Australia and New Zealand Banking Group Limited (ANZ); BHP Billiton Limited (BHP); Commonwealth Bank of Australia (CBA); CSL Limited (CSL); National Australia Bank Limited (NAB); Westpac Banking Corporation (WBC):
A rally in iron ore prices combined with a rise in oil helped pushed BHP Billiton shares up 0.9 per cent to a three-month high of $24.78. A bump in commodity prices provided support for mining shares on Tuesday, but the wider market largely traded within a tight band and closed flat. Investors kept a lid on any major market movements ahead of US Federal Reserve chair Janet Yellen’s twoday testimony to Congress starting on Wednesday night and news flow out of US earnings season. Both the benchmark S&P/ASX 200 Index and the broader All Ordinaries Index closed just marginally higher, at 5728.9 and 5768.5, respectively. Second-quarter earnings out of the US will be closely watched this week, as Wall Street has smashed records this year, swept up in the pro-growth rhetoric of the Trump administration. ‘‘Companies that manage to back up their high valuations with solid earnings growth will drive sentiment,’’ said Bob Doll, senior portfolio manager at Nuveen Asset Management. ‘‘With economic growth prospects looking solid, we think earnings can climb.’’BHP Billiton and other miners did most of the heavy lifting on the local market, with the Big Australian hitting a three-month high during the session, while buying in the big four banks was mixed. Commonwealth Bank of Australia closed down 0.05 per cent and National Australia Bank was off 0.3 per cent, while Westpac managed to claw 0.4 per cent higher and ANZ Bank rose 0.2 per cent. CSL was the largest drag on the benchmark index, dropping 0.7 per cent, as investors scooped up profits.
Caltex Australia Limited (CTX); Woolworths Limited (WOW):
British energy giant BP remains confident its $1.8 billion acquisition of Woolworths’ fuel business will proceed, even though the competition watchdog has delayed a decision until August. The Australian Competition and Consumer Commission was due to announce on Thursday whether it would approve or block the deal, or release a statement of issues. BP asked the ACCC to delay handing down its decision after the commission recently raised a range of issues, sources said. The ACCC will announce a new decision date after receiving additional information from both BP and Woolworths. Sources dismissed suggestions BP was trying to ‘‘cut a deal’’ with the ACCC or had offered undertakings over serious concerns, saying negotiations had not reached that stage. The deal was signed in late December 2016 and is due to be completed in January 2018, reflecting the complexity and size of the acquisition, which would make the Britain-based energy company the largest fuel retailer and wholesaler in Australia. ‘‘BP is working closely with the ACCC and we respect the process. We remain confident that clearance will be granted in due course,’’ a BP spokesman said. However, analysts believe there is a 50 per cent chance the acquisition will be blocked. If it is approved, BP may be forced to divest as many as 90 outlets, changing the economics of the deal. The acquisition will increase BP’s share of the wholesale fuel market from about 18 per cent to 30 per cent and increase the number of BPsupplied sites by at least 527 to more than 1930, giving it a similar number to Caltex, which has about 1900 sites, and making it larger than Shell (980) and Coles Express (692). BP’s share of company-owned and operated sites will rise to about 12 per cen.
Downer EDI Limited (DOW); iSentia Group Limited (ISD); Orora Limited (ORA); TPG Telecom Limited (TPM):
Shares Investors may be concerned that the market is running too high, but there are companies that can lift earnings, writes ST Wong. One such company is Orora, a large fibre and beverage packaging producer in Australasia with a sizeable packaging distribution business in North America. Orora has proven to be disciplined, well managed and has a credible growth path. Since being spun out of Amcor several years ago, Orora’s management has diversified its revenues and successfully increased the size of its potential market. Engineering and infrastructure management services group Downer is another fallen angel. Downer shares have been punished because of the company’s proposed acquisition of integrated services company Spotless. But the share price should recover if management demonstrates that it has the operational capabilities to stabilise and gain market share in Spotless’ sphere of services. This will add to Downer’s position as a leading contractor in the favourable infrastructure and improving mining services sectors. Isentia, a market leader in media intelligence which counts major Australian companies as clients, has been losing market share on top of poorly executing its acquisition of King Content. Isentia’s share price has halved since reaching a peak of $4.06 in October last year. We are starting to see some evidence that Isentia’s core Australian business could be starting to turn a corner. TPG Telecom is another company whose share price has halved in the past year. Competition is biting while there is some discomfort on TPG’s entry into the Singaporean and Australian mobile markets. However, TPG’s management team is tenacious and shouldn’t be written of.
