AMP Ltd (AMP) & Macquarie Group Ltd (MQG):
Macquarie Group has a potential $7.3 billion iron in the local merger and acquisition fire, and is said to be crunching the numbers on a tilt at beleaguered AMP. Sources have told The Australian’s DataRoom that Macquarie had in recent months dropped away from the sell-side role — alongside UBS — for AMP’s multi-tiered life insurance sale and was weighing up an offer for the wealth group. Incoming Macquarie chief Shemara Wikramanayake is said to have heavy involvement in assessing the investment logic as AMP shares hover near record lows, and the firm figures out whether to target infrastructure arm AMP Capital or make a whole-of-company bid.
BHP Billiton Ltd (BHP):
BHP has today announced a US$10.4 billion ($14.7b) shareholder return program, through the combination of an off-market buyback and a special dividend. The miner said the program would commence immediately, starting with the buy back of $7.3 million of BHP shares and followed by a special dividend to to be payable in January 2019. Shareholder returns come from the proceeds of BHP’s sale of its US onshore gas assets. “Returning this US$10.4 billion will bring the total cash returned to shareholders to US$21 billion over the last two years,” chief Andrew Mackenzie said.
Centuria Capital Ltd (CNI):
Centuria Capital is holding a big bash at Carriageworks in Sydney tonight and there’s speculation it may include a big announcement. Chief executive John McBain was keen to hose down talk of a big announcement last night, saying there’s no big news. Apparently, there have been some suggestions that talks have been progressing between ESR and Centuria. Already, ESR looks set to buy Centuria’s rival Propertylink after launching a $700 million bid for the business that was backed by the board. The thinking was always that it planned to mop up both Propertylink and one of Centuria’s funds. It bought a 14 per cent strategic stake in Centuria Capital last year. Centuria recently bolstered its defences with a $650m acquisition of the Hines Global REIT after its industrial fund received a takeover approach by Propertylink, which in turn was bid for by ESR. Centuria tried to call an extraordinary general meeting to oust Propertylink’s board, and the Propertylink board urged shareholders to vote against the resolutions. Shares in Centuria Capital closed at $1.31 last night, and its market value sits at $461m, so an acquisition would require ESR to outlay at least $500m. Its Centuria Industrial Fund is currently worth $682m.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia's $4.1 billion sale of its funds management business paves the way for a special dividend to shareholders as early as next financial year. That's the view of Macquarie equities research analysts on Thursday morning, who reckon CBA could have about $3 billion to return which would mean about a $1.70 a share fully franked special dividend. "We estimate that CBA's capital position should increase by ~$3.4bn as a result of this divestment (after taking into account tax and impacts of separation costs)," Macquarie told clients on Thursday morning. "We note that CBA indicated that its expected capital benefit should be ~$2.9bn (which we were not able to reconcile). "While some of its capital surplus may be used to invest and better capitalise NewCo (remaining businesses earmarked for demerger), we believe CBA should be well placed to do capital management initiatives in FY20."
Corporate Travel Management Ltd (CTD) & Propertylink Group (PLG):
Corporate Travel Management has rebounded after yesterday’s horror session - the stock up 7.6 per cent in morning trade but still far from paring its 27pc losses yesterday. Addressing shareholders at its AGM yesterday, chairman Tony Bellas defended his business, saying it had far lower costs than its rivals with bricks and mortar office networks. He told the market it “acknowledged” two issues in the VGI Partners report - claims for patents that don’t exist and offices listed on its website that it does not occupy. And responding to a claim by VGI that cash balances were overstated because the amount of interest income was too low to be plausible, Corporate Travel said it was true its cash balances were lower than those of companies to which the hedge fund compared it, but this was because those companies mostly sold travel to holidaymakers rather than corporate clients.
National Australia Bank Ltd (NAB):
National Australia Bank has reported a 14 per cent drop in annual profit to $5.7 billion, weighed on by lower earnings in its consumer and wealth unit as home loan margins were crimped. The cash profit represents the 12 months ended September 30 and compares to $6.6 billion in the prior corresponding period, the Melbourne-based lender said in an ASX statement on Thursday. Excluding restructuring and customer remediation charges the annual result printed 2 per cent lower at $6.49 billion. “We are operating in a challenging environment and remain alert to risks,” NAB chief executive Andrew Thorburn said in the statement. He noted though that the economic backdrop remained favourable. “Increasing potential also exists for a pick-up in mining investment.” Mr Thorburn also said NAB had a “clear path” to achieve the prudential regulator’s “unquestionably strong” 10.5 per cent target on core capital.
