AGL energy limited (AGL); CSL limited (CSL); Insurance Australia Group Limited (IAG); Suncorp Group Limited (SUN):
Higher average commodity prices, particularly for iron ore, will likely lift revenues for mining stocks and we see potential for higher earnings and dividends in this area. Higher electricity and gas prices will lift the likes of AGL Energy, which will show improvements at both the top and bottom line, given its role in generation. With more price increases posted in June, this should boost earnings into fiscal 2018. Healthcare stocks such as CSL and insurers like IAG and Suncorp (benefiting from premium increases) should also start to see some top line growth. Rising equity markets should also lift the revenue of some fund managers.
Australia and New Zealand Banking Group Limited (ANZ); Suncorp Group Limited (SUN):
ANZ has said it made little sense for it to use its capital to manufacture wealth products and would focus instead on distribution and look to offload its wealth arm. Suncorp is also mulling the sale of its life insurance arm and is pushing forward with its so-called ‘‘marketplace strategy’’, which involves offering other manufacturer’s products. But Mr Long said with less than half of Australians feeling prepared for retirement, NAB is focused on the objectives Australians have in retirement, with ‘‘engagement’’ being equally as important as a ‘‘product solution’’. ‘‘There is too much focus in the industry on the amount and it’s really what standard of living you want in retirement,’’ said Mr Long. ‘‘People have different objectives in retirement. There is actually a lot we can tell them to do to improve their lives.
Autosports Group Limited (ASG):
ASG downgraded its profits in late April just four months after listing with an issue price of $1. ASG is one of a number of ASX companies that have been lumped in the ‘‘dud float’’ category, the latest being Oliver’s Real Food, which stunned investors by downgrading profits on July 31 after just five weeks ASG is now under serious pressure to deliver on a turnaround plan built around using a single brand across its business rather than running separate branded entities in their local markets, cost-cutting and management changes.
BHP Billiton Limited(BHP); Rio Tinto Limited (RIO):
For commodities such as iron ore we believe current prices are unsustainably high, with iron ore in oversupply relative to modest growth in demand from Chinese steel production and margins for iron ore producers close to historical peaks. These trends all suggest the future direction of the iron ore price is downwards. As a key commodity for BHP and Rio Tinto this is an important lead indicator for their future earnings.
Commonwealth Bank of Australia (CBA); Westpac Banking Corporation (WBC):
To back up the proposition that Australian business is enamoured with consultants run your finger down the list of the top 100 companies. The first two companies are, of course, run by former management consultants. Ian Narev, a former McKinsey & Co partner, is CEO of the Commonwealth Bank of Australia and Brian Hartzer, a former management consultant at First Manhattan, is CEO of Westpac Banking Corp. Within the ranks of Westpac, the CEO of the consumer bank, George Frazis, is a former BCG consultant.
Coca-Cola Amatil Limited (CCL); The Star Entertainment Group Limited (SGR):
The McKinsey alumni is pretty extensive and includes Matt Bekier, who is CEO of Star Entertainment Group and Alison Watkins, who is CEO of Coca-Cola Amatil. Former CEO of the ASX, Elmer Funke Kupper is a former McKinsey consultant who managed to work in banking, wagering and the securities industry. Jayne Hardlicka, who is CEO of Jetstar Group, is a former Bain consultant. One observation about this cohort is that all have high IQs and proven emotional intelligence. That distinguishes them from many of their former colleagues in consulting who failed the emotional IQ test and did not make the transition to business.
Crown Resorts Limited (CWN); Surfstitch Group Limited (SRF):
Proxy advisers have denounced attempts by SurfStitch’s second largest shareholder and thwarted suitor, Crown Financial, to unseat chairman Sam Weiss as ‘‘puzzling’’ and not in the interests of minority investors. Long-suffering SurfStitch shareholders will meet in Sydney on Wednesday to consider a proposal from Crown, which owns 10.3 per cent of the embattled online surfwear retailer, to remove Mr Weiss from the board. Crown, led by managing director Kim Sundell, says SurfStitch’s performance since Mr Weiss’ appointment has been catastrophic and his tenure has been marked by board dysfunction, inconsistent strategy, continuing losses, the sale of assets at significant losses and the decimation of the share price.
