Forum Topics DJ Australian Equities Roundup -- Market Talk 22 Dec 2022 15:00:03
Jimmy
2 months ago

News SummaryDJ Australian Equities Roundup -- Market Talk22 Dec 2022 15:00:033 Views0219 GMT - An increase in the capital cost of Pilbara Minerals' P680 expansion project is more than offset by price reviews with major customers that have led to increases in fiscal 2023 spodumene pricing, Goldman Sachs analysts say in a note. "The revised offtake pricing applies for all shipments to major offtake customers falling within (December 2022) and onwards, which drives a significant increase in our FY23E earnings," the GS analysts say. Yet, the miner's stock is down 0.7% at A$3.815 in Sydney, taking week-to-date losses to more than 7.0%. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0132 GMT - Kogan.com's acquisition of fallen furniture retailer Brosa looks relatively low-risk, but more clarity on profitability is needed before its earnings impact can be gauged, RBC Capital Markets analyst Wei-Weng Chen says. The settling of logistics support for Brosa customers with undelivered orders will add to the A$1.5 million acquisition costs, Chen tