Commonwealth Bank of Australia (CBA):
New CEOs at Commonwealth Banks may struggle to meet expectations in their first outing at this profit reporting season, according to Citi’s Brendan Sproules. In a note, he said the two banks could scuttle the recent rally in banking stocks. “A consensus miss for sector bellwether, CBA in particular, may put at risk the recent rally... On a continuing operations basis, Citi remains about 4.5 per cent below consensus expectations,” he said. According to Citi, CBA has more simplification to come, and was looking more like its peers to address its deteriorating revenue outlook. “With CBA looking increasingly more like peers, there leaves little justification for its current valuation premium, in our view,” Mr Sproules said. CBA last traded down 1.12pc at $73.95.
AMP Limited (AMP):
The departure from Janus Henderson of its co-CEO Andrew Formica will increase speculation he is line to be the next boss of struggling AMP. The global funds manager says former Janus boss Dick Weil will be its sole chief executive, ditching the dual UK-US leadership set-up in place since a merger in 2017. Formica, who was Henderson’s sole CEO for a decade, has reportedly recently remarried, sparking suggestions he may want to wind back his job commitments. He will receive a $US12 million payout from Janus Henderson. The news came as new AMP chairman David Murray used a newspaper interview to blast ASX corporate governance rules and stress he would not be adopting the rules in his new job.
Nine Entertainment Co. Holdings Limited (NEC):
Nine Entertainment chief executive Hugh Marks believes the scale of quality content in a merger with Fairfax Media will be a key advantage to give advertisers more options and audiences across the proposed combined business. Speaking on the ThinkTV chief executive panel in Sydney on Tuesday night, Mr Marks once again reassured people Nine would totally back the editorial independence of Fairfax's mastheads, including The Australian Financial Review. Putting Nine and Fairfax together will bring together free to air television, newspapers, digital news websites, radio, full ownership of streaming service Stan, a competitor to Netflix, and a 60 per cent stake in real estate classifieds business Domain.
P2P Transport Ltd (P2P):
Shares in ride share and taxi fleet management company P2P Transport have fallen sharply after the company warned of a drop in earnings due to higher costs and lower revenue. P2P says earnings for 2017/18 are now expected to be between $10.1 million and $11.1 million, down from its prospectus forecast of $12.7 million. Shares in P2P, which listed on the ASX in December with a $1.32 issue price, were down 20 cents, or 18 per cent, to 90c at 11.20am.
Rio Tinto Limited (RIO):
Rio Tinto said it will spend $US146 million ($196m) on initial work for its planned Koodaideri iron ore mine in Western Australia ahead of a final decision on the project later this year. The mining company (RIO) said the cash would be used for detailed engineering work, development of a rail construction camp and the first stage of a workers’ camp for the mine. Construction on the project, if approved by directors, will start in 2019. The mine would be operational in 2021.
Westpac Bank (WBC):
Westpac Bank, the nation's second largest lender, is responding to bruising revelations at the banking royal commission about its lending controls with a new tightening of credit policy. It also follows allegations at the commission from a distraught customer about one of the bank's commission-earning advisers recommending unsuitable and expensive financial products. The bank, which attacked the commission for publishing a damning confidential PwC report into its credit controls, is targeting serviceability issues identified by the report as inadequate. It is the fourth round of tightening in the past six months aimed at improving borrowers' capacity to service their loans by detailed examination of total expenses and all forms of income used to service repayments. There were two rounds of policy tightening in April and another in June.
Xero Limited (XRO):
Accounting software Xero has today announced the acquisition of Canadian tech Hubdoc, a tool to help accountants and bookkeepers to streamline admin tasks. Under the deal, Xero will fork out US$60 million ($80.8 million) in cash and equity initially and then a further US$10 million in equity after 18 months. It said transaction and integration costs, together with continuing investment in Hubdoc’s growth, is expected to reduce Xero’s EBITDA in FY19 by approximately NZ$7 million. “This acquisition accelerates our ability to streamline the collection and classification of the data small businesses and their advisors need in order to focus on driving better business outcomes,” chief Steve Vamos told the market. XRO last traded at $42.80.
(Source: AIMS)
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