Appen Ltd (APX):
Shares in Appen have returned to trade at a loss after announcing a $285 million raise to funds its acquisition of US tech developer Figure Eight. Trade in the stock had been halted while the company finalised an institutional raise, but fell 8 per cent at the open to $22.40. Under the raise, shares were offered at $21.50 - and will be offered under a follow-up share purchase plan to eligible shareholders at that price also. APX last down 8.17pc at $22.38.
Australia and New Zealand Banking Group (ANZ):
Credit Suisse has cut ANZ to Neutral from Outperform and lowered its target price to $28 from $30 citing near term earnings downside. Analyst Jarrod Martin says while some too the recent announcement of the banks conservatism of loans as an inflection point, Credit Suisse had other thoughts. “We differ and believe that the earliest we are likely to see a change is towards the back-end of FY19. Given the balance sheet leads the P&L we see some near-term earnings risk (FY19 and FY20) and have downgraded balance sheet growth 2.0 per cent to 1.2 per cent for FY19.” Reflecting on the RBNZ’s capital proposal, he says that at a minimum ANZ’s future capital management initiatives will take a pause until there is greater certainty. “In addition given ANZ’s lower risk weights the application of a floor impacts ANZ more and may erode some of the capital surplus and lower future capital management,” Mr Martin adds. “We have pushed out the next capital management initiative to FY20 and decreased buybacks by $1.5bn.”
Electro Optic Systems Holdings Ltd (EOS):
Remote controlled weapons maker Electro Optic Systems released a market update this morning that sent stocks up 8.5 per cent to $2.68. EOS says revenue and profit are expected to "more-than-double" in 2019, which would give it revenues of about $170 million, up from $87.13 million in 2018. It is optimistically forecasting revenue of $250 million by 2020 with profits of about $26 million, excluding currency fluctuations. EOS describes the remote controlled weapons market as $7 billion, of which it has been awarded tenders worth $0.8 billion, tendered for $2.2 billion and is in $2.1 billion pre-tender qualification.
GWA Group Ltd (GWA):
GWA Group is set to acquire New Zealand tap maker Methven after the $112 million deal was backed by shareholders this morning. The scheme of arrangement, first revealed in December, still has to receive approval by the New Zealand High Court but GWA expects it to become fully binding by April 10. The offer equates to $NZ1.60 per share and strengthens GWA’s position across Austrlaia and New Zealand, and accelerate growth opportunities in core markets.
IPH Ltd (IPH):
Shares in IPH are at the highest level since July 2016 with a one-day rise of 3.83% to $6.78 after announcing plans to acquire Xenith IP Group for cash and shares worth $1.97 per Xenith share. In response Xenith shares are up 14 per cent to $1.83. Under the offer Xenith shareholders get $1.28 cash plus 0.1 IPH shares. This will cost $113.5 million. "The IPH proposal provides significantly greater certainty of value than the QANTM Merger by means of the substantial cash component," IPH told the market, adding it has minimal conditions. IPH holds 19.99 per cent of Xenith and intends to vote against the merger with QANTM are the upcoming scheme meeting. Xenith has not yet responded.
Mirvac Group (MGR); DEXUS Property Group (DXS):
Listed property companies Mirvac and Dexus are at significant highs today. Dexus is at an all-time high at $12.60, a one-day rise of 0.2 per cent, but an 18.6 per cent rise since the start of 2019. Mirvac is at $2.70, a one day rise of 1.1 per cent that takes it to the highest level since early 2008. Property reporter Carolyn Cummins says the office property market is booming due to low vacancies and limited new supply. Also, one outcome from the banking royal commission is the need for more compliance people who will have to lease new office space away from the banks' head offices, but nearby. Plus, a new report today from Knight Frank says overall vacancy in both cities is at the lowest levels for ten years, with Melbourne now the tightest office market in Australia. Rents have increased by 12 per cent in Sydney CBD over the past year and by 14 per cent in Melbourne CBD. Both are expected to grow in high single digits over the next year.
National Australia Bank Ltd (NAB):
NAB's monthly business survey found business conditions fell by 3 points to +4 index points in February, driven by declines in profitability and trading sub-indexes. Employment was unchanged at +5. Confidence fell 2 points in the month to +2 index points. NAB Group Chief Economist, Alan Oster, says "conditions declined in February to below average levels – with profitability and trading now below average. While monthly movements in conditions have been hard to interpret in the early part of the year, this survey is based on a larger sample and surveyed well after the January period and suggests that conditions have materially deteriorated further to below average levels in 2019". "Confidence remains below average, forward orders are negative and capacity utilisation is trending lower. This may have important implications for both future investment and employment decisions of business" Mr Oster said. "While the decline in conditions has been broad-based across industries, retail remains the standout. It has now reported negative conditions for 5 months and with the outlook for the consumer remaining weak, we see little improvement on the horizon".
