BHP Group Ltd (BHP):
BHP says it will suffer a first-half $US600 million ($840 million) "negative impact" on productivity, naming the November train derailment and production problems at its iron ore mines. While production for the year will be in line with guidance, maintenance and production outages had lifted costs for the six months ended December 31 above full-year guidance. Guidance for its copper production, though, has increased with output now estimated at 1.645-1.74 million tonnes from the previous forecast of 1.62-1.71 million tonnes, the company said in a statement to the Australian stock exchange. "Productivity for the December 2018 half year has been impacted by unplanned production outages at Olympic Dam, Spence and Western Australia Iron Ore, with a total negative impact of approximately US$600 million," the statement said.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank could be forced to cut its dividend after the sale of its insurance and global asset management businesses, says Morgan Stanley. In a note to clients, Morgan Stanley's Richard Wiles said CBA's sale of life insurance and global asset management businesses had created a "near-term earnings hole" for the bank and raised questions about its dividend payout stance. CBA completed the divestment of its life insurance business last year and has agreed to sell its global asset management business, Colonial First State Global Asset Management (CFSGAM) to a Japanese buyer for $4.1 billion.
Family Insights Group Ltd (FAM):
Family Insights Group, which helps parents monitor their children's online activity, is running into some troubles with its takeover of Frugl Group. Frugl is a grocery price comparison platform. So far Family insights, which used to be called Wangle Technologies, has acquired 95.71 per cent of shares in Frugl, but a single shareholder is still hanging onto a 4.29 per cent stake. "The company is considering all of its options in relation to acquiring this minority shareholding", it notes. Family Insights has also identified a legal dispute during the due diligence process between Frugl and an ex-employuee. It has decided that the value of the settlement with the ex-employee will affect the revenue milestones, which must be reached for Family Insights to pay Frugl shareholders for their shares. Family Insights is trading slightly lower at 0.0015 cents today.
Mod Resources Ltd (MOD):
Mining company and takeover-target MOD Resouces has successfully raised $15 million, with $10 million coming from institutional investors and a further $5 million to be raised from shareholders through a rights issue of 24 cents per share. MOD is in a trading halt, but last trading on Friday at 22 cents per share. The board has also rejected an unsolicited takeover offer from Sandfire Resources at 38 cents per share, saying it is too cheap. Managing director Julian Hanna told shareholders this morning: "The unsolicited, indicative proposal for 100 per cent of the company received from Sandfire confirms the potential of the T3 Copper Project [in Botswana], however the Board considers it significantly undervalues the assets of the company". The takeover offer was equivalent to 1 Sandfire share for every 17 MOD shares, according to MOD. Sandfire Resources shares are down 3.6 per cent this morning to $6.79.
Oil Search Ltd (OSH):
In the last three months of 2018 Oil Search produced 7.4 million barrels of oil, but Royal Bank of Canada analysts were expecting it to produce 7.9 million barrels of oil. And during 2018 it produced 25.2 million barrels, which was at the lower end of its own guidance of between 25 million and 26 million barrels. "Both production and sales revenue were 6 per cent lower than our expectations, with sales volumes a more modest 1 per cent miss," the RBC analysts wrote to clients today. "We attribute weaker production to a softer than anticipated ramp-up in oil from Kutubu and Moran and condensate from PNG LNG post the February earthquake. This saw annual 2018 production hit 25.2 million barrels of oil and fall in at the lower end of previously advised guidance of 25-26 million barrels. Revenues were soft on the back of weaker than anticipated realised oil pricing compounded by a sales mix skewed toward less expensive gas as opposed to oil." Production guidance for 2019 is also lower than analysts were expecting to see.
Stanmore Coal Ltd (SMR):
Golden Investment director Mark Zhou says the company is considering a seat on the Stanmore Coal board and Golden is going to play a long game ahead of Tuesday's cut-off for its offer to acquire all shares in the junior miner. The 95¢ per share takeover bid from Golden for Stanmore erupted in controversy last week when the Australian Securities and Investments Commission criticised Golden for releasing an independent expert report from Grant Thornton. Golden released its fifth supplementary bidder's statement to the market late on Friday in response to Stanmore's announcement from earlier that day declaring an interim dividend of 3¢ a share and a non-binding share buyback. Mr Zhou said Stanmore announced the dividend and buyback in an attempt to prop up its share price above the Golden bid of 95¢ until the offer expired on Tuesday evening. The share price closed down 0.5 per cent on Monday at 95¢. The 30-day moving average at the time the offer was announced was about 90¢.
Super Retail Group Ltd (SUL):
Super Retail Group has appointed the boss of its outdoor leisure division, Anthony Heraghty, as chief executive and managing director to replace long-serving CEO Peter Birtles. Mr Heraghty is currently managing director of SRG's outdoor leisure division and oversees boating, camping and fishing chains BCF and Rays and outdoor clothing retailer Macpac. Outdoor has been SRG's worst performer over the last few years, with earnings falling 8 per cent since 2015 despite a 6.7 per cent increase in sales - due mainly to problems at Rays. But SRG chairwoman Sally Pitkin said Mr Heraghty was the standout candidate from a national and international search that commenced after Mr Birtles' retirement was announced in October as part of a planned succession process. SRG's 2019 price/earnings multiple has de-rated from 12.0 times to 9.0 - below other discretionary retailers trading on 11 to 12 times earnings - following news of Mr Birtles' retirement as the market assumed a new CEO would re-base earnings by up to 20 per cent.