(Source: AIMS)
Higher average commodity prices, particularly for iron ore, will likely lift revenues for mining stocks and we see potential for higher earnings and dividends in this area. Higher electricity and gas prices will lift the likes of AGL Energy, which will show improvements at both the top and bottom line, given its role in generation. With more price increases posted in June, this should boost earnings into fiscal 2018. Healthcare stocks such as CSL and insurers like IAG and Suncorp (benefiting from premium increases) should also start to see some top line growth. Rising equity markets should also lift the revenue of some fund managers.
Australia and New Zealand Banking Group Limited (ANZ); Suncorp Group Limited (SUN):
ANZ has said it made little sense for it to use its capital to manufacture wealth products and would focus instead on distribution and look to offload its wealth arm. Suncorp is also mulling the sale of its life insurance arm and is pushing forward with its so-called ‘‘marketplace strategy’’, which involves offering other manufacturer’s products. But Mr Long said with less than half of Australians feeling prepared for retirement, NAB is focused on the objectives Australians have in retirement, with ‘‘engagement’’ being equally as important as a ‘‘product solution’’. ‘‘There is too much focus in the industry on the amount and it’s really what standard of living you want in retirement,’’ said Mr Long. ‘‘People have different objectives in retirement. There is actually a lot we can tell them to do to improve their lives.
Autosports Group Limited (ASG):
ASG downgraded its profits in late April just four months after listing with an issue price of $1. ASG is one of a number of ASX companies that have been lumped in the ‘‘dud float’’ category, the latest being Oliver’s Real Food, which stunned investors by downgrading profits on July 31 after just five weeks ASG is now under serious pressure to deliver on a turnaround plan built around using a single brand across its business rather than running separate branded entities in their local markets, cost-cutting and management changes.
BHP Billiton Limited(BHP); Rio Tinto Limited (RIO):
For commodities such as iron ore we believe current prices are unsustainably high, with iron ore in oversupply relative to modest growth in demand from Chinese steel production and margins for iron ore producers close to historical peaks. These trends all suggest the future direction of the iron ore price is downwards. As a key commodity for BHP and Rio Tinto this is an important lead indicator for their future earnings.
Commonwealth Bank of Australia (CBA); Westpac Banking Corporation (WBC):
To back up the proposition that Australian business is enamoured with consultants run your finger down the list of the top 100 companies. The first two companies are, of course, run by former management consultants. Ian Narev, a former McKinsey & Co partner, is CEO of the Commonwealth Bank of Australia and Brian Hartzer, a former management consultant at First Manhattan, is CEO of Westpac Banking Corp. Within the ranks of Westpac, the CEO of the consumer bank, George Frazis, is a former BCG consultant.
Coca-Cola Amatil Limited (CCL); The Star Entertainment Group Limited (SGR):
The McKinsey alumni is pretty extensive and includes Matt Bekier, who is CEO of Star Entertainment Group and Alison Watkins, who is CEO of Coca-Cola Amatil. Former CEO of the ASX, Elmer Funke Kupper is a former McKinsey consultant who managed to work in banking, wagering and the securities industry. Jayne Hardlicka, who is CEO of Jetstar Group, is a former Bain consultant. One observation about this cohort is that all have high IQs and proven emotional intelligence. That distinguishes them from many of their former colleagues in consulting who failed the emotional IQ test and did not make the transition to business.
Crown Resorts Limited (CWN); Surfstitch Group Limited (SRF):
Proxy advisers have denounced attempts by SurfStitch’s second largest shareholder and thwarted suitor, Crown Financial, to unseat chairman Sam Weiss as ‘‘puzzling’’ and not in the interests of minority investors. Long-suffering SurfStitch shareholders will meet in Sydney on Wednesday to consider a proposal from Crown, which owns 10.3 per cent of the embattled online surfwear retailer, to remove Mr Weiss from the board. Crown, led by managing director Kim Sundell, says SurfStitch’s performance since Mr Weiss’ appointment has been catastrophic and his tenure has been marked by board dysfunction, inconsistent strategy, continuing losses, the sale of assets at significant losses and the decimation of the share price.
(Source: AIMS)
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