Accolade Wines; Champs Private Equity:
The bigwigs at CHAMP Private Equity have started weighing refinancing options for Accolade Wines, after putting the company’s slated float on ice earlier this year. Street Talk understands the buyout firm is examining several options including tapping the US high-yield debt market. Sources said that while the recapitalisation was not being driven by the impending expiration of any debt facilities, Accolade and CHAMP were eager to come up with other financing arrangements for several existing tranches of asset-backed financing.
AGL Energy Limited (AGL); Origin Energy Limited (ORG):
Re-regulating retail electricity prices is the wrong response to the latest report confirming that Australian households are paying several times more than their European and American counterparts for retailers to bring electricity to their meters. But the problem for the big power retailers is that – just like the big banks with their life insurance and money laundering scandals – any efforts they are making to fix the problem are coming too little, too late. The cost to the bottom lines of reregulation for the big three – AGL Energy, Origin Energy and Energy-Australia – is estimated at $200 million to $300 million in Victoria alone. Their most vocal chief executive, Andy Vesey, belled the cat on how the practice of screwing their most loyal customers and rewarding disloyalty could backfire on them a year ago. ‘‘I only talk to you about a good deal if you threaten to leave me, and if I want your business I have to steal you away from somebody else,’’ Mr Vesey said in August 2016. AGL Energy’s confident assessment of the prospects for its potential $250 million LNG import project in Victoria has not been wholly embraced by the market, with some still questioning whether gas can be imported at a price that makes sense for local users. As chief executive Andy Vesey outlined last week, the venture is moving ahead in the development pipeline, with Crib Point at Western Port in Victoria beating rival options in NSW and South Australia as the preferred site. But not all are on board with Mr Vesey’s view that the project is a ‘‘gamechanger’’ for the east coast market, and the timing of a final investment decision in 2019 leaves plenty of room for the market to move against the venture. Even in today’s market, with weak Asian LNG prices and soaring prices on the east coast, some believe the economics don’t stack up.
Ansell Limited (ARI):
Rubber glove and safety product maker Ansell will try to catch up with surging rubber prices, which helped push full-year profit below market expectations. Natural and synthetic rubber account for about half of Ansell’s raw material costs. Rubber futures hit a five-year high earlier this year. Ansell has moved to lift prices, but the increases could not offset the impact of higher raw materials costs in the 12 months to June 30. Ansell said its full-year net profit fell 7.2 per cent to $US147.7 million ($187.6 million), below Morgan Stanley’s expectations for $US154.9 million. Revenue rose 1.7 per cent to $US1.6 billion, in line with expectations.
Ardent Leisure Group (AAD):
Ardent Leisure has appointed former Walt Disney Company executive Randy Garfield as a US-based independent director, saying he was a better candidate than either of the two proposed by activist shareholder Ariadne. As part of the process to appoint Mr Garfield, Ardent’s board also interviewed – and rejected – Ariadne’s proposed directors US-based Brad Richmond and former Scentre Group executive Andy Hedges, chairman George Venardos said on Monday. Ariadne has called a shareholder meeting on September 4 to vote on its nomination of Mr Richmond and Mr Hedges – as well as Ariadne directors Gary Weiss and Kevin Seymour – to the Ardent board. ‘‘It is a competitive situation where they were put up against the candidates brought by [recruitment firm] Heidrick & Struggles and we made a decision purely based on merit,’’ Mr Venardos told The Australian Financial Review. ‘‘They had certain skills that were relevant but Mr Garfield, you would say, has more of those skills and more of the relevant experience.
Argo Investments Limited (ARG); Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia may lose the traditional higher valuation premium it has over the other big banks, while Rio Tinto is shaping as a better bet than BHP, says the boss of $5.4 billion Argo Investments. Jason Beddow, the managing director of Argo, which on Monday lifted its final dividend to deliver a fifth consecutive year of higher annual dividends, said it was possible the CBA premium may slowly disappear as it faces a grinding period of trying to improve its systems and culture. ‘‘Does it deserve to trade on a premium compared with the others, maybe not,’’ Mr Beddow said Commonwealth Bank will refund $10 million to more than 65,000 customers, after the bank admitted it sold credit card repayment insurance to students and unemployed people who are unable to claim the insurance. Australian Securities and Investments Commission said on Monday between 2011 and 2015, CBA sold millions of dollars worth of add-on ‘‘CreditCard Plus’’ insurance to 65,000 customers who were either unemployed or students. The vast majority of customers were students who took out credit card loans with lower limits, and the customers were therefore unable to claim unemployment or temporary and permanent disability cover provided by the insurance, ASIC said.