(Source: AIMS)
BHP says it will suffer a first-half $US600 million ($840 million) "negative impact" on productivity, naming the November train derailment and production problems at its iron ore mines. While production for the year will be in line with guidance, maintenance and production outages had lifted costs for the six months ended December 31 above full-year guidance. Guidance for its copper production, though, has increased with output now estimated at 1.645-1.74 million tonnes from the previous forecast of 1.62-1.71 million tonnes, the company said in a statement to the Australian stock exchange. "Productivity for the December 2018 half year has been impacted by unplanned production outages at Olympic Dam, Spence and Western Australia Iron Ore, with a total negative impact of approximately US$600 million," the statement said.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank could be forced to cut its dividend after the sale of its insurance and global asset management businesses, says Morgan Stanley. In a note to clients, Morgan Stanley's Richard Wiles said CBA's sale of life insurance and global asset management businesses had created a "near-term earnings hole" for the bank and raised questions about its dividend payout stance. CBA completed the divestment of its life insurance business last year and has agreed to sell its global asset management business, Colonial First State Global Asset Management (CFSGAM) to a Japanese buyer for $4.1 billion.
Family Insights Group Ltd (FAM):
Family Insights Group, which helps parents monitor their children's online activity, is running into some troubles with its takeover of Frugl Group. Frugl is a grocery price comparison platform. So far Family insights, which used to be called Wangle Technologies, has acquired 95.71 per cent of shares in Frugl, but a single shareholder is still hanging onto a 4.29 per cent stake. "The company is considering all of its options in relation to acquiring this minority shareholding", it notes. Family Insights has also identified a legal dispute during the due diligence process between Frugl and an ex-employuee. It has decided that the value of the settlement with the ex-employee will affect the revenue milestones, which must be reached for Family Insights to pay Frugl shareholders for their shares. Family Insights is trading slightly lower at 0.0015 cents today.
Mod Resources Ltd (MOD):
Mining company and takeover-target MOD Resouces has successfully raised $15 million, with $10 million coming from institutional investors and a further $5 million to be raised from shareholders through a rights issue of 24 cents per share. MOD is in a trading halt, but last trading on Friday at 22 cents per share. The board has also rejected an unsolicited takeover offer from Sandfire Resources at 38 cents per share, saying it is too cheap. Managing director Julian Hanna told shareholders this morning: "The unsolicited, indicative proposal for 100 per cent of the company received from Sandfire confirms the potential of the T3 Copper Project [in Botswana], however the Board considers it significantly undervalues the assets of the company". The takeover offer was equivalent to 1 Sandfire share for every 17 MOD shares, according to MOD. Sandfire Resources shares are down 3.6 per cent this morning to $6.79.
Oil Search Ltd (OSH):
In the last three months of 2018 Oil Search produced 7.4 million barrels of oil, but Royal Bank of Canada analysts were expecting it to produce 7.9 million barrels of oil. And during 2018 it produced 25.2 million barrels, which was at the lower end of its own guidance of between 25 million and 26 million barrels. "Both production and sales revenue were 6 per cent lower than our expectations, with sales volumes a more modest 1 per cent miss," the RBC analysts wrote to clients today. "We attribute weaker production to a softer than anticipated ramp-up in oil from Kutubu and Moran and condensate from PNG LNG post the February earthquake. This saw annual 2018 production hit 25.2 million barrels of oil and fall in at the lower end of previously advised guidance of 25-26 million barrels. Revenues were soft on the back of weaker than anticipated realised oil pricing compounded by a sales mix skewed toward less expensive gas as opposed to oil." Production guidance for 2019 is also lower than analysts were expecting to see.
Stanmore Coal Ltd (SMR):
Golden Investment director Mark Zhou says the company is considering a seat on the Stanmore Coal board and Golden is going to play a long game ahead of Tuesday's cut-off for its offer to acquire all shares in the junior miner. The 95¢ per share takeover bid from Golden for Stanmore erupted in controversy last week when the Australian Securities and Investments Commission criticised Golden for releasing an independent expert report from Grant Thornton. Golden released its fifth supplementary bidder's statement to the market late on Friday in response to Stanmore's announcement from earlier that day declaring an interim dividend of 3¢ a share and a non-binding share buyback. Mr Zhou said Stanmore announced the dividend and buyback in an attempt to prop up its share price above the Golden bid of 95¢ until the offer expired on Tuesday evening. The share price closed down 0.5 per cent on Monday at 95¢. The 30-day moving average at the time the offer was announced was about 90¢.
Super Retail Group Ltd (SUL):
Super Retail Group has appointed the boss of its outdoor leisure division, Anthony Heraghty, as chief executive and managing director to replace long-serving CEO Peter Birtles. Mr Heraghty is currently managing director of SRG's outdoor leisure division and oversees boating, camping and fishing chains BCF and Rays and outdoor clothing retailer Macpac. Outdoor has been SRG's worst performer over the last few years, with earnings falling 8 per cent since 2015 despite a 6.7 per cent increase in sales - due mainly to problems at Rays. But SRG chairwoman Sally Pitkin said Mr Heraghty was the standout candidate from a national and international search that commenced after Mr Birtles' retirement was announced in October as part of a planned succession process. SRG's 2019 price/earnings multiple has de-rated from 12.0 times to 9.0 - below other discretionary retailers trading on 11 to 12 times earnings - following news of Mr Birtles' retirement as the market assumed a new CEO would re-base earnings by up to 20 per cent.
(Source: AIMS)
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