0228 GMT - Australian gold miners may have more deals ahead, UBS analysts say. They believe gold mining M&A is likely to continue in Australia, as record-high gold prices in both U.S.-dollar and Australian-dollar terms strengthen corporate balance sheets. Australian gold producers are grappling with aging mines and a broad lack of exploration success, which has led them into an M&A cycle, say the analysts. "Short mine lives/declining production profiles [will be] the driver to replenish project pipelines and reserve/resource inventories," the analysts say. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0129 GMT - Treasury Wine Estates should think twice if it's considering gatecrashing the proposed $1.95 billion acquisition of Duckhorn Portfolio by Butterfly Equity, says Jefferies. Duckhorn's wine portfolio is at the right Luxury price points for Treasury Wine, so could be a good fit, analyst Michael Simotas says. "However, we do not see a strong case for Treasury Wine to step in," Jefferies says. That's because a deal would represent some 30% of Treasury Wine's valuation and it would significantly increase its exposure to the U.S. market, Jefferies says. Also, it's not long ago that Treasury Wine bet on the U.S. via a takeover of DAOU. (david.winning@wsj.com; @dwinningWSJ)

0038 GMT - Buying Arcadium Lithium would slightly accelerate Rio Tinto's shift in commodity mix away from iron ore and give the miner scale to grow its lithium production in the long run, Morgan Stanley analysts say. But how accretive it might be for shareholders will "depend on valuation, a timely delivery of growth plans and/or lithium price tailwinds," the analysts say in a note. The analysts reckon Arcadium's 2028 growth ambitions need to be met for estimated valuation multiples to look compelling. Arcadium is last up 0.7% in Sydney, after a 46% surge Monday when Rio Tinto said it had made a takeover approach. Rio Tinto is trading 2.2% higher. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2359 GMT - Arcadium Lithium's operations, projects and technology clearly fit the direction in which Rio Tinto wants to take its own lithium business, RBC Capital Markets analysts say in a note. While there's limited details on the takeover talks to date, "Rio has previously indicated that it wants a diverse portfolio of lithium projects and that lithium brine operations provide the scale to be a meaningful contributor to Rio's portfolio," they say. Brine assets make up roughly 69% of Arcadium's net asset value, according to the broker. "Geographically, the companies' assets match," and Arcadium's technology and growth options would be appealing to the Anglo-Australian mining giant, the analysts say. Arcadium is up 0.7% in Sydney, after a 46% surge Monday on the confirmation of takeover talks. Rio Tinto is 2.0% higher. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2346 GMT - Sinopec's request for a price review with the APLNG gas-export project is likely to result in a lower contracted LNG price from Jan. 1 for at least the next five years, Jarden says in a research note on Origin Energy. "While we leave our forecasts (which factor in a 5% cut in its oil-linked contract price) unchanged, we see potential for further downside risk (up to A$0.45/share) if there is no 'floor' in the price review process," says analyst Nik Burns. Jarden expects the market to take a conservative view on the outcome, and it could take six months to resolve if parties seek arbitration. Still, Origin has a tailwind from oil-price volatility due to Middle East unrest. Jarden keeps its price target unchanged at A$10.00/share, just below Origin's latest price of A$10.21. (david.winning@wsj.com; @dwinningWSJ)

2321 GMT - Money-market traders will sift through the Reserve Bank of Australia's policy meeting minutes at 0030 GMT for any hints of a retreat by the central bank from its recent hawkish narrative. The RBA has continued to warn that interest-rate cuts are unlikely near term, while adding all policy options are on the table. RBA Governor Michele Bullock said in her press conference that an interest-rate increase wasn't "explicitly" discussed at this month's board meeting. So the minutes might be perceived as somewhat less hawkish, but only at the margin. It won't be until after the release of 3Q CPI data on Oct. 30 that the RBA might be placed to adjust its current messaging. (james.glynn@wsj.com)

