-listed resources companies spent an average of $A418,000 on exploration in the June 2016 quarter. This is 16 per cent higher than in the March quarter, and represents the first quarterly increase in more than two years. The median exploration budget of small explorers increased from $A91,000 to $A115,000. There was also a large increase in the number of resources groups that raised at least $A10m from investors during the quarter.

CORPORATES
BDO CHARTERED ACCOUNTANTS AND ADVISERS, AUSTRALIAN INSTITUTE OF GEOSCIENTISTS

Capex takes back seat as optimism stalls

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Original article by Vesna Poljak
The Australian Financial Review – Page: 15 : 2-Sep-16

Businesses are still reluctant to increase their capital investments. Figures released on 1 September 2016 suggest that $A105.2 billion will be spent on capital investments in 2016-17 which is unchanged in non-mining terms. Investors who rely on dividends are likely to benefit from this trend as companies will return some of their capital to them as dividends.

CORPORATES
RIO TINTO LIMITED – ASX RIO, JB HI-FI LIMITED – ASX JBH, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, NICK SCALI LIMITED – ASX NCK, BHP BILLITON LIMITED – ASX BHP

Mining capex slump ‘only half finished’

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Original article by Mark Mulligan
The Australian Financial Review – Page: 31 : 14-Jun-16

National Australia Bank notes that capital expenditure in the mining sector has fallen to around 4.5 per cent of GDP, compared with eight per cent at the height of the resources boom. The bank expects capex to reach a low of just 1.5 per cent of GDP by 2018. NAB also notes that the downturn in employment in the mining sector has been slower than anticipated, although this is expected to gather pace in coming years with the loss of a net 50,000 by 2019.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN BUREAU OF STATISTICS

Capex collapse as mining investment boom unwinds

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Original article by Daniel Palmer
The Australian – Page: 31 : 27-May-16

The Australian Bureau of Statistics has reported that capital expenditure on buildings and equipment fell by 5.2 per cent in the March 2016 quarter, compared with expectations of a 3.5 per cent decline. Capex in the mining sector fell by 12 per cent and non-mining capex was down 0.4 per cent. Meanwhile, the latest figures show that capex is forecast to total $A89.2bn in 2016-17, compared with a previous forecast of $A82.6bn.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, CAPITAL ECONOMICS LIMITED, COMMONWEALTH SECURITIES LIMITED

Companies need to come up with growth strategies

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Original article by Philip Baker
The Australian Financial Review – Page: 26 : 13-May-16

Many Australian-listed companies have prioritised dividend yields in recent years, rather than investing in growth strategies. However, Macquarie Securities’ Jason Todd believes that investors are poised to reward companies that pursue growth via strategies such as acquisitions and capital expenditure. He identifies a number of stocks that could benefit from a growth strategy, including Transurban Group, Wesfarmers, Amcor, Carsales.com, CSL and Orora.

CORPORATES
MACQUARIE SECURITIES PTY LTD, TRANSURBAN GROUP LIMITED – ASX TCL, WESFARMERS LIMITED – ASX WES, AMCOR LIMITED – ASX AMC, CARSALES.COM LIMITED – ASX CAR, CSL LIMITED – ASX CSL, ORORA LIMITED – ASX ORA, ASCIANO LIMITED – ASX AIO, ASX LIMITED – ASX ASX, WOOLWORTHS LIMITED – ASX WOW, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, SEEK LIMITED – ASX SEK, INCITEC PIVOT LIMITED – ASX IPL, TREASURY WINE ESTATES LIMITED – ASX TWE, RAMSAY HEALTH CARE LIMITED – ASX RHC

Dividend lure keeps capex hungry

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 27 : 30-Mar-16

Australia’s benchmark S&P/ASX 200 boasts a dividend yield of 4.98 per cent at present, and it is tipped to be 4.66 per cent for the 2016 calendar year. Yield-hungry investors continue to shun bonds in favour of equities, and Citigroup has suggested that this focus on yield is deterring companies from increasing their capital expenditure. Australian companies anticipate capex of $A124bn in 2015-16, and $A82.6bn in 2016-17.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CITIGROUP PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, UBS GLOBAL ASSET MANAGEMENT (AUSTRALIA) LIMITED

Subsidy won’t generate target

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Original article by Ben Potter
The Australian Financial Review – Page: 8 : 10-Mar-16

Insufficient investment in wind and solar energy generation will make it difficult for Australian to reach the Renewable Energy Target (ERT). According to Bloomberg New Energy Finance, 532 megawatts of new wind and solar projects are under construction, which is less than a tenth of the capacity required to meet the RET. The Federal Government may need to renegotiate the target with the Opposition.

CORPORATES
BLOOMBERG LP, AGL ENERGY LIMITED – ASX AGL, ORIGIN ENERGY LIMITED – ASX ORG, GRATTAN INSTITUTE, AUSTRALIA. DEPT OF THE ENVIRONMENT