Commonwealth Bank of Australia(CBA):
Commonwealth Bank boss Ian Narev has apologised to shareholders and shouldered the blame for the lender's alleged breaches of anti-money laundering laws. Mr Narev, who has already announced he will step down following the allegations, said on Friday the bank was focused on "putting things right" after failing to meet the appropriate standards and letting down stakeholders. The proposed action launched by Austrac alleges CBA failed to provide on-time reports for 53,506 cash transactions of $10,000 or more through its Intelligent Deposit Machines between November 2012 and September 2015.
Commonwealth Bank has called on the government to carefully consider design issues associated with the proposed introduction of an open banking regime after significant cost blowouts in a similar exercise in Britain. In its submission to the Treasury’s review of open banking, CBA says the cost of implementing open banking and associated payments reforms for some British banks were a high as £300 million ($505m), while the average figure was £150m-£200m. The high figures, according to CBA, were “understandable”, because of the technical complexity of the British model. Practical design choices could be made to reduce the execution risk and potential financial burden on the industry. CBA recommends a “technology-neutral” approach to regulation of open banking.
Challenger Limited (CGF):
One of Australia’s largest life insurance groups, Challenger, has dismissed concerns about the quality of its $10.4 billion investment portfolio that is helping underpin the company’s profitability and underwrite its annuity policies. The country’s largest provider of retirement annuities, a form of longevity insurance that helps to provide savers with income in retirement beyond average life expectancy, has been bulking up on riskier financial investments in recent years, including sub-investment grade bonds, also known as junk bonds. APRA have been incentivising the sector to take on riskier asset-backed securities such as mortgage and car loans rather than safer corporate credit. Challenger has disputed the concerns raised by analysts, arguing it is comfortable with the level of investment-grade assets it owns and its 18 per cent return-onequity target.
Simonds Group Limited (SIO):
Home builder Simonds Group’s chief executive Matthew Chun has stepped down from the top job by mutual agreement, effective immediately. The move follows a board restructure last month that saw the group’s founding family and allies take most board spots and was seen as possibly paving the way for privatisation. Simonds Group (SIO) shares dropped nearly 12 per cent to 30 cents in morning trade and are down more than 80 per cent since listing in late 2014. Mr Chun is still employed as the group searches for a new boss but he will not be based in the Simonds offices. Rhett Simonds, a non-executive director of the group and grandson of founder Gary Simonds, has been appointed interim chief executive effective immediately.
Qantas Airways Limited (QAN):
Qantas shares have hit a new high after US investment bank Goldman Sachs upgraded its rating on the airline. After four years of “negligible growth”, Goldman analysts tip a resurrection in domestic travel volume growth to 3 per cent on tourist flow, increased demand and an easing mining contraction. Qantas’s international volume outlook is that of 6 per cent growth in the same period backed by China, US and Asia transit traffic. Goldman believes the strong share price performance of the airlines earlier this year was representative of global peer rerating rather than an improvement in the underlying outlook or financial. Shares in Qantas have soared more than 80 per cent in 2017, as the company’s financial performance continues to improve under the restructuring strategy of chief executive Alan Joyce.
Woolworths Limited (WOW):
The Kaufland supermarket and general merchandise chain operated by the world's fourth largest retailer, Germany's Schwarz Group, is stepping up its Australian expansion plans after acquiring a large site in inner Adelaide. It is the first large property purchase in Australia by the group and marks a serious step forward for Kaufland, which has spent the past year or so scouring Australia for potential sites ahead of a launch. It is following in the footsteps of German rival Aldi which has built a network of almost 500 stores in Australia since opening up in 2001. Aldi has been a major thorn in the side of dominant supermarket retail chains Woolworths and Coles, and the IGA network, in the Australian supermarket sector. Aldi has made a serious dent in profit margins of the other three players with a predominantly private label offering and now has a national market share which Morgan Stanley estimates at close to 8 per cent.
QBE Insurance Group Ltd (QBE):
Brisbane-based fund manager DNR Capital is hanging onto its stock in weather-beaten insurer QBE, saying disasters present good buying opportunities and tips premium hikes are on the horizon. DNR capital told investors that despite QBE's "disappointing" share price performance it is "reluctant to sell into the current weakness". Morgan Stanley analyst Daniel Toohey said he was more bullish on QBE, saying while it expects catastrophe premiums to rise 10 per cent, the ASX-listed global insurer is ahead of the pack because it has already locked in most of its 2018 reinsurance program, including the $US900 million reinsurance aggregate. "With greater clarity on full-year 2017 estimated earnings, and the market not pricing in full-year 2018 estimated upside from premium hikes, in our view now is the time to buy," he said. DNR Capital said it retained a modest 2.6 per cent stake in QBE shares after the insurer's poor result in August.
