Bendigo and Adelaide Bank plans to launch a new digital bank in an attempt to expand its reach to students and millennials. In an interview with The Australian, new CEO Marnie Baker said the fully digital bank was one of several initiatives it would roll out to change perceptions about its operations. She says a recent survey showed many people thought of the bank as a second-tier institution unable to meet all customer needs. “This is obviously wrong, and we have to change people’s perceptions,” she says. Conversely, the bank rates highly in trust compared to the majors, so Baker argues the negative reputation flowing from the banking royal commission offers an opportunity for Bendigo. “Traditionally banks assessed the value of a customer, but now while that [the royal commission] continues the customers are assessing the value of the bank,” she says. While the bank’s rural loan book has drawn the ire of the commission, Baker notes it was “not questioning us to the extent it has others”. The digital bank is one of the innovations Baker will roll out -shortly. But Bendigo is already a pioneer in many initiatives as part of what Baker sees as a commitment to put customers first.
Elders Ltd (ELD):
Elders is believed to be poised to embark on an equity raising worth about $300 million as early as this week to fund the acquisition of the PGG Wrightson business in New Zealand. As revealed by this column, Elders has been the frontrunner to buy what is considered a similar business in New Zealand that would offer synergies for the Australian-listed operation. Macquarie Capital is working on the acquisitions and the equity raising, which is likely to be a $300m rights issue. The thinking is that Elders could outlay about $600m for PGG Wrightson and fund just under half the purchase with debt and the remainder with equity. The raising could see shares issued at a discount of between 15 per cent and 20 per cent to its last traded share price. On Friday, Elders issued an earnings update to the market, signalling that its annual profit would be flat due to drought across large parts of Australia. That update was widely considered to be somewhat of a cleansing notice to the market before the raise.
Harvey Norman (HVN):
The dairy venture part-owned by Harvey Norman has been put up for sale, three years after the furniture and electrical retailer bought into it on the recommendation of founder and chairman Gerry Harvey. The real estate agency running the intended sale, Elders Real Estate, said on Monday it is calling for expressions of interest in Coomboona Dairies in northern Victoria's Goulburn Valley. Harvey Norman, controlled by billionaire retail veteran Mr Harvey, hired receivers for the dairy farm in March, a month after saying writedowns on the farm had contributed to a decline in first-half profit. Harvey Norman's first-half profit dropped 19 per cent to $207.7 million, which included a $20.7 million impairment on a dairy investment that attracted the ire of shareholders and confusion from analysts. The disappointing first-half result triggered a major share sell-off on February 28, wiping $635 million from the retailer's market value.
Insurance Australia Group Ltd (IAG):
Insurance Australia Group has confirmed it’s most senior legal officer will leave the company after taking “extended leave” since earlier this year. IAG (IAG), in a short statement this morning, said the group general counsel Chris Bertuch would stand formally down from the company on September 30. Mr Bertuch’s previously unexplained absence from the group had been the subject of reports ahead of the banking royal commission’s hearings into the insurance industry. On June 1, IAG released a statement to the ASX that was signed by Rebecca Farrell who was “acting” in Mr Bertuch’s role. IAG chief executive Peter Harmer said Mr Bertuch, who joined IAG as Group General Counsel and Company Secretary in 2011, made the decision while on extended leave from the company. The company said Ms Farrell will continue in the role of acting group general counsel and company secretary while an internal and external search takes place for Mr Bertuch’s replacement.
Santos Ltd (STO):
A spat over gas prices has erupted between the Andrew Forrest-backed consortium planning to build Australia’s first import facility and Santos as concerns grow that the domestic producer may be forced to shelve its controversial Narrabri project in gas-starved NSW. Santos’s longdelayed Narrabri development could be axed if Mr Forrest’s proposed liquefied natural gas import terminal proceeds, under an analysis plotted by Macquarie. The state government could treat the billionaire’s LNG scheme as a new source of gas supply, leading it to reject Narrabri and dealing a potentially fatal blow to a project already hobbled by community opposition, delayed approvals and reserve downgrades. Even if the local Narrabri project does proceed, the Australian Industrial Energy consortium claims it will develop gas more cheaply from its own import plant. Santos chief executive Kevin Gallagher rejected Macquarie’s theory the NSW government would be tempted to reject the Narrabri project, which has been slated to supply half the state’s gas needs. The Santos chief also vowed Narrabri would be able to beat the price of imported gas, which AIE has previously pitched at a fixed rate of $10 per gigajoule into -Sydney.
Sigma Healthcare Ltd (SIG):
The drug distributor has put a brave face on the loss of a Chemist Warehouse supply contract that accounts for about 40 per cent of its revenue, arguing that there wasn’t much point refreshing the deal if it wasn’t going to make a decent margin out of it. Unconvinced, investors marked down Sigma stock by a symmetrical 40 per cent on the news, with the contract loss overshadowing other issues in a sector that is heavily contested by a handful of full-line wholesale distributors. Sigma said it failed to come to amenable terms with the fast growing Chemist Warehouse and its sister company MyChemist, with the contract ultimately won by the New Zealand-based, dual-listed Ebos Group from June next year. Broker Morgans bluntly dubbed the switch as a “major contract for Ebos and a major loss for Sigma”. Sigma CEO Mark Hooper points out the non-contract also frees up $300 million of working capital and ensures a “clearer future”. Given the company is seen as undergeared, that enhances the prospect of some kind of acquisition. Sigma continues to supply the chemist “banner groups” Amcal, Guardian and PharmaSave (it also distributes to hospitals).
Stockland Corporation Ltd (SGP):
Stockland said annual funds from operations would be at the top end of its target range, easing concerns among investors about the impact of falling house prices on Australian residential property developers. Stockland (SGP) said it expected funds from operations per security to rise by around 6.5 per cent in the year through June, compared to prior guidance for between 5.0 per cent and 6.5 per cent. “This reflects continued growth in Stockland’s market-leading residential business, with approximately 6,400 settlements completed in the year to June 2018,” management said. Stockland didn’t change its second-half distribution, reaffirming a forecast for 13.5 cents per security.
Village Roadshow Ltd (VRL):
Village Roadshow has launched a $51 million equity raising to pay down debt. The 5 for 26 accelerated non-renounceable pro rata entitlement offer has been launched for the company through JPMorgan. Shares (VRL) are being sold at $1.65 each which represents a 24.3 per cent discount to the group’s share price close on Friday of $2.18. On Monday, shares were placed in a trading halt. The Entitlement Offer is supported by shareholders of Village Roadshow Corporation, which owns about 40 per cent of the listed Village Roadshow. Village Roadshow Corporation is controlled by the Kirby family and Graham Burke. The listed Village Roadshow is believed to be working hard to maintain dividend payments to investors and to reassure lenders that its debt pile of about $400m will be refinanced by the December 2019 deadline. Village Roadshow has also announced bosses Graham Burke and Robert Kirby will take a 25 per cent pay cut as the company launches a $51 million equity raising to pay down debt.The company’s director fees will also be reduced by 25 per cent, the company told the market this morning.