AGL’s FY18 underlying net profit of $1.023 billion beat consensus by 3 per cent and FY18 DPS of $1.17 was a 4pc beat, according to CLSA. But AGL missed on guidance for FY19 underlying net profit of $970m-$1070m, with the $1020m essentially flat, which is 6pc below the $1089m consensus, says CLSA’s Daniel Butcher. “This is a good FY18 result, but once analysts work through the numbers the share price may be overshadowed by the miss for FY19 guidance,” he says. He also notes that AGL said “Wholesale Markets earnings to peak as electricity market prices begin to decline”, suggesting regulatory uncertainty with the COAG energy policy meeting tomorrow a potential headwind. Mr Butcher also sees a negative read through for Origin which reports on August 16, noting that consensus data indicates the market expects some substantial uplifts in earnings for Origin. “If that not all of that uplift can be attributed to APLNG and oil price, logically AGL’s signal that its profit will be flat in FY19 may have repercussions for Origin Energy Markets division earnings.”
Crown Resorts Ltd (CWN):
High rollers have returned to the James Packer-backed Crown Resorts, boosting its profit but weakness at its Perth casino continues to weigh on the company. The Australian-listed company’s annual results reported that normalised net profit after tax was up 12.7 per cent to $386.8 million, while revenue increased 4.5 per cent to $3.4bn. Its reported net profit after tax, after significant items, was down 70 per cent to $558.9 million. The reported profit in the prior corresponding period had included Crown’s share of profit from its former Macau interest, Melco Crown, plus also the proceeds of the sale of its stake in Melco Crown. In its Australian resorts, which are in Melbourne and Perth, VIP turnover increased 54.5 per cent to $51.5 billion. Main floor gaming revenue was up 1.5 per cent at $1.68bn. “Crown’s full-year results reflects a sold performance from our Melbourne operations and continued subdued trading in Perth,” John Alexander, executive chairman of Crown Resorts, said.
Innate Immunotherapeutics Ltd (IIL):
ASX-listed biotech Innate Immunotherapeutics has said it is co-operating with US authorities over the arrest of Republican Congressman and significant shareholder Chris Collins over alleged insider trading. In a statement Innate said: “it has co-operated fully with requests for information made to it by the US Securities and Exchange Commission”. “The Company and its directors/officers (excepting Mr Collins) are not under investigation,” it said, adding it considers the ongoing investigation to be a “private matter” to Mr Collins. At the same time Innate rejected suggestions that Mr Collins was a beneficiaries of any share issuance in the company on favourable terms. Mr Collins retired as a director of the biotech in early May. Shares in IIL last traded at 29.5c, down 1.5 per cent.
Mirvac Group (MGR):
Mirvac Group said its annual net profit fell by 6 per cent, as it sought to balance strong demand for offices with cooling conditions in Australian residential property. The Sydney-based company, which also owns shopping malls and develops residential communities, reported a net profit of $1.09 billion for the 12 months through June, down from $1.16 billion a year earlier. Its earnings per share were 15.6c, in line with tightened guidance provided in June and extending its record of beating the midpoint of its initial annual profit guidance each year since the 2012 fiscal year. Mirvac said it sold 3,400 lots during the fiscal year, in line with its target despite battling headwinds in the residential market. Mirvac Chief Executive Susan Lloyd-Hurwitz sounded an upbeat note on the outlook: “Our gross margins of over 25pc reflect our strategy to focus on the strong Sydney and Melbourne markets, as well as our ability to buy and sell at the right time in the property cycle,” she said. Mirvac said it expects annual earnings per share of between 16.8 Australian cents a share and 17.1 cents in the 2019 fiscal year, and a distribution of 11.6 Australian cents a share.
National Australia Bank Ltd (NAB):
The corporate regulator has accused National Australia Bank of four potentially criminal breaches of the law over a scandal in which it charged customers fees without providing any service, explosive documents the bank tried to keep from public gaze at the financial services royal commission reveal. Allegations against the bank are outlined in an Australian Securities and Investments Commission letter to NAB, dated October last year and headlined “Suspected offending by members of the NAB group”. The letter shows ASIC was “concerned” that NAB’s correspondence to customers over an incident in which they were charged so-called “plan service fees” for advice from a financial planner they did not have was misleading, deceptive and false. It accused NAB of breaching two sections of the ASIC Act, both of which can attract criminal sanction. ASIC accepted that NAB had remediated customers stung by the wrongly-charged fees. It is believed the regulator has not yet decided whether to settle the dispute with NAB, pursue civil action or go down the path of criminal prosecution.
Newcrest Mining Limited (NCM):
Gold miner Newcrest has flagged a reduction in the carrying value of some of its assets ahead of full-year results announcement. The company told the market this morning that the reduction in carrying values is expected to have a non-cash earnings impact of between $260 million and $270m. That reduction was due to a $190m after tax impact from its Telfer gold and copper mines in Western Australia, after a life of mine plan indicated lower gold recoveries and higher estimated operating and closure costs that previously forecast. The company’s gold and copper joint venture in Namosi, Fiji, is likely to have a $70m impact, after an assessment of project configurations prompted an assessment of the appropriateness to continue to carry forward previous study costs. “The outcomes of these reviews may potentially impact the reported mineral resources and ore reserves for these assets, which will be assessed in Newcrest’s annual mineral resource and ore reserve estimate process to be completed at 31 December 2018,” Newcrest said in a statement to the market.
Orora Ltd (ORA):
Packaging company Orora has lifted its annual full-year profit by 24 per cent to $212.2 million and expects earnings to increase further in 2019 subject to global economic conditions. The Melbourne-based company, spun off from Amcor, said the result came despite flat trading conditions in its Australasian and North American markets as the manufacturer improved productivity and margins from its plants. Net profit lifted by 12 per cent to $208.6 million on a 5.2 per cent lift in sales revenue to $4.24 billion. Orora shares may jump on stronger-than-expected earnings and guidance for FY19 earnings above FY18 on a constant currency basis, and costs broadly in line. Australian EBIT jumped 8.7pc to $232.2m and revenue of $4.24bln beat the $4.237bln estimate. The stock is showing a lot of positive momentum with a 36.5pc total return in the past year. Yesterday it bounced off the 50-day moving average at $3.57 and may set a new record high above $3.725 today. ORA last $3.59.
Suncorp Group Ltd (SUN):
Suncorp Group have pledged to return about $600 million to its shareholders after agreeing to the sale of its Australian life insurance business. The banking and insurance provider also said it would pay a special dividend for the second half of its financial year, supported by a strong balance sheet and in anticipation of a lift in performance during the coming year. The Brisbane-based company said it had signed a nonbinding agreement to sell its life insurance operations for about $725 million to TAL Dai-ichi Life, an arm of Japanese insurer Dai-ichi Life Group. In recent years, several of Australia’s big financial-services companies have moved to exit capital-intensive life-insurance operations, selling them to focused insurers with greater scale. Suncorp’s deal, which remains subject to certain conditions and regulatory approval in Australia and Japan, is expected to close by the end of December.