Aurizon Holdings Limited (AZJ):
Rebounding Australian coal exports are not just ‘‘green shoots’’ but reflect growth in demand from Asia, Aurizon chief executive Andrew Harding says. ‘‘We had a number of contracts where customers have put their money down to haul more tonnes, that is an absolute sign in my case that people are actually seeing the demand,’’ Mr Harding told The Australian Financial Review after the rail group reported an annual net loss of $188 million. ‘‘The dynamics behind it is the growth in Asia, the realisation that while coal one day in the very long term will be a much smaller part of the energy mix, there is just such an increase in demand in Asia that you have to meet it by multiple sources, coal being one of those sources.’’ Aurizon has forecast an increase in coal haulage volumes in 2017-18, guiding investors to expect between 215 million and 225 million tonnes, stronger than analysts expected, as exports of metallurgical coal from Queensland rise compared with a year earlier.
Bendigo and Adelaide Bank Limited (BEN):
Bendigo keeps branches open Bendigo & Adelaide Bank chief executive Mike Hirst is confident the group can withstand the trust issues plaguing the banking sector, with branches and frontline staff a key part of its defence. Mr Hirst also acknowledged the issues facing the banking industry, following Commonwealth Bank’s announcement that CEO Ian Narev would be stepping down after the AUSTRAC scandal. ‘‘There is no doubt the industry is challenged on the trust front and on the trust front we come up well,’’ Mr Hirst said. He said Bendigo would look to buck the sectoral trend of closing branches and reducing staff numbers in order to maintain tight control of its distribution. ‘‘As we move into an environment when the regulatory environment and the oversight on institutions and the penalties for not doing the right thing became greater and greater, owning your distribution will become more and more important,’’ Mr Hirst said.
Charter Hall Group (CHC); Dexus Property Group (DXS); GPT Group (GPT):
GPT has moved a step closer towards its development of a prime Parramatta site, with architects Fender Katsalid is chosen to design the $230-plus million office tower. The design, selected through a competition run by the local council, includes a ground-level event space and a terrace facing the Parramatta River GPT bought the site owned by the Salvation Army on the corner of Smith and Phillip streets in the heart of Parramatta in February for $31.2 million. Parramatta is at the centre of a major development push by big players including Charter Hall, Lang Walker’s Walker Corporation and Dexus. The western Sydney hub has also been singled out as a key part of the future development of Sydney under plans revealed last year by the Greater Sydney Commission.
Crown Resorts Limited (CWN):
Crown Resorts learned the hard way that the rules for foreign businesses operating in China can change on a dime. In this case the consequences came with a human as well as financial cost when 16 of its staff, including three Australians, were subjected to a horror 10-months in detention in Shanghai. The last of the remaining Crown employees jailed in China were freed over the weekend. The highest profile of these was senior Melbourne based executive Jason O’Connor who is now back with his family in Australia and trying to avoid the media limelight after his traumatic incarceration. It is unclear if he will return to work at Crown. The complexities around how local gaming regulators view charges against staff in other countries will complicate things.
JB Hi-Fi Limited (JBH):
Retailer JB Hi-Fi is aiming to grow sales and earnings by more than 20 per cent in 2018 despite stepping up investment in staff, e-commerce and technology to ‘‘future proof’’ its business ahead of Amazon’s expansion. Chief executive Richard Murray expects group sales to increase about 21 per cent to $6.8 billion in 2018, underpinned by about 6 per cent sales growth at JB Hi-Fi stores and a full year of sales from The Good Guys after last year’s $870 million acquisition. Unveiling a 36 per cent rise in underlying net profit to $208 million in 2017, the strongest growth for eight years, Mr Murray issued no profit guidance for 2018. But based on changes in JB Hi-Fi’s remuneration policies, statutory earnings before interest and tax will have to grow by between 23 per cent and 34 per cent in 2018 for senior executives to achieve short-term incentives.
Newcrest Mining Limited (NCM):
Newcrest Mining chief Sandeep Biswas says the gold miner’s decision to include a dividend ‘floor’ will help give it freedom to flex returns while providing some stability for shareholders. Newcrest, the biggest gold producer on the ASX, reported net profit for the 2017 financial year of $US308 million, down 7 per cent year-onyear largely due to $US86 million in one-off items. The miner’s underlying net profit of $US394 million was up 22 per cent thanks to better gold and copper prices but fell short of consensus forecasts of $US438 million. A number of analysts told clients the weaker than expected profit result was balanced by better free cash flow and a strong dividend.
(Source: AIMS)
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