2302 GMT - Ord Minnett says it has regained confidence that some of almond grower Select Harvests's recent issues were industry wide, rather than management own goals. Select Harvests last month raised A$80 million of equity, citing bumps in the road after shifting to a new logistics provider in April. "With industry trends continuing to be favorable and with the global almond price continuing to rise, we revise our target price for Select Harvests up to A$4.60 per share and upgrade our recommendation to an accumulate," analyst John Lawlor says. Ord Minnett had previously rated Select Harvests at hold with a A$4.35/share price target. (david.winning@wsj.com; @dwinningWSJ)

2220 GMT - Macquarie is no longer bearish about fund manager Magellan Financial, despite a spike in retail outflows. Magellan reported A$1.8 billion of retail outflows in 1Q, and Macquarie expects another A$600 million of outflows in the current quarter. However, Magellan's share price now implies a 10x price-to-earnings multiple for its funds management business, which Macquarie thinks is more reasonable than before. It upgrades Magellan to neutral, from underperform. "We still view FY 2025 as a transition year, with optionality from investments more likely an FY 2026 story," Macquarie says. (david.winning@wsj.com; @dwinningWSJ)

2218 GMT - Cooper Energy is likely to upgrade its production guidance now that its Orbost natural-gas plant is performing consistently, reckons Macquarie. Cooper has an annual target of producing 62-69 terajoules of natural gas per day, but Macquarie points out that the Orbost plant has tracked close to its nameplate capacity since mid-July following operational improvements. As a result, the bank now expects Cooper Energy to produce an average of 70.6 terajoules/day in FY 2025. That's up from a prior forecast of 68.8 terajoules/day. "Better Orbost production not only boosts earnings and increases spot market exposure, but also accelerates Cooper Energy's deleveraging (supporting equity re-rating)," Macquarie says. (david.winning@wsj.com; @dwinningWSJ)

2206 GMT - Technology One is no longer rated a buy by Goldman Sachs following a 61% jump in its share price since June 26, outperforming Australia's benchmark ASX 200 index which has risen 16% over the same timeframe. "Our in depth analysis of Technology One's end markets and Annualized Recurring Revenue growth outlook supports a mid-teens top-line growth rate to FY 2030 (reaching A$1 billion ARR)," analyst Chris Gawler says. At the same time, Technology One's natural operating leverage, reflected by more than 80% incremental SaaS margins, means 15%-20% pretax profit growth is the new normal, Goldman says. But the stock's recent rally means the "risk-reward appears fair with balanced risks to both the upside and downside," Goldman says. (david.winning@wsj.com; @dwinningWSJ)

2156 GMT - Alternative asset manager HMC Capital's exposure to private credit attracts a new bull. Goldman Sachs starts HMC Capital at buy, with a A$8.94/share price target, highlighting how investors are raising allocations to private markets. It also sees a positive skew in borrower preferences to private credit, a structural shift in the public markets to larger deal sizes, and an acceleration in commercial real-estate credit due to Australia's undersupply of housing stock. Goldman expects HMC Capital's private credit funds under management to rise to around A$5 billion by FY 2027, from A$1.6 billion at end-June. That's part of a larger expansion in FUM to more than A$20 billion over the medium term, from A$12.7 billion now. HMC Capital ended Monday at A$8.60.(david.winning@wsj.com; @dwinningWSJ)

2154 GMT - Pro Medicus's A$98 million, eight-year contract renewal with U.S. health care company Mercy Health supports Goldman Sachs's bullish call on its stock. "Despite a material step-up in the frequency and value of recent Pro Medicus contract wins, we believe the pipeline remains healthy with little sign of competition being close to matching the Visage solution," analyst Annabel Li says. Pro Medicus's share of the U.S. market remains low at 7% and that highlights the opportunity, "notwithstanding upside prospects from the core Total Addressable Market, adjacencies and potential new markets," Goldman says. Pro Medicus ended Monday at A$182.31, below Goldman's A$193.00/share price target. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

October 08, 2024 00:00 ET (04:00 GMT)