Capri – Daily Market Research (Morning Note) 13/11/2018

Ord Minnett Research Woolworths Group (WOW) announced the much-anticipated sale of its petrol business to European and North American convenience and fuel retailer EG Group for $1.725 billion(¥189,750,000,000). Ord Minnett derives a pro-forma FY19E enterprise value to operating earnings (EV/EBITDA) transaction multiple of 6.8x, in line with or above recent similar transactions and so we see this acquisition as EPS-dilutive. There is little tax to be paid on the sale due to carried-forward losses from Read more…

Capri – Daily Market Report (Morning Note) 02/11/2018

Ord Minnett Research Deutsche Bank Research BHP – 15% (plus tax rebate) harvest BHP – Ticker: BHP.AX, Closing Price: 33.11 AUD, Target Price: 36.00 AUD, Recommendation: Hold. We view BHP’s A$10.4(¥1,100)bn returns program as particularly friendly to Australian shareholders given the tax component on both legs. A 50/50 off-market buyback in Australia to commence immediately and then special dividend applicable to all shares on issue in January 2019 post the buyback, should most broadly satisfy Read more…

Capri – Daily Market Report (Morning Note) 01/11/2018

Ord Minnett Research Deutsche Bank Research Healthscope Limited – 1Q trading update and expected value of property assets – Ticker: HSO.AX, Closing Price: 2.10 AUD, Target Price: 2.26 AUD, Recommendation: Hold. 1Q trading update – strong growth off a low base – The Hospitals division achieved operating EBITDA growth of 10.4% in 1Q19 (vs -6.8% in 1Q18). Management noted hospital revenue growth has remained subdued, so we believe the company’s strong double-digit EBITDA growth is Read more…

Capri – Daily Market Report (Morning Note) 31/10/2018

Ord Minnett Research Deutsche Bank Research Newcrest Mining – Cadia site visit – plenty of time to pull the recovery levers – Ticker: NCM.AX, Closing Price: 20.76 AUD, Target Price: 23.00 AUD, Recommendation: Buy. We recently visited NCM’s Cadia mine near Orange, NSW. Over the last two years the operation has been impacted by a major seismic event and a tailings dam failure. Despite this NCM is progressing plans to enhance the operation over the Read more…

Capri – Daily Market Report (Morning Note) 16/10/2018

Ord Minnett Research Deutsche Bank Research Wesfarmers Ltd – Little Shop, big sales – Ticker: WES.AX, Closing Price: 47.33 AUD, Target Price: 48.00 AUD, Recommendation: Hold. Sales were always going to be strong but seem to have normalised – Coles’ supermarket sales were always going to be strong given the benefits from 1) Little Shop; 2) free plastic bags; and 3) increased below the line Flybuys activity. LFL sales growth was 5.1% which was ahead Read more…

Capri – Daily Market Report (Morning Note) 15/10/2018

Ord Minnett Research Deutsche Bank Research Australian Banking Sector – The Bank Vault: Valuation charts -Bank sector – valuation metrics. Inside this week’s Bank Vault we highlight key bank valuation trends over the last month, and take a look at the week’s regulatory news. The major banks’ avg 12m fwd PER is currently 11.1x, which is 14% below the 5yr avg. On a relative basis, the majors on avg are trading at a ~19% discount Read more…

Capri – Daily Market Report (Morning Note) 05/10/2018

  Ord Minnett Research   Deutsche Bank Research South32 (S32) – aluminium advantage: Buy retained S32 has 3.2mt of excess alumina that gets sold into the spot market. The Norsk Hydro news earlier in the week has tightened the market, and the 1.4mt aluminium deficit we forecast in 2019 could prove to be conservative. Not only is the spot alumina price going to help (every 10% increase is an 11% boost to S32 EBIT), S32 Read more…

Capri – Daily Market Report (Morning Note) 04/10/2018

Ord Minnett Research Morgans Research Call to action – Australia Strategy – Refundable franking credits and retirees Labor’s proposal to scrap cash refunds of surplus franking credits has created unwanted angst for affected retirees. Public debate is intensifying as these retirees point out that this proposal adversely affects their long term retirement planning. Retirement savings decisions have accounted for franking refunds as an established feature of our tax system, which are therefore core to the Read more…

Capri – Daily Market Report (Morning Note) 03/10/2018

Ord Minnett Research Morgans Research Call to action – High Conviction Stocks – October We currently expect the S&P/ASX200 index to finish the year at 6,300 but the outlook particularly this late in a sustained business cycle is becoming more vulnerable given the prevailing macro-economic risks. Equity market valuations remain stretched and measures of market volatility remain close to all-time lows. We continue to caution investors against complacency and note that avoiding loss is just Read more…

Capri – Daily Market Report (Morning Note) 28/09/2018

Ord Minnett Research Deutsche Bank Westpac Alert – Legal and remediation costs to impact FY18 result – Ticker: WBC.AX, Closing Price: 27.81 AUD, Target Price: 31.00 AUD, Recommendation: Buy. $235(¥25,850)m profit impact on FY18 from refunds and litigation provisions – After the market close today, WBC announced it expects an impact of $235(¥25,850)m (post-tax) on its FY18 result due to customer refunds as well as provisions for recent litigation. The remediation costs relate to the Read more…