Brambles Limited (BXB):
Destocking may turn into restocking among United States retailers, and if that happens then blue-chip company Brambles is cheap at its current beatendown price. Brambles, once a staple in the share portfolio of many conservative investors because of its hard-won reputation for consistency and reliability, has seriously fallen out of favour in the past three months as questions arose about the performance of its US pallets business. Brambles hasn’t been at a discount to the ASX industrials since July 2009 when the world was still in the grip of the global financial crisis. Brambles historically commands an average 15 per cent premium over the ASX industrials, which shows how much work new chief executive Graham Chipchase has to do to restore the aura. UBS suggests there has been an overreaction and suspects the issues in the Brambles pallets business is ‘‘temporary in nature driven by cyclical weakness and an oversupply of white wood pallets’’. UBS has a ‘‘buy’’ rating on Brambles and expects the share price to have recovered to $10.60 in 12 months’ time. The shares gained 4¢ on Friday to close at $9.37. The stock was sitting at $12.61 on January 16 just a few days before the downgrade. It has fallen 31 per cent since late July last year when it was fetching $13.60.
Charter Hall Group (CHC):
One of the Victorian industrial properties sold in a portfolio to Blackstone. Private equity player Blackstone has struck a deal with local funds powerhouse Charter Hall to acquire a $126 million portfolio of industrial assets. The purchase is the next addition to a rapidly growing portfolio of industrial properties around Australia being accumulated by the US giant. Last year the New York-listed investor acquired almost $1.3 billion of industrial assets from another local fund manager, Goodman. The Goodman purchases came in two deals, with a 21-facility portfolio worth nearly $650 million acquired in late October. Major portfolio transactions have been a strong theme in the industrial market in the past year, with Mapletree, Cache and Ascendas and local manger AMP Capital all joining in the buying action. For Charter Hall, the transaction with Blackstone was struck at a premium to book value and an equated capitalisation rate of 6.98 per cent.
Downer EDI Limited (DOW):
Retail investors have joined institutions in baulking at participating in Downer EDI’s equity raising to pay for its $1.2 billion takeover of Spotless as the contractor’s shares continue to trade well below the entitlement offer price. Stockbrokers say there is no incentive for retail shareholders to take up their entitlements because Downer’s shares, which closed on Friday at $5.52, have been trading at a steep discount to the offer price of $5.95. Underwriter UBS was left holding some $258 million of Downer stock after institutions took up only 66 per cent of their entitlements, but will not take such a big financial hit from similarly poor demand for the retail offer because it lined up sub-underwriters who will have. Downer chief executive Grant Fenn said public companies typically provided ‘‘very limited’’ information to takeover suitors, and Downer has had specialist advisers looking closely at Spotless for the past 12 months. The hedge fund, which has about $1 billion in funds under management across all of its investments, has backed the strategy of Spotless chief executive Martin Sheppard. Our advice was not to take it up at that price.
RioTinto Limited (RIO):
Rio Tinto has responded to the Australian Taxation Office’s claim for $447 million in extra tax payments by publishing the taxes it paid in every Australian state, territory and council in 2016. The miner said it paid $3.85 billion to Australian governments in the year. Rio and the ATO have been in dispute over Rio’s use of a Singapore marketing hub. While the ‘‘Taxes Paid’’ report is published annually by Rio, it is usually released in June, suggesting it has been published earlier this year to coincide with the ATO’s latest claim. Rio Tinto has responded to the Australian Taxation Office’s claim for $447 million in extra tax payments by publishing the taxes it paid in every Australian state, territory and council in 2016. The miner said it paid $US2.89 billion ($3.85 billion) to Australian governments in the year, with $US1.39 billion of that going into federal coffers. After Australia, Rio’s biggest tax spends were in Canada and Mongolia. That declining tax bill has coincided with a reduction in global staff numbers, which have more than halved since 2008, and a divestment campaign that has yielded $US7 billion since 2013. Rio makes a significant contribution to public finances in countries in which it operates.
Tabcorp Holdings Limited (TAH):
Tabcorp has struck an exclusive wagering deal with more than 1100 pubs and hotels in NSW, countering a recent ground-breaking partnership between rival CrownBet and clubs in the state. The deal, to be unveiled on Monday, will have 1116 pubs nominate Tabcorp as their exclusive wagering partner and receive a commission from bets placed in their values by punters using the TAB app. Trailing commissions will also be paid to the pubs for bets placed by customers they have convinced to sign up to the TAB app while in their venues, similar to the model Tabcorp has rolled out in Victoria and the ACT after a successful trial in Canberra last year. Racing Victoria and Racing.com , the broadcast joint venture between Seven West Media and Racing Victoria, have also applied to the tribunal to intervene in the deal, even though the racing body is in a joint venture with Tabcorp in return for the wagering company having an exclusive retail licence in Victoria. Giles Thompson, the acting Racing Victoria chief executive, has argued his organisation will be hit hard by the merger in that it will virtually end any prospect of a competitive bidding process for the next wagering licence from 2025 onwards. Paperwork for the Racing Victoria, Racing.com and CrownBet’s applications are due with the tribunal at the end of this week.