Retail Food Group Ltd (RFG):
The board of embattled food chain Retail Food Group has hit back at reports the company was contemplating a move to appoint administrators after a horror year. RFG, the operator of Gloria Jeans, Donut King and Crust Pizza chains, said it denied the accuracy of the article published in Queensland’s Courier Mail. Last month, the company posted a statutory loss after tax of $111.1 million for the December half, slipping further from a $87.8 loss in the previous corresponding period. It said it was making progress on its major restructuring activity to better focus on its core retail food and coffee supply operations. “Restructuring activity is forecast to deliver c.$20m in annualised cost savings. These benefits are expected to start materialising in 2H19, but will largely be felt in FY20,” it said at the time.
Westpac Banking Corp (WBC):
Readers have pointed out that Westpac's decision to bring forward its interim dividend payment date by nine days from, July 3 to June 24, means Westpac shareholders will receive three dividend payments this current financial year. "We expect the interim dividend to be paid at a similar date in future years," the bank told the market yesterday. For 2018-19 Westpac shareholders are set to receive $2.82 per share, rather than $1.88, if it maintains the 94 cent payout. This includes the interim dividend for the six months ending in March 2018, which was paid on 4 July, 2018, and the full year dividend for the 12 months ending September 2018, which was paid on 20 December, 2018. And now, they will also get the interim dividend for the six months ending March 2019 paid on 24 June, 2019. The interim dividend will be announced on 6 May. The change is "putting the money into shareholders pockets a little bit earlier", a Westpac spokesman said today.
Xenith IP Group Ltd (XIP):
Intellectual property group Xenith IP is trading 12 per cent higher at lunch after fielding a $197 million takeover bid from larger rival IPH. The move is the latest in a bidding war between the major listed-IP players, trumping a merger bid from QANTM lobbed earlier this year. IPH is offering a cash and scrip offer worth $1.97 per share for the 80 per cent of Xenith it does not already own. XIP shares last up 12.5pc to $1.81. IPH last up 2.91pc to $6.72.
(Source: AIMS)
Shares in Appen have returned to trade at a loss after announcing a $285 million raise to funds its acquisition of US tech developer Figure Eight. Trade in the stock had been halted while the company finalised an institutional raise, but fell 8 per cent at the open to $22.40. Under the raise, shares were offered at $21.50 - and will be offered under a follow-up share purchase plan to eligible shareholders at that price also. APX last down 8.17pc at $22.38.
Australia and New Zealand Banking Group (ANZ):
Credit Suisse has cut ANZ to Neutral from Outperform and lowered its target price to $28 from $30 citing near term earnings downside. Analyst Jarrod Martin says while some too the recent announcement of the banks conservatism of loans as an inflection point, Credit Suisse had other thoughts. “We differ and believe that the earliest we are likely to see a change is towards the back-end of FY19. Given the balance sheet leads the P&L we see some near-term earnings risk (FY19 and FY20) and have downgraded balance sheet growth 2.0 per cent to 1.2 per cent for FY19.” Reflecting on the RBNZ’s capital proposal, he says that at a minimum ANZ’s future capital management initiatives will take a pause until there is greater certainty. “In addition given ANZ’s lower risk weights the application of a floor impacts ANZ more and may erode some of the capital surplus and lower future capital management,” Mr Martin adds. “We have pushed out the next capital management initiative to FY20 and decreased buybacks by $1.5bn.”
Electro Optic Systems Holdings Ltd (EOS):
Remote controlled weapons maker Electro Optic Systems released a market update this morning that sent stocks up 8.5 per cent to $2.68. EOS says revenue and profit are expected to "more-than-double" in 2019, which would give it revenues of about $170 million, up from $87.13 million in 2018. It is optimistically forecasting revenue of $250 million by 2020 with profits of about $26 million, excluding currency fluctuations. EOS describes the remote controlled weapons market as $7 billion, of which it has been awarded tenders worth $0.8 billion, tendered for $2.2 billion and is in $2.1 billion pre-tender qualification.
GWA Group Ltd (GWA):
GWA Group is set to acquire New Zealand tap maker Methven after the $112 million deal was backed by shareholders this morning. The scheme of arrangement, first revealed in December, still has to receive approval by the New Zealand High Court but GWA expects it to become fully binding by April 10. The offer equates to $NZ1.60 per share and strengthens GWA’s position across Austrlaia and New Zealand, and accelerate growth opportunities in core markets.
