Aurizon Holdings Limited (AZJ):
New Aurizon boss Andrew Harding gets a chance this week to remind the broader investment community that the debate about how to pay for a big new Queensland coal railway is more complicated than whether the Commonwealth can see its way to lending $1 billion to an Indian billionaire. Harding is in Melbourne to address a 600-strong audience at the Melbourne Mining Club on Thursday and, outside of offering new insights on cyclone mitigation, Rio Tinto’s former erstwhile man of iron ore is very likely to deliver some affirming detail on his move to trump Gautam Adani. Adani has, very famously, gone to the brand new Northern Australia Infrastructure Fund seeking quite a bit of financial help to build the railway tracks that will run coal from his company’s fiercely disputed Carmichael coal project to the company’s coal export terminal at Abbot Point in Queensland.
Downer EDI Limited (DOW) & Spotless Group Holdings Ltd (SPO):
Allan Gray managing director and Downer EDI shareholder Simon Mawhinney has warned Downer not to increase its $1.2 billion takeover bid for Spotless Group, saying the target is not a ‘‘trophy asset’’ and has too much debt for the profit it makes. Spotless on Monday recommended its 8000-plus shareholders reject the Downer offer of $1.15 in cash per share, saying it was opportunistic and timed to take advantage of a historical share price low, with Spotless only in the early stages of implementing a ‘‘strategy reset’’. It will reveal detailed reasons for the decision to reject the offer in a Target’s Statement to be released on April 27, which will include financial forecasts for 2017-18. But Mr Mawhinney said the best result for Downer, which made its hostile bid for Spotless without doing due diligence, would be that its takeover offer fails at the current price and it just continues on with its own core operations.
Platinum Asset Management Limited (PTM):
Platinum Asset Management chief investment officer Andrew Clifford has attacked companies who launch share buybacks ‘‘to try and support their share price’’.Platinum opened the door to a buyback when it was under attack by short sellers last year but is yet to purchase a single share, with Mr Clifford saying a buyback would only proceed if the price was right. ‘‘I think there is a misunderstanding broadly by the commentators about what share buybacks are about, and yes, many companies use them in a fashion to try and support their stock price,’’ he said in an interview with The Australian Financial Review . ‘‘We think that is a very unrealistic, and in fact foolish approach to using shareholders’ capital. ‘‘I think what I would call the abuse of buybacks by the corporate sector in general is implying a certain standard of behaviour which we actually have no interest in adhering to.’’ Mr Clifford, who co-founded the fund in 1994 with billionaire Kerr Neilson, said that there were no plans to officially launch the buyback of up to 10 per cent of its stock, plans for which were announced in September 2016.
Tatts Group Limited (TTS):
Tatts shareholders have four words for chairman Harry Boon and his bankers at Goldman Sachs. Show me the money. It’s that time in the Tatts deal when Boon and his bankers do the rounds with key institutional shareholders to find out what they think of Pacific Consortium’s cash bid for the wagering and lotteries company. The key question is whether Pacific Consortium’s $4.21 a share cash offer is good enough to grant due diligence, and how it stacks up against an already agreed scrip-and-cash bid from wagering rival Tabcorp. The meetings start on Wednesday.
The A2 Milk Company (A2M):
The a2 Milk Company appears poised for an earnings upgrade after a strong start to the second half, while a major shareholder believes the New Zealand company is a possible takeover target from multinationals looking for growth. According to Tmall/Taobao data, a2 is winning share in China, while maintaining its premium pricing position. While the largest proportion of sales in 2016 was within the Australian grocery and pharmacy channels, direct sales into China increased significantly and are expected to continue to rise. NZ dairy processor Synlait Milk, a2’s sole supplier for infant formula, said just weeks ago that it was ramping up production and there have been reports of retail outlets running out of stock. Goldman Sachs recently upgraded its earnings per share expectations by 9 per cent to 12 per cent for the next three financial years. ‘‘Its relationship with Synlait also means that it is well placed to obtain CFDA registration [in China] to grow further offline,’’ analyst Andrea Chong said. ‘‘Supply of product is the main near-term constraint to earnings growth, with second-half growth likely skewed to fourth quarter.”