(Source: AIMS)
Destocking may turn into restocking among United States retailers, and if that happens then blue-chip company Brambles is cheap at its current beatendown price. Brambles, once a staple in the share portfolio of many conservative investors because of its hard-won reputation for consistency and reliability, has seriously fallen out of favour in the past three months as questions arose about the performance of its US pallets business. Brambles hasn’t been at a discount to the ASX industrials since July 2009 when the world was still in the grip of the global financial crisis. Brambles historically commands an average 15 per cent premium over the ASX industrials, which shows how much work new chief executive Graham Chipchase has to do to restore the aura. UBS suggests there has been an overreaction and suspects the issues in the Brambles pallets business is ‘‘temporary in nature driven by cyclical weakness and an oversupply of white wood pallets’’. UBS has a ‘‘buy’’ rating on Brambles and expects the share price to have recovered to $10.60 in 12 months’ time. The shares gained 4¢ on Friday to close at $9.37. The stock was sitting at $12.61 on January 16 just a few days before the downgrade. It has fallen 31 per cent since late July last year when it was fetching $13.60.
Charter Hall Group (CHC):
One of the Victorian industrial properties sold in a portfolio to Blackstone. Private equity player Blackstone has struck a deal with local funds powerhouse Charter Hall to acquire a $126 million portfolio of industrial assets. The purchase is the next addition to a rapidly growing portfolio of industrial properties around Australia being accumulated by the US giant. Last year the New York-listed investor acquired almost $1.3 billion of industrial assets from another local fund manager, Goodman. The Goodman purchases came in two deals, with a 21-facility portfolio worth nearly $650 million acquired in late October. Major portfolio transactions have been a strong theme in the industrial market in the past year, with Mapletree, Cache and Ascendas and local manger AMP Capital all joining in the buying action. For Charter Hall, the transaction with Blackstone was struck at a premium to book value and an equated capitalisation rate of 6.98 per cent.
Downer EDI Limited (DOW):
Retail investors have joined institutions in baulking at participating in Downer EDI’s equity raising to pay for its $1.2 billion takeover of Spotless as the contractor’s shares continue to trade well below the entitlement offer price. Stockbrokers say there is no incentive for retail shareholders to take up their entitlements because Downer’s shares, which closed on Friday at $5.52, have been trading at a steep discount to the offer price of $5.95. Underwriter UBS was left holding some $258 million of Downer stock after institutions took up only 66 per cent of their entitlements, but will not take such a big financial hit from similarly poor demand for the retail offer because it lined up sub-underwriters who will have. Downer chief executive Grant Fenn said public companies typically provided ‘‘very limited’’ information to takeover suitors, and Downer has had specialist advisers looking closely at Spotless for the past 12 months. The hedge fund, which has about $1 billion in funds under management across all of its investments, has backed the strategy of Spotless chief executive Martin Sheppard. Our advice was not to take it up at that price.
RioTinto Limited (RIO):
Rio Tinto has responded to the Australian Taxation Office’s claim for $447 million in extra tax payments by publishing the taxes it paid in every Australian state, territory and council in 2016. The miner said it paid $3.85 billion to Australian governments in the year. Rio and the ATO have been in dispute over Rio’s use of a Singapore marketing hub. While the ‘‘Taxes Paid’’ report is published annually by Rio, it is usually released in June, suggesting it has been published earlier this year to coincide with the ATO’s latest claim. Rio Tinto has responded to the Australian Taxation Office’s claim for $447 million in extra tax payments by publishing the taxes it paid in every Australian state, territory and council in 2016. The miner said it paid $US2.89 billion ($3.85 billion) to Australian governments in the year, with $US1.39 billion of that going into federal coffers. After Australia, Rio’s biggest tax spends were in Canada and Mongolia. That declining tax bill has coincided with a reduction in global staff numbers, which have more than halved since 2008, and a divestment campaign that has yielded $US7 billion since 2013. Rio makes a significant contribution to public finances in countries in which it operates.
Tabcorp Holdings Limited (TAH):
Tabcorp has struck an exclusive wagering deal with more than 1100 pubs and hotels in NSW, countering a recent ground-breaking partnership between rival CrownBet and clubs in the state. The deal, to be unveiled on Monday, will have 1116 pubs nominate Tabcorp as their exclusive wagering partner and receive a commission from bets placed in their values by punters using the TAB app. Trailing commissions will also be paid to the pubs for bets placed by customers they have convinced to sign up to the TAB app while in their venues, similar to the model Tabcorp has rolled out in Victoria and the ACT after a successful trial in Canberra last year. Racing Victoria and Racing.com , the broadcast joint venture between Seven West Media and Racing Victoria, have also applied to the tribunal to intervene in the deal, even though the racing body is in a joint venture with Tabcorp in return for the wagering company having an exclusive retail licence in Victoria. Giles Thompson, the acting Racing Victoria chief executive, has argued his organisation will be hit hard by the merger in that it will virtually end any prospect of a competitive bidding process for the next wagering licence from 2025 onwards. Paperwork for the Racing Victoria, Racing.com and CrownBet’s applications are due with the tribunal at the end of this week.
(Source: AIMS)
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