Metcash Limited (MTS):
As the chief executive of Tesco’s Turkish business Kipa, US-born retailer Jeff Adams reversed a five year slide in same-store sales before Tesco pulled the pin in 2016, selling out to Migros at a £119 million loss. As the chief executive of Tesco’s Turkish business Kipa, US-born retailer Jeff Adams reversed a five-year slide in same-store sales before Tesco pulled the pin in 2016, selling out to Migros at a £119 million loss. As retail operations director for Tesco’s Fresh & Easy business in the US, Mr Adams, the incoming Metcash chief executive, grew store numbers from 60 to 200 and introduced a profitable new express format before Tesco withdrew from the US in 2012 at a cost of £1.2 billion.
Tabcorp Holdings Limited (TAH); Tatts Group Limited (TTS):
Tabcorp is confident it can complete its $11 billion merger with Tatts Group in the December quarter, despite the competition watchdog’s decision to appeal the Australian Competition Tribunal’s approval of the deal. Tabcorp said on Tuesday that it will oppose the Australian Competition and Consumer Commission’s Federal Court appeal against the ACT decision, but said it was important to note the ACCC was seeking to clarify technical points of law, rather than the pros and cons of the merger. ‘‘The factual findings by the tribunal of substantial public benefits and of no, or insignificant, detriment arising from the transaction are not in issue in the judicial review application,’’ Tabcorp said.
Vocus Group Limited (VOC):
Affinity Equity matches KKR in $2.2b telco bid. The Vocus Group board has drawn out Affinity Equity Partners to match Kohlberg Kravis Roberts & Co’s $2.2 billion indicative bid for the company, and now hopes it can smoke out more suitors for the embattled telecommunications business. The private equity giants will enter Vocus’ virtual data room later this week and are likely to request about four weeks for due diligence. The board is expected to put a cut-off date for firm offers, but it is yet to determine when that will be. The bid from Affinity, revealed by The Australian Financial Review’s Street Talk column on Tuesday morning, comes more than a month after KKR’s approach to the Vocus board. The Financial Review also revealed Affinity was considering a tilt at Vocus last month.
(Source: AIMS)
A rally in iron ore prices combined with a rise in oil helped pushed BHP Billiton shares up 0.9 per cent to a three-month high of $24.78. A bump in commodity prices provided support for mining shares on Tuesday, but the wider market largely traded within a tight band and closed flat. Investors kept a lid on any major market movements ahead of US Federal Reserve chair Janet Yellen’s twoday testimony to Congress starting on Wednesday night and news flow out of US earnings season. Both the benchmark S&P/ASX 200 Index and the broader All Ordinaries Index closed just marginally higher, at 5728.9 and 5768.5, respectively. Second-quarter earnings out of the US will be closely watched this week, as Wall Street has smashed records this year, swept up in the pro-growth rhetoric of the Trump administration. ‘‘Companies that manage to back up their high valuations with solid earnings growth will drive sentiment,’’ said Bob Doll, senior portfolio manager at Nuveen Asset Management. ‘‘With economic growth prospects looking solid, we think earnings can climb.’’BHP Billiton and other miners did most of the heavy lifting on the local market, with the Big Australian hitting a three-month high during the session, while buying in the big four banks was mixed. Commonwealth Bank of Australia closed down 0.05 per cent and National Australia Bank was off 0.3 per cent, while Westpac managed to claw 0.4 per cent higher and ANZ Bank rose 0.2 per cent. CSL was the largest drag on the benchmark index, dropping 0.7 per cent, as investors scooped up profits.