Wesfarmers Ltd (WES):
Investment bankers are pitching so many targets to Wesfarmers it now has a ticketing system like its own Coles deli, according to dubious sources. But seriously, what are they going to do with the $16 billion odd from the Coles spin-off when it’s completed later this month? UBS analyst Ben Gilbert has noted that Wesfarmers will be much more cyclical with a large exposure to housing - via Bunnings - and consumer discretionary spending - via Kmart and Target. Mr Gilbert said last month that the risk of moderating consumer spending and housing over 2019 could drive a 10-20pc “derate” of WES shares. So could Wesfarmers have a look at the bombed-out aged care sector as a countercyclical play? It certainly is a long-term growth and potentially high-yield industry. While the pending Aged Care Royal Commission could do more damage to listed aged care providers, Wesfarmers could score some bargains without taking enough exposure to lower their overall valuation. Of course Wesfarmers could buy the whole sector for less than $2 bn, so it wouldn’t solve the problem of what to do with all the proceeds of Coles, but that doesn’t preclude some smaller deals that may include aged care.
Woolworths Group Ltd (WOW):
Woolworths has booked a 1.9 per cent lift in first quarter sales for its Australian Food business to $9.9bn, reflecting a challenging start as customers adjusted to the removal of single-use plastic bags. “While it was a more challenging quarter for sales, customer and brand metrics were strong across the Group, especially in Australian Food reflecting the underlying health of our business,” chief executive Brad Banducci said. It comes after Mr Banducci said in August that negative reaction from shoppers since July, when single-use plastic bags were removed, had taken Woolworths by surprise. He said Woolworths’ sales performance had suffered an unexpected hit, partly blamed on the problematic transition to reusable bags. But today Woolworths said that sales momentum had improved in September through to October, and that the majority of Woolworths’ customers responded well to the company’s commitment to the environment.
(Source: AIMS)
Macquarie Group has a potential $7.3 billion iron in the local merger and acquisition fire, and is said to be crunching the numbers on a tilt at beleaguered AMP. Sources have told The Australian’s DataRoom that Macquarie had in recent months dropped away from the sell-side role — alongside UBS — for AMP’s multi-tiered life insurance sale and was weighing up an offer for the wealth group. Incoming Macquarie chief Shemara Wikramanayake is said to have heavy involvement in assessing the investment logic as AMP shares hover near record lows, and the firm figures out whether to target infrastructure arm AMP Capital or make a whole-of-company bid.
BHP Billiton Ltd (BHP):
BHP has today announced a US$10.4 billion ($14.7b) shareholder return program, through the combination of an off-market buyback and a special dividend. The miner said the program would commence immediately, starting with the buy back of $7.3 million of BHP shares and followed by a special dividend to to be payable in January 2019. Shareholder returns come from the proceeds of BHP’s sale of its US onshore gas assets. “Returning this US$10.4 billion will bring the total cash returned to shareholders to US$21 billion over the last two years,” chief Andrew Mackenzie said.
Centuria Capital Ltd (CNI):
Centuria Capital is holding a big bash at Carriageworks in Sydney tonight and there’s speculation it may include a big announcement. Chief executive John McBain was keen to hose down talk of a big announcement last night, saying there’s no big news. Apparently, there have been some suggestions that talks have been progressing between ESR and Centuria. Already, ESR looks set to buy Centuria’s rival Propertylink after launching a $700 million bid for the business that was backed by the board. The thinking was always that it planned to mop up both Propertylink and one of Centuria’s funds. It bought a 14 per cent strategic stake in Centuria Capital last year. Centuria recently bolstered its defences with a $650m acquisition of the Hines Global REIT after its industrial fund received a takeover approach by Propertylink, which in turn was bid for by ESR. Centuria tried to call an extraordinary general meeting to oust Propertylink’s board, and the Propertylink board urged shareholders to vote against the resolutions. Shares in Centuria Capital closed at $1.31 last night, and its market value sits at $461m, so an acquisition would require ESR to outlay at least $500m. Its Centuria Industrial Fund is currently worth $682m.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia's $4.1 billion sale of its funds management business paves the way for a special dividend to shareholders as early as next financial year. That's the view of Macquarie equities research analysts on Thursday morning, who reckon CBA could have about $3 billion to return which would mean about a $1.70 a share fully franked special dividend. "We estimate that CBA's capital position should increase by ~$3.4bn as a result of this divestment (after taking into account tax and impacts of separation costs)," Macquarie told clients on Thursday morning. "We note that CBA indicated that its expected capital benefit should be ~$2.9bn (which we were not able to reconcile). "While some of its capital surplus may be used to invest and better capitalise NewCo (remaining businesses earmarked for demerger), we believe CBA should be well placed to do capital management initiatives in FY20."