Technology One Limited (TNE):
ASX-listed cloud software company TechnologyOne has been one of the most consistent strong performers on the ASX in the last five years. The company has gone from trading at around $1.30 to around $5 in only five years, but in the last six months it's been in a period of decline and last week it took a particularly unusual hit. Investors pushed the stock down 10.3 per cent in one day, after the company, which provides governments and universities the software they need to run everything from enterprise resource planning to performance management, issued a profit downgrade. TechnologyOne altered its full-year profit growth outlook to between 7 per cent and 9 per cent, down from 10 per cent to 15 per cent. The reduction was driven by a fall in profits from its consulting division. The company had expected a stronger second half sales pipeline, but newly appointed chief executive Edward Chung said a number of significant deals, for which contracts had been negotiated, did not close by year end. Excluding significant events, underlying profit growth was forecast at 20 per cent. Morningstar senior technology equities analyst and portfolio manager Gareth James told The Australian Financial Review investors had been too focused on the statutory profit growth reduction to realise there had actually been a lot of positive news in the company's ASX release.
Yellow Brick Road Holdings Ltd (YBR):
Mark Bouris-led Yellow Brick Road Holdings has attracted the attention of an offshore-based suitor. Street Talk can reveal the interested party has been approaching local stockbroking firms and potential funders about a tilt at the mortgage broking and financial advice group. Preparations are in the early stages and sources said the suitor had not yet locked down funding or made an approach to Yellow Brick Road's board. Local stockbroking firms, including Blue Ocean Equities, and private equity giant Apollo Global Management are among those approached to get involved in a potential move on Yellow Brick Road. Industry participants pointed to financial services group Squirrel as a potential acquirer of Yellow Brick Road. But it's not an easy proposition. An offer for the company, which has a market capitalisation of about $44 million, would have to be compelling as Macquarie Group, Nine Entertainment and Bouris all hold large stakes and may not be sellers.
(Source: AIMS)
Commonwealth Bank boss Ian Narev has apologised to shareholders and shouldered the blame for the lender's alleged breaches of anti-money laundering laws. Mr Narev, who has already announced he will step down following the allegations, said on Friday the bank was focused on "putting things right" after failing to meet the appropriate standards and letting down stakeholders. The proposed action launched by Austrac alleges CBA failed to provide on-time reports for 53,506 cash transactions of $10,000 or more through its Intelligent Deposit Machines between November 2012 and September 2015.
Commonwealth Bank has called on the government to carefully consider design issues associated with the proposed introduction of an open banking regime after significant cost blowouts in a similar exercise in Britain. In its submission to the Treasury’s review of open banking, CBA says the cost of implementing open banking and associated payments reforms for some British banks were a high as £300 million ($505m), while the average figure was £150m-£200m. The high figures, according to CBA, were “understandable”, because of the technical complexity of the British model. Practical design choices could be made to reduce the execution risk and potential financial burden on the industry. CBA recommends a “technology-neutral” approach to regulation of open banking.
Challenger Limited (CGF):
One of Australia’s largest life insurance groups, Challenger, has dismissed concerns about the quality of its $10.4 billion investment portfolio that is helping underpin the company’s profitability and underwrite its annuity policies. The country’s largest provider of retirement annuities, a form of longevity insurance that helps to provide savers with income in retirement beyond average life expectancy, has been bulking up on riskier financial investments in recent years, including sub-investment grade bonds, also known as junk bonds. APRA have been incentivising the sector to take on riskier asset-backed securities such as mortgage and car loans rather than safer corporate credit. Challenger has disputed the concerns raised by analysts, arguing it is comfortable with the level of investment-grade assets it owns and its 18 per cent return-onequity target.
Simonds Group Limited (SIO):
Home builder Simonds Group’s chief executive Matthew Chun has stepped down from the top job by mutual agreement, effective immediately. The move follows a board restructure last month that saw the group’s founding family and allies take most board spots and was seen as possibly paving the way for privatisation. Simonds Group (SIO) shares dropped nearly 12 per cent to 30 cents in morning trade and are down more than 80 per cent since listing in late 2014. Mr Chun is still employed as the group searches for a new boss but he will not be based in the Simonds offices. Rhett Simonds, a non-executive director of the group and grandson of founder Gary Simonds, has been appointed interim chief executive effective immediately.
Qantas Airways Limited (QAN):
Qantas shares have hit a new high after US investment bank Goldman Sachs upgraded its rating on the airline. After four years of “negligible growth”, Goldman analysts tip a resurrection in domestic travel volume growth to 3 per cent on tourist flow, increased demand and an easing mining contraction. Qantas’s international volume outlook is that of 6 per cent growth in the same period backed by China, US and Asia transit traffic. Goldman believes the strong share price performance of the airlines earlier this year was representative of global peer rerating rather than an improvement in the underlying outlook or financial. Shares in Qantas have soared more than 80 per cent in 2017, as the company’s financial performance continues to improve under the restructuring strategy of chief executive Alan Joyce.
Woolworths Limited (WOW):
The Kaufland supermarket and general merchandise chain operated by the world's fourth largest retailer, Germany's Schwarz Group, is stepping up its Australian expansion plans after acquiring a large site in inner Adelaide. It is the first large property purchase in Australia by the group and marks a serious step forward for Kaufland, which has spent the past year or so scouring Australia for potential sites ahead of a launch. It is following in the footsteps of German rival Aldi which has built a network of almost 500 stores in Australia since opening up in 2001. Aldi has been a major thorn in the side of dominant supermarket retail chains Woolworths and Coles, and the IGA network, in the Australian supermarket sector. Aldi has made a serious dent in profit margins of the other three players with a predominantly private label offering and now has a national market share which Morgan Stanley estimates at close to 8 per cent.
QBE Insurance Group Ltd (QBE):
Brisbane-based fund manager DNR Capital is hanging onto its stock in weather-beaten insurer QBE, saying disasters present good buying opportunities and tips premium hikes are on the horizon. DNR capital told investors that despite QBE's "disappointing" share price performance it is "reluctant to sell into the current weakness". Morgan Stanley analyst Daniel Toohey said he was more bullish on QBE, saying while it expects catastrophe premiums to rise 10 per cent, the ASX-listed global insurer is ahead of the pack because it has already locked in most of its 2018 reinsurance program, including the $US900 million reinsurance aggregate. "With greater clarity on full-year 2017 estimated earnings, and the market not pricing in full-year 2018 estimated upside from premium hikes, in our view now is the time to buy," he said. DNR Capital said it retained a modest 2.6 per cent stake in QBE shares after the insurer's poor result in August.
Technology One Limited (TNE):
ASX-listed cloud software company TechnologyOne has been one of the most consistent strong performers on the ASX in the last five years. The company has gone from trading at around $1.30 to around $5 in only five years, but in the last six months it's been in a period of decline and last week it took a particularly unusual hit. Investors pushed the stock down 10.3 per cent in one day, after the company, which provides governments and universities the software they need to run everything from enterprise resource planning to performance management, issued a profit downgrade. TechnologyOne altered its full-year profit growth outlook to between 7 per cent and 9 per cent, down from 10 per cent to 15 per cent. The reduction was driven by a fall in profits from its consulting division. The company had expected a stronger second half sales pipeline, but newly appointed chief executive Edward Chung said a number of significant deals, for which contracts had been negotiated, did not close by year end. Excluding significant events, underlying profit growth was forecast at 20 per cent. Morningstar senior technology equities analyst and portfolio manager Gareth James told The Australian Financial Review investors had been too focused on the statutory profit growth reduction to realise there had actually been a lot of positive news in the company's ASX release.
Yellow Brick Road Holdings Ltd (YBR):
Mark Bouris-led Yellow Brick Road Holdings has attracted the attention of an offshore-based suitor. Street Talk can reveal the interested party has been approaching local stockbroking firms and potential funders about a tilt at the mortgage broking and financial advice group. Preparations are in the early stages and sources said the suitor had not yet locked down funding or made an approach to Yellow Brick Road's board. Local stockbroking firms, including Blue Ocean Equities, and private equity giant Apollo Global Management are among those approached to get involved in a potential move on Yellow Brick Road. Industry participants pointed to financial services group Squirrel as a potential acquirer of Yellow Brick Road. But it's not an easy proposition. An offer for the company, which has a market capitalisation of about $44 million, would have to be compelling as Macquarie Group, Nine Entertainment and Bouris all hold large stakes and may not be sellers.
(Source: AIMS)
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