Several analysts are not ruling out the possibility of a capital raising by AMP, after it warned on Monday a plan to sell its life insurance business for $3.3 billion was "highly unlikely" to proceed, and it cut its dividend to zero. Citi analysts said if there is no sale, it could leave AMP in the tricky situation of not having enough capital to fund a major overhaul of its advice business. "It may therefore be left with a stark choice of either delaying the strategy's implementation or coming to market to raise capital," said the analysts, who have a "sell" on AMP.
Arafura Resources Limited (ARU):
Shareholders in rare earths explorer Arafura Resources were not particularly keen on its entitlement offer, with only 35 per cent of the new shares on offer being bought in the 7 for 20 offer. Shares are flat today at 10 cents. The offer was for new shares at 8.5 cents, which will become available on Friday. The company was hoping to raise $23.2 million by issuing 273 million shares, but it looks like underwriters Pattersons and sub-underwritiers Talaxis will have to pick up $15.1 million of shares, or 178 million new shares.
Galaxy Resources Limited (GXY):
Galaxy Resources has affirmed its full year guidance as its second quarter production topped guidance. The miner produced 56,460 dry metric tonnes of lithium oxide from its Mt Cattlin project, exceeding its guidance of up to 50,000 dmt and at a unit cash cost of $US337 ($478) making it one of the lowest cost lithium concentrate operations in the world. Despite the strong quarter, the company reaffirmed its full year guidance for between 180,000 to 210,000 dmt, with Q3 targets of between 45,000 to 55,000dmt.
GBST Holdings Limited (GBT):
GBST and prospective takeover partner SS&C Technologies are continuing negotiations, into almost a third week and today released the details of its process and exclusivity deed. The $3.60 per share proposal from SS&C has been recommended by the GBST board, ahead of two other bidders Bravura and UK-based FNZ. In an update to the market this morning, GBST said it intended to recommend SS&C’s proposal if a bid emerged after the due dilligence period.
Hub24 Ltd (HUB):
Investment and superannuation platform HUB24 has posted a record June quarter with net inflows of $3.9 billion over the past financial year. In a quarterly update this morning, HUB24 said its inflows had increased by 32.4 per cent on the prior corresponding period, taking annual net inflows to $3.9bn - an increase of 60.6pc on FY18. The group said its growth in funds under administration was driven by organic opportunities from existing and new adviser relationships.
Keybridge Capital Limited (KBC):
Keybridge Capital has been suspended from quotation "pending enquiries by the ASX". The securities will remain suspended pending the outcome of these enquiries and an announcement by Keybridge Capital regarding the composition of the board. This morning Patrick Hatch has a story about Keybridge's involvement in the attempted takeover of chocolate maker Yowie. "With its shares sagging, three funds linked to infamous corporate raiders Nick Bolton and Farooq Khan – Keybridge Capital, Bentley Capital and Aurora – bought into the company in early 2018. Since then, they have been using their combined 23 per cent stake to try to remove board members and take control of the company."
Metgasco Limited (MEL):
Metgasgo has placed its shares in a trading halt one day after it received an unsolicited takeover approach. However Metgasgo says reason behind the halt is due to it finalising “determination of cost overruns” in relation to its Gulf of Mexico drilling program, given operational and weather events. Yesterday The Australian’s Nick Evans wrote how Metgasgo received an all-scrip bid valued at 4c a share from fellow junior Melbana Energy. The bid is linked to former director Andrew Purcell who was ousted from the company a year ago.
NIB Health Funds Ltd (NHF):
Key analyst ratings cuts for NIB have prompted as much as a 10 per cent sell-off in the stock in Tuesday’s trade, with some saying the stock’s relief rally on the election result had “gone too far”. Both Citi and Goldman Sachs have cut the stock to Sell today, after reaching record highs earlier this month. Citi’s Nigel Pittaway said the stock was “looking pricey” and he expects a 2.85pc rate increase for the next two years, down from his previous outlook of 3pc given falling industry participation, affordability pressures, subdued claims inflation and a push from the health minister for lower rate increases.
Oil Search Limited (OSH):
Oil Search says both its second-quarter production and revenue have dipped by 5.0 per cent as expected, but analysts were reportedly looking for a more substantial first-half recovery after last year’s earthquake in Papua New Guinea. The company said total production for the April-June period came in at 6.9 million barrels of oil equivalent, down from 7.2 mmboe a year ago on account of scheduled maintenance activity, with first half production 38 per cent higher at 14.1 mmboe. This reflects the damage caused during the prior corresponding period when a devastating earthquake halted operations. Meanwhile, Oil Search revenue for the second quarter was $US378.9 million ($538.1 million), down from $US398.1 million a year ago. First half 2019 revenue was 39 per cent higher at $US777 million ($1.1 billion).
Perpetual Limited (PPT):
Another quarter of outflows from Perpetual has raised the pressure on chief executive Rob Adams to refresh the fund’s strategy and look for inorganic growth, so says Morgan Stanley. Yesterday, the fund announced $1.1 billion of outflows for the June quarter - largely from Australian equities ($1.2bn) with smaller outflows from cash and fixed income ($0.2bn) and global equities ($0.1bn). Morgan Stanley’s Andrei Stadnik says outflows were below the bank’s forecasts, but that he expects consensus downgrades of up to 5 per cent to next year’s earnings.
Rio Tinto Limited (RIO):
Rio Tinto said construction of its underground copper mine at Oyu Tolgoi in Mongolia will take longer and cost more than earlier envisaged. The miner said Tuesday it is assessing mine design options given stability risks associated with its approved design, which could delay production by 16-30 months to between May 2022 and June 2023. Rio Tinto estimated the capital spend for the project could now be as high as US$6.5 billion-US$7.2 billion ($9.23bn to $10.22bn), an increase of up to US$1.9 billion from the US$5.3 billion projected earlier. The company said it is reviewing the carrying value of the Oyu Tolgoi mine and would disclose the outcome on August 1.
St Barbara Ltd (SBM):
Atlantic Gold shareholders have approved its acquisition by ASX-listed St Barbara, paving the way for the $779 million takeover to go ahead. The TSX-listed gold miner, with assets in Canada, will now seek a final order from the Supreme Court of British Columbia, and the finalisation of the transaction is expected next Monday. St Barbara says the deal diversifies its gold production base with a low cost, long life mine in a favourable jurisdiction and gives it significant growth potential.