WPP Aunz Ltd (WPP):
Advertising’s digital upheaval took a heavy toll on WPP as the world’s largest ad company logged its worst performance since the financial crisis, triggering jitters among investors across the sector. WPP last night (AEDT) said net sales fell 0.9 per cent on a comparable basis last year, spooking investors who were expecting signs of recovery after the company cut its forecast three times, predicting a “broadly flat” 2017. The firm also said it is setting budgets for 2018 on the assumption of no growth in revenue and net sales. WPP shares tumbled 9 per cent, and the fallout quickly spread to rival ad giants like Publicis Groupe which fell 4 per cent. Digital disruption is leading Unilever, Procter & Gamble and other consumer-goods giants that once splurged on ad agency-led campaigns to redirect their spending. That is saddling ad firms with their slowest revenue growth in a decade and pressuring agency holding companies to revamp organisational structures that are out of step with the digital age.
Atlas Iron Limited (AGO):
Atlas Iron has struck a deal to sell 1.5 million tonnes of lithium to Sinosteel after processing ore supplied by Pilbara Minerals. It follows Atlas's agreement in December to buy up to 1.5m tonnes of the metal — as key ingredient in batteries — from Pilbara’s Pilgangoora Lithium Project. As part of the new agreement Sinosteel will advance funds to Pilbara, which owns the Pilgangoora project in Western Australia. Atlas Iron (AGO) said: “As part of the arrangement, Sinosteel will advance funds to cover prepayments due to Pilbara Minerals for direct shipping ore mine development costs.” It comes after Atlas agreed in December to purchase between 1 and 1.5 million tonnes of lithium direct shipping ore from Pilbara over a 15-month period. Atlas processes the lithium using infrastructure including its Mt Dove crushing hub and Utah Point facilities to generate an expected operating margin of between $15 and $20 per tonne, the company said. “Atlas is on track to satisfy remaining conditions precedent in coming weeks to allow first exports to commence in the June 2018 quarter,” the statement said.
Bega Cheese Ltd (BGA):
UBS has upgraded Bega Cheese to "buy" from "neutral" and lowered its target price to $7.90 a share from $8.30. The broker comes up with a valuation of $7.22 for the stock, which was trading at $6.68 on Friday. UBS argues that Bega Cheese's result was not as bad as the market initially thought and the price weakness is an attractive buying opportunity. The company delivered lower than expected 2017-18 guidance for EBITDA of $105 million to $115 million and UBS is forecasting $114 million. The stock is trading on 23 times this year's earnings and 22 times 2018-19 with "risks skewed to the upside" in a dairy market that UBS thinks will stay rational.
Woolworths Group Ltd (WOW):
The competition watchdog has taken Woolworths to the federal court accusing it of labelling its disposable picnic products as biodegradable when in fact they are not. The Australian Competition and Consumer Commission says the supermarket giant’s “W Select eco” line of bowls, plates and cutlery had been marketed as biodegradable and compostable in the three years to November 2017. However, the ACCC says, these environmental representations were “false, misleading or deceptive” and in contravention of the Australian Consumer Law. The ACCC also alleges that Woolworths (WOW) had failed to make reasonable or adequate efforts to substantiate these biodegradability claims.
QBE Insurance Group Ltd (QBE):
A Sydney-based superannuation fund has lodged resolutions against QBE Insurance Group in an attempt to force the company to disclose more information about climate risk. Local Government Super, which oversees $10 billion of assets, has tied up with Market Forces, a climate action activist group, to file an advisory resolution at QBE which, if accepted, would give shareholders greater powers to ensure their concerns, such as environmental concerns, are heard by the board. In the case of Local Government Super and Market Forces, they are seeking more information from QBE about the potential implications on the company's bottom line from climate change, the potential downside from insuring energy companies and whether there should be any underwriting restrictions in place and QBE's policy on providing directors and officers insurance to companies that are driving climate change or undermining attempts to reverse it.
Retail Food Group Limited (RFG):
Retail Food Group has swung to a heavy first-half loss as it warned it will shut up to 200 outlets. Unveiling a net loss after tax of $87.8 million for the first half, compared to a restated $32.7m net profit after tax in the first half last year, the company said unsustainable rent and declining shopping centre performance will mean between 160 and 200 stores will be closed by the end of fiscal year 2019. The owners of Gloria Jean’s, Donut King and Brumby’s Bakery said it will not pay an interim dividend. The company (RFG) paid an interim dividend of 14.75 cents per share last year. Retail Food Group booked a negative earnings before interest, tax, depreciation and amortisation of $100.8m for the six months to December 31, compared to positive earnings of $55.4m in the first half last year. Revenue grew to $195.5m, compared to $161.9m the first half last year.
LBT Innovations Limited (LBT):
Adelaide-based medical technology company LBT Innovations is in front of investors seeking an equity injection. The company is seeking to raise $7 million at 15¢ a share via PAC Partners and Hawkesbury Partners, the brokers sent terms to potential investors on Friday morning. The offer was priced at a 16.6 per cent discount to the five-day volume weighted average price, according to terms sent to potential investors, and a 25 per cent discount to its last traded price. Funds raised were to launch and develop its APAS technology and product extensions, according to the termsheet. Its APAS Independence instrument uses artificial intelligence to help with pathology procedures. The company had a $30 million market capitalisation prior to the raising. It is run by former Cochlear executive Brenton Barnes, who finished as director of Asian growth markets at the listed giant before starting at LBT Innovations in August 2016. The brokers were calling for bids by 9am on Monday. LBT shares went into a trading halt ahead of the raising.
