AGL Energy Limited (AGL):
Market worries about government intervention on energy prices have affected sentiment around AGL and Origin, whose share prices are off highs reached in April-May. After a second round of household power tariff hikes in July by some smaller retailers in Victoria, some households have seen increases of up to 43 per cent from last year. RBC Capital Market analyst Paul Johnston told clients the regulatory risks around AGL are ‘‘growing and under-appreciated’’, highlighting the situation in Victoria. NSW Labor also recently committed to re-regulate prices should it be elected. Grattan Institute energy program director Tony Wood said the AEMC report showed that ‘‘it’s patently not all OK’’ on retail competition, given gross margins for AGL, Origin and EnergyAustralia were some 40 per cent higher in Victoria than elsewhere, while their net margins are likely to be even higher since they have economies of scale over smaller retailers.
Australia and New Zealand Banking Group (ANZ):
Roy Morgan research to be distributed today will show that over the 12 months to July 30, customer satisfaction at the big four collectively improved by 0.3 per cent while the customer satisfaction of all the other banks combined declined by 0.9 per cent. ANZ was the third-most supported bank in the survey with 78.8 per cent of the bank’s customers surveyed indicating they were satisfied, falling from second place 12 months ago after experiencing a decline of 0.1 per cent in customer satisfaction.
Aurizon Holdings Ltd (AZJ):
New Aurizon chief executive Andrew Harding has moved fast in his first six months, taking hundreds of millions of dollars of write-downs and reorganising the freight rail group’s corporate structure and management team. But the depth of write-downs has been surprising. Aurizon last week announced it would take another $554 million of impairment charges – mostly on its bulk haulage business – in addition to $236 million of impairment charges announced in January. Aurizon raised its dividend payout ratio in mid-2015 to 70 to 100 per cent of underlying net profits after tax from 60 to 70 per cent previously, and its interim dividend of 13.6¢ a share in February represented a payout ratio of 100 per cent of underlying net profits after tax. Aurizon has told investors it expects to report underlying earnings before interest and tax of $836 million when it delivers its annual results next month. Aurizon’s shares, which hit all-time highs in early June, are now lagging behind the broader market. The stock, which closed at $4.93 on Friday, is down 5 per cent over the past 12 months compared with a 2.5 per cent rise in the S&P/ASX 200.
BHP Billiton Limited (BHP):
For the next three weeks or so, the whispered question de jour within BHP will be whether or not Elliott will offer up nominees for election at November’s annual general meeting. Now, to be fair to Elliott, it can certainly be credited with firming BHP’s public resolve on the fate of its $US30 billion punt on US shale oil. BHP has so far spent more than $US4 billion acquiring Canadian potash resources and partially building the mining infrastructure needed to get at its fertiliser. It needs to spend another $US5 billion or so to actually start digging and exporting the stuff. Elliott has started claiming influence and authority over events when there has been none.
Commonwealth Bank of Australia (CBA):
Ian Narev will mark six years as Commonwealth Bank of Australia’s chief executive in December. It’s the same amount of time his predecessor Ralph Norris was in the role.When Narev began as CEO, CBA shares were trading near $50. Recently they were just shy of $84. But now some analysts are predicting its shares will fall towards $70. Wiles expects housing loan growth for the sector to slow from 6 per cent in financial year 2017 to 4 per cent the year after. He argues that the major banks are currently trading on an average forward earnings per share multiple of 13.4 times, which is above the long run average, and also implies 5 per cent loan growth. Slower loan growth is one reason why he has a target on CBA’s shares of $72. Meanwhile, Citi analysts have a share price forecast of $75 and a sell on the stock; CLSA rates CBA underperform and UBS is neutral. In home loans, CBA’s market share has been almost static under Narev.
Crown Resorts Ltd (CWN):
In a document filed in the Federal Circuit Court, Crown’s former first aid manager, Audrey Gatt, claims she witnessed and complained about more than 20 occupational health and safety incidents at Crown Resorts in the five months she was employed at the casino. Ms Gatt, who has worked in the medical industry for more than eight years and as a police officer prior to that, said work health and safety issues at Crown Resorts was ‘‘very widespread’’ and there was ‘‘100 per cent without a doubt’’ a culture of ignoring serious OHS problems. Ms Gatt’s lawyer argues she was unlawfully dismissed because she made more than 20 complaints about the occupational health and safety practices at Crown. Ms Gatt wants compensation for losing her job and a maximum pecuniary penalty, which is set at $63,000.
Downer EDI Limited (DOW) & Spotless Group Holdings Ltd (SPO):
Downer EDI will wait until Monday afternoon to decide whether to further extend its $1.2 billion takeover offer for Spotless after securing more than 80 per cent of the services group. Downer said on Friday that its stake in Spotless had risen to 80.3 per cent, up from 67 per cent a week earlier, after Spotless’s board recommended investors accept the cash takeover offer. The offer of $1.15 per share is due to close at 7pm on Monday but may be extended further if some investors have still not accepted by the deadline. Downer was on Sunday waiting to see how many investors had accepted the offer over the weekend. Retail and institutional investors are understood to have accepted the offer last week but New York-headquartered hedge fund Coltrane Asset Management, which controls 10.64 per cent of Spotless and is its second-biggest shareholder after Downer, has been holding out.
(Source: AIMS)
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