IPH Ltd (IPH):
Shares in IPH are at the highest level since July 2016 with a one-day rise of 3.83% to $6.78 after announcing plans to acquire Xenith IP Group for cash and shares worth $1.97 per Xenith share. In response Xenith shares are up 14 per cent to $1.83. Under the offer Xenith shareholders get $1.28 cash plus 0.1 IPH shares. This will cost $113.5 million. "The IPH proposal provides significantly greater certainty of value than the QANTM Merger by means of the substantial cash component," IPH told the market, adding it has minimal conditions. IPH holds 19.99 per cent of Xenith and intends to vote against the merger with QANTM are the upcoming scheme meeting. Xenith has not yet responded.
Mirvac Group (MGR); DEXUS Property Group (DXS):
Listed property companies Mirvac and Dexus are at significant highs today. Dexus is at an all-time high at $12.60, a one-day rise of 0.2 per cent, but an 18.6 per cent rise since the start of 2019. Mirvac is at $2.70, a one day rise of 1.1 per cent that takes it to the highest level since early 2008. Property reporter Carolyn Cummins says the office property market is booming due to low vacancies and limited new supply. Also, one outcome from the banking royal commission is the need for more compliance people who will have to lease new office space away from the banks' head offices, but nearby. Plus, a new report today from Knight Frank says overall vacancy in both cities is at the lowest levels for ten years, with Melbourne now the tightest office market in Australia. Rents have increased by 12 per cent in Sydney CBD over the past year and by 14 per cent in Melbourne CBD. Both are expected to grow in high single digits over the next year.
National Australia Bank Ltd (NAB):
NAB's monthly business survey found business conditions fell by 3 points to +4 index points in February, driven by declines in profitability and trading sub-indexes. Employment was unchanged at +5. Confidence fell 2 points in the month to +2 index points. NAB Group Chief Economist, Alan Oster, says "conditions declined in February to below average levels – with profitability and trading now below average. While monthly movements in conditions have been hard to interpret in the early part of the year, this survey is based on a larger sample and surveyed well after the January period and suggests that conditions have materially deteriorated further to below average levels in 2019". "Confidence remains below average, forward orders are negative and capacity utilisation is trending lower. This may have important implications for both future investment and employment decisions of business" Mr Oster said. "While the decline in conditions has been broad-based across industries, retail remains the standout. It has now reported negative conditions for 5 months and with the outlook for the consumer remaining weak, we see little improvement on the horizon".
Retail Food Group Ltd (RFG):
The board of embattled food chain Retail Food Group has hit back at reports the company was contemplating a move to appoint administrators after a horror year. RFG, the operator of Gloria Jeans, Donut King and Crust Pizza chains, said it denied the accuracy of the article published in Queensland’s Courier Mail. Last month, the company posted a statutory loss after tax of $111.1 million for the December half, slipping further from a $87.8 loss in the previous corresponding period. It said it was making progress on its major restructuring activity to better focus on its core retail food and coffee supply operations. “Restructuring activity is forecast to deliver c.$20m in annualised cost savings. These benefits are expected to start materialising in 2H19, but will largely be felt in FY20,” it said at the time.
Westpac Banking Corp (WBC):
Readers have pointed out that Westpac's decision to bring forward its interim dividend payment date by nine days from, July 3 to June 24, means Westpac shareholders will receive three dividend payments this current financial year. "We expect the interim dividend to be paid at a similar date in future years," the bank told the market yesterday. For 2018-19 Westpac shareholders are set to receive $2.82 per share, rather than $1.88, if it maintains the 94 cent payout. This includes the interim dividend for the six months ending in March 2018, which was paid on 4 July, 2018, and the full year dividend for the 12 months ending September 2018, which was paid on 20 December, 2018. And now, they will also get the interim dividend for the six months ending March 2019 paid on 24 June, 2019. The interim dividend will be announced on 6 May. The change is "putting the money into shareholders pockets a little bit earlier", a Westpac spokesman said today.
Xenith IP Group Ltd (XIP):
Intellectual property group Xenith IP is trading 12 per cent higher at lunch after fielding a $197 million takeover bid from larger rival IPH. The move is the latest in a bidding war between the major listed-IP players, trumping a merger bid from QANTM lobbed earlier this year. IPH is offering a cash and scrip offer worth $1.97 per share for the 80 per cent of Xenith it does not already own. XIP shares last up 12.5pc to $1.81. IPH last up 2.91pc to $6.72.
(Source: AIMS)
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