(Source: AIMS)
Advertising’s digital upheaval took a heavy toll on WPP as the world’s largest ad company logged its worst performance since the financial crisis, triggering jitters among investors across the sector. WPP last night (AEDT) said net sales fell 0.9 per cent on a comparable basis last year, spooking investors who were expecting signs of recovery after the company cut its forecast three times, predicting a “broadly flat” 2017. The firm also said it is setting budgets for 2018 on the assumption of no growth in revenue and net sales. WPP shares tumbled 9 per cent, and the fallout quickly spread to rival ad giants like Publicis Groupe which fell 4 per cent. Digital disruption is leading Unilever, Procter & Gamble and other consumer-goods giants that once splurged on ad agency-led campaigns to redirect their spending. That is saddling ad firms with their slowest revenue growth in a decade and pressuring agency holding companies to revamp organisational structures that are out of step with the digital age.
Atlas Iron Limited (AGO):
Atlas Iron has struck a deal to sell 1.5 million tonnes of lithium to Sinosteel after processing ore supplied by Pilbara Minerals. It follows Atlas's agreement in December to buy up to 1.5m tonnes of the metal — as key ingredient in batteries — from Pilbara’s Pilgangoora Lithium Project. As part of the new agreement Sinosteel will advance funds to Pilbara, which owns the Pilgangoora project in Western Australia. Atlas Iron (AGO) said: “As part of the arrangement, Sinosteel will advance funds to cover prepayments due to Pilbara Minerals for direct shipping ore mine development costs.” It comes after Atlas agreed in December to purchase between 1 and 1.5 million tonnes of lithium direct shipping ore from Pilbara over a 15-month period. Atlas processes the lithium using infrastructure including its Mt Dove crushing hub and Utah Point facilities to generate an expected operating margin of between $15 and $20 per tonne, the company said. “Atlas is on track to satisfy remaining conditions precedent in coming weeks to allow first exports to commence in the June 2018 quarter,” the statement said.
Bega Cheese Ltd (BGA):
UBS has upgraded Bega Cheese to "buy" from "neutral" and lowered its target price to $7.90 a share from $8.30. The broker comes up with a valuation of $7.22 for the stock, which was trading at $6.68 on Friday. UBS argues that Bega Cheese's result was not as bad as the market initially thought and the price weakness is an attractive buying opportunity. The company delivered lower than expected 2017-18 guidance for EBITDA of $105 million to $115 million and UBS is forecasting $114 million. The stock is trading on 23 times this year's earnings and 22 times 2018-19 with "risks skewed to the upside" in a dairy market that UBS thinks will stay rational.
Woolworths Group Ltd (WOW):
The competition watchdog has taken Woolworths to the federal court accusing it of labelling its disposable picnic products as biodegradable when in fact they are not. The Australian Competition and Consumer Commission says the supermarket giant’s “W Select eco” line of bowls, plates and cutlery had been marketed as biodegradable and compostable in the three years to November 2017. However, the ACCC says, these environmental representations were “false, misleading or deceptive” and in contravention of the Australian Consumer Law. The ACCC also alleges that Woolworths (WOW) had failed to make reasonable or adequate efforts to substantiate these biodegradability claims.
QBE Insurance Group Ltd (QBE):
A Sydney-based superannuation fund has lodged resolutions against QBE Insurance Group in an attempt to force the company to disclose more information about climate risk. Local Government Super, which oversees $10 billion of assets, has tied up with Market Forces, a climate action activist group, to file an advisory resolution at QBE which, if accepted, would give shareholders greater powers to ensure their concerns, such as environmental concerns, are heard by the board. In the case of Local Government Super and Market Forces, they are seeking more information from QBE about the potential implications on the company's bottom line from climate change, the potential downside from insuring energy companies and whether there should be any underwriting restrictions in place and QBE's policy on providing directors and officers insurance to companies that are driving climate change or undermining attempts to reverse it.
Retail Food Group Limited (RFG):
Retail Food Group has swung to a heavy first-half loss as it warned it will shut up to 200 outlets. Unveiling a net loss after tax of $87.8 million for the first half, compared to a restated $32.7m net profit after tax in the first half last year, the company said unsustainable rent and declining shopping centre performance will mean between 160 and 200 stores will be closed by the end of fiscal year 2019. The owners of Gloria Jean’s, Donut King and Brumby’s Bakery said it will not pay an interim dividend. The company (RFG) paid an interim dividend of 14.75 cents per share last year. Retail Food Group booked a negative earnings before interest, tax, depreciation and amortisation of $100.8m for the six months to December 31, compared to positive earnings of $55.4m in the first half last year. Revenue grew to $195.5m, compared to $161.9m the first half last year.
LBT Innovations Limited (LBT):
Adelaide-based medical technology company LBT Innovations is in front of investors seeking an equity injection. The company is seeking to raise $7 million at 15¢ a share via PAC Partners and Hawkesbury Partners, the brokers sent terms to potential investors on Friday morning. The offer was priced at a 16.6 per cent discount to the five-day volume weighted average price, according to terms sent to potential investors, and a 25 per cent discount to its last traded price. Funds raised were to launch and develop its APAS technology and product extensions, according to the termsheet. Its APAS Independence instrument uses artificial intelligence to help with pathology procedures. The company had a $30 million market capitalisation prior to the raising. It is run by former Cochlear executive Brenton Barnes, who finished as director of Asian growth markets at the listed giant before starting at LBT Innovations in August 2016. The brokers were calling for bids by 9am on Monday. LBT shares went into a trading halt ahead of the raising.
(Source: AIMS)
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