Caltex Australia Limited (CTX); Woolworths Limited (WOW):
British energy giant BP remains confident its $1.8 billion acquisition of Woolworths’ fuel business will proceed, even though the competition watchdog has delayed a decision until August. The Australian Competition and Consumer Commission was due to announce on Thursday whether it would approve or block the deal, or release a statement of issues. BP asked the ACCC to delay handing down its decision after the commission recently raised a range of issues, sources said. The ACCC will announce a new decision date after receiving additional information from both BP and Woolworths. Sources dismissed suggestions BP was trying to ‘‘cut a deal’’ with the ACCC or had offered undertakings over serious concerns, saying negotiations had not reached that stage. The deal was signed in late December 2016 and is due to be completed in January 2018, reflecting the complexity and size of the acquisition, which would make the Britain-based energy company the largest fuel retailer and wholesaler in Australia. ‘‘BP is working closely with the ACCC and we respect the process. We remain confident that clearance will be granted in due course,’’ a BP spokesman said. However, analysts believe there is a 50 per cent chance the acquisition will be blocked. If it is approved, BP may be forced to divest as many as 90 outlets, changing the economics of the deal. The acquisition will increase BP’s share of the wholesale fuel market from about 18 per cent to 30 per cent and increase the number of BPsupplied sites by at least 527 to more than 1930, giving it a similar number to Caltex, which has about 1900 sites, and making it larger than Shell (980) and Coles Express (692). BP’s share of company-owned and operated sites will rise to about 12 per cen.
Downer EDI Limited (DOW); iSentia Group Limited (ISD); Orora Limited (ORA); TPG Telecom Limited (TPM):
Shares Investors may be concerned that the market is running too high, but there are companies that can lift earnings, writes ST Wong. One such company is Orora, a large fibre and beverage packaging producer in Australasia with a sizeable packaging distribution business in North America. Orora has proven to be disciplined, well managed and has a credible growth path. Since being spun out of Amcor several years ago, Orora’s management has diversified its revenues and successfully increased the size of its potential market. Engineering and infrastructure management services group Downer is another fallen angel. Downer shares have been punished because of the company’s proposed acquisition of integrated services company Spotless. But the share price should recover if management demonstrates that it has the operational capabilities to stabilise and gain market share in Spotless’ sphere of services. This will add to Downer’s position as a leading contractor in the favourable infrastructure and improving mining services sectors. Isentia, a market leader in media intelligence which counts major Australian companies as clients, has been losing market share on top of poorly executing its acquisition of King Content. Isentia’s share price has halved since reaching a peak of $4.06 in October last year. We are starting to see some evidence that Isentia’s core Australian business could be starting to turn a corner. TPG Telecom is another company whose share price has halved in the past year. Competition is biting while there is some discomfort on TPG’s entry into the Singaporean and Australian mobile markets. However, TPG’s management team is tenacious and shouldn’t be written of.
Metcash Limited (MTS):
As the chief executive of Tesco’s Turkish business Kipa, US-born retailer Jeff Adams reversed a five year slide in same-store sales before Tesco pulled the pin in 2016, selling out to Migros at a £119 million loss. As the chief executive of Tesco’s Turkish business Kipa, US-born retailer Jeff Adams reversed a five-year slide in same-store sales before Tesco pulled the pin in 2016, selling out to Migros at a £119 million loss. As retail operations director for Tesco’s Fresh & Easy business in the US, Mr Adams, the incoming Metcash chief executive, grew store numbers from 60 to 200 and introduced a profitable new express format before Tesco withdrew from the US in 2012 at a cost of £1.2 billion.
Tabcorp Holdings Limited (TAH); Tatts Group Limited (TTS):
Tabcorp is confident it can complete its $11 billion merger with Tatts Group in the December quarter, despite the competition watchdog’s decision to appeal the Australian Competition Tribunal’s approval of the deal. Tabcorp said on Tuesday that it will oppose the Australian Competition and Consumer Commission’s Federal Court appeal against the ACT decision, but said it was important to note the ACCC was seeking to clarify technical points of law, rather than the pros and cons of the merger. ‘‘The factual findings by the tribunal of substantial public benefits and of no, or insignificant, detriment arising from the transaction are not in issue in the judicial review application,’’ Tabcorp said.
Vocus Group Limited (VOC):
Affinity Equity matches KKR in $2.2b telco bid. The Vocus Group board has drawn out Affinity Equity Partners to match Kohlberg Kravis Roberts & Co’s $2.2 billion indicative bid for the company, and now hopes it can smoke out more suitors for the embattled telecommunications business. The private equity giants will enter Vocus’ virtual data room later this week and are likely to request about four weeks for due diligence. The board is expected to put a cut-off date for firm offers, but it is yet to determine when that will be. The bid from Affinity, revealed by The Australian Financial Review’s Street Talk column on Tuesday morning, comes more than a month after KKR’s approach to the Vocus board. The Financial Review also revealed Affinity was considering a tilt at Vocus last month.
(Source: AIMS)
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