Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Morningstar Equity

Morningstar Equity

Origin Energy Limited ORG| Origin Energy's Eraring Deal Boosts Liquidity

Morningstar Recommendation: Accumulate
Gareth James, Morningstar Analyst -
02 9276 4583
Origin Energy's purchase of the Eraring coal fired power station in New South Wales comes as little surprise and has no impact on our AUD 14 per share fair value estimate. Our net profit forecasts remain unchanged, however, the transaction results in a AUD 250 million cash payment to Origin. The payment helps liquidity, a key concern for some investors recently, and makes rumoured equity issuance even less likely. Our thesis is largely unchanged, but our view of the company improves slightly with the additional flexibility of Eraring and the improved liquidity position. The transaction is too small to impact our medium fair value uncertainty rating or the competitive positioning of the company. We maintain our view that Origin has no sustainable competitive advantage, or economic moat. The core energy markets business has few, if any, advantages over competitors and we only expect returns on invested capital to be around equal to the weighted average cost of capital of 8.6%.

Seven Group Holdings Limited SVW| Challenging Markets Result in Restructuring for Seven Group's WesTrac Business
Morningstar Recommendation: Accumulate
Ross MacMillan, Morningstar Analyst -
02 9276 4450
Seven Group announced the implementation of an organisational restructure of WesTrac Australia's NSW/ACT operations as a result of deteriorating market conditions, particularly in the mining sector. The restructure will involve significant redundancies, causing a one-off charge of AUD 10 million. In February, former CEO Peter Gammell forecast an increase in underlying net profit after tax (NPAT) for fiscal 2013 of between 10% and 20%. Seven Group has now indicated earnings will be at the lower end of earlier guidance, which equates to underlying NPAT of approximately AUD 377 million.

Amcor Limited AMC| China Acquisition Increases Amcor's Exposure to a Rise in Consumer Spending
Morningstar Recommendation: Reduce
Nathan Zaia, Morningstar Analyst -
02 9276 4491
Amcor's acquisition of Chinese flexible packaging business Jiangsu Shenda Group for RMB 350 million (AUD 62 million) builds on a successful strategy of reinvesting strong cash flows from developed markets into faster-growing emerging markets. We believe Amcor's global research, development and technology, relationships with multinationals and financial capacity puts it at an advantage over smaller competitors, particularly in more fragmented developing markets. This leaves Amcor well positioned to capitalise on supportive fundamentals of rising per-capita incomes, urbanisation and increased health awareness, driving consumption and complexity of packaging in Asia. Amcor also announced the sale of its retired mill property in Australia for AUD 120 million. While we view the strategic acquisition positively, the size of the acquisition has no impact on our forecasts or AUD 9.00 fair value estimate.

Precinct Properties New Zealand Limited PCT-NZ| Cut to Borrowing Spreads Has Muted Impact on Precinct's Borrowing Costs
Morningstar Recommendation: Hold
Tony Sherlock, Morningstar Analyst -
02 9276 4584
Precinct replaced its existing unsecured NZD 635 million facility with a secured facility of NZD 660 million. The existing banking syndicate of ANZ Bank, Bank of New Zealand and Commonwealth Bank has been expanded to include Bank of Toyko-Mitsubishi, taking a NZD 50 million exposure. The new facility has tranches expiring in July 2016, July 2017 and July 2018, increasing weighted average debt tenure from three to four years.

Caltex Australia Limited CTX| One Minute Caltex Soaring, the Next a Fall
Morningstar Recommendation: Hold
Mark Taylor, Morningstar Analyst -
02 9276 4478
Caltex has guided half-year replacement cost operating profit (RCOP) at AUD 160 to AUD 175 million, well below expectations. The company only just reported first quarter profit of AUD 146 million, meaning the second quarter declines by 80%-90%. As is the norm with Caltex, most of the volatility pertains to the refining and supply segment. But the marketing and distribution component has not been completely immune either.


Macmahon Holdings - Upgrade due to price change
Monadelphous - Upgrade due to price change
Sigma Pharma. - Upgrade due to price change
Telecom NZ - Upgrade due to price change
Telstra - Upgrade due to price change
UGL - Upgrade due to price change
WorleyParsons - Upgrade due to price change
AGL Energy - Upgrade due to price change
Patties Foods - Upgrade due to price change
ResMed - Upgrade due to price change
Fisher & Paykel Healthcare - Upgrade due to price change
Telecom NZ - Upgrade due to price change


ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news