(Source: AIMS)
New Aurizon boss Andrew Harding gets a chance this week to remind the broader investment community that the debate about how to pay for a big new Queensland coal railway is more complicated than whether the Commonwealth can see its way to lending $1 billion to an Indian billionaire. Harding is in Melbourne to address a 600-strong audience at the Melbourne Mining Club on Thursday and, outside of offering new insights on cyclone mitigation, Rio Tinto’s former erstwhile man of iron ore is very likely to deliver some affirming detail on his move to trump Gautam Adani. Adani has, very famously, gone to the brand new Northern Australia Infrastructure Fund seeking quite a bit of financial help to build the railway tracks that will run coal from his company’s fiercely disputed Carmichael coal project to the company’s coal export terminal at Abbot Point in Queensland.
Downer EDI Limited (DOW) & Spotless Group Holdings Ltd (SPO):
Allan Gray managing director and Downer EDI shareholder Simon Mawhinney has warned Downer not to increase its $1.2 billion takeover bid for Spotless Group, saying the target is not a ‘‘trophy asset’’ and has too much debt for the profit it makes. Spotless on Monday recommended its 8000-plus shareholders reject the Downer offer of $1.15 in cash per share, saying it was opportunistic and timed to take advantage of a historical share price low, with Spotless only in the early stages of implementing a ‘‘strategy reset’’. It will reveal detailed reasons for the decision to reject the offer in a Target’s Statement to be released on April 27, which will include financial forecasts for 2017-18. But Mr Mawhinney said the best result for Downer, which made its hostile bid for Spotless without doing due diligence, would be that its takeover offer fails at the current price and it just continues on with its own core operations.
Platinum Asset Management Limited (PTM):
Platinum Asset Management chief investment officer Andrew Clifford has attacked companies who launch share buybacks ‘‘to try and support their share price’’.Platinum opened the door to a buyback when it was under attack by short sellers last year but is yet to purchase a single share, with Mr Clifford saying a buyback would only proceed if the price was right. ‘‘I think there is a misunderstanding broadly by the commentators about what share buybacks are about, and yes, many companies use them in a fashion to try and support their stock price,’’ he said in an interview with The Australian Financial Review . ‘‘We think that is a very unrealistic, and in fact foolish approach to using shareholders’ capital. ‘‘I think what I would call the abuse of buybacks by the corporate sector in general is implying a certain standard of behaviour which we actually have no interest in adhering to.’’ Mr Clifford, who co-founded the fund in 1994 with billionaire Kerr Neilson, said that there were no plans to officially launch the buyback of up to 10 per cent of its stock, plans for which were announced in September 2016.
Tatts Group Limited (TTS):
Tatts shareholders have four words for chairman Harry Boon and his bankers at Goldman Sachs. Show me the money. It’s that time in the Tatts deal when Boon and his bankers do the rounds with key institutional shareholders to find out what they think of Pacific Consortium’s cash bid for the wagering and lotteries company. The key question is whether Pacific Consortium’s $4.21 a share cash offer is good enough to grant due diligence, and how it stacks up against an already agreed scrip-and-cash bid from wagering rival Tabcorp. The meetings start on Wednesday.
The A2 Milk Company (A2M):
The a2 Milk Company appears poised for an earnings upgrade after a strong start to the second half, while a major shareholder believes the New Zealand company is a possible takeover target from multinationals looking for growth. According to Tmall/Taobao data, a2 is winning share in China, while maintaining its premium pricing position. While the largest proportion of sales in 2016 was within the Australian grocery and pharmacy channels, direct sales into China increased significantly and are expected to continue to rise. NZ dairy processor Synlait Milk, a2’s sole supplier for infant formula, said just weeks ago that it was ramping up production and there have been reports of retail outlets running out of stock. Goldman Sachs recently upgraded its earnings per share expectations by 9 per cent to 12 per cent for the next three financial years. ‘‘Its relationship with Synlait also means that it is well placed to obtain CFDA registration [in China] to grow further offline,’’ analyst Andrea Chong said. ‘‘Supply of product is the main near-term constraint to earnings growth, with second-half growth likely skewed to fourth quarter.”
(Source: AIMS)
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