Corporate Travel Management Ltd (CTD) & Propertylink Group (PLG):
Corporate Travel Management has rebounded after yesterday’s horror session - the stock up 7.6 per cent in morning trade but still far from paring its 27pc losses yesterday. Addressing shareholders at its AGM yesterday, chairman Tony Bellas defended his business, saying it had far lower costs than its rivals with bricks and mortar office networks. He told the market it “acknowledged” two issues in the VGI Partners report - claims for patents that don’t exist and offices listed on its website that it does not occupy. And responding to a claim by VGI that cash balances were overstated because the amount of interest income was too low to be plausible, Corporate Travel said it was true its cash balances were lower than those of companies to which the hedge fund compared it, but this was because those companies mostly sold travel to holidaymakers rather than corporate clients.
National Australia Bank Ltd (NAB):
National Australia Bank has reported a 14 per cent drop in annual profit to $5.7 billion, weighed on by lower earnings in its consumer and wealth unit as home loan margins were crimped. The cash profit represents the 12 months ended September 30 and compares to $6.6 billion in the prior corresponding period, the Melbourne-based lender said in an ASX statement on Thursday. Excluding restructuring and customer remediation charges the annual result printed 2 per cent lower at $6.49 billion. “We are operating in a challenging environment and remain alert to risks,” NAB chief executive Andrew Thorburn said in the statement. He noted though that the economic backdrop remained favourable. “Increasing potential also exists for a pick-up in mining investment.” Mr Thorburn also said NAB had a “clear path” to achieve the prudential regulator’s “unquestionably strong” 10.5 per cent target on core capital.
Wesfarmers Ltd (WES):
Investment bankers are pitching so many targets to Wesfarmers it now has a ticketing system like its own Coles deli, according to dubious sources. But seriously, what are they going to do with the $16 billion odd from the Coles spin-off when it’s completed later this month? UBS analyst Ben Gilbert has noted that Wesfarmers will be much more cyclical with a large exposure to housing - via Bunnings - and consumer discretionary spending - via Kmart and Target. Mr Gilbert said last month that the risk of moderating consumer spending and housing over 2019 could drive a 10-20pc “derate” of WES shares. So could Wesfarmers have a look at the bombed-out aged care sector as a countercyclical play? It certainly is a long-term growth and potentially high-yield industry. While the pending Aged Care Royal Commission could do more damage to listed aged care providers, Wesfarmers could score some bargains without taking enough exposure to lower their overall valuation. Of course Wesfarmers could buy the whole sector for less than $2 bn, so it wouldn’t solve the problem of what to do with all the proceeds of Coles, but that doesn’t preclude some smaller deals that may include aged care.
Woolworths Group Ltd (WOW):
Woolworths has booked a 1.9 per cent lift in first quarter sales for its Australian Food business to $9.9bn, reflecting a challenging start as customers adjusted to the removal of single-use plastic bags. “While it was a more challenging quarter for sales, customer and brand metrics were strong across the Group, especially in Australian Food reflecting the underlying health of our business,” chief executive Brad Banducci said. It comes after Mr Banducci said in August that negative reaction from shoppers since July, when single-use plastic bags were removed, had taken Woolworths by surprise. He said Woolworths’ sales performance had suffered an unexpected hit, partly blamed on the problematic transition to reusable bags. But today Woolworths said that sales momentum had improved in September through to October, and that the majority of Woolworths’ customers responded well to the company’s commitment to the environment.
(Source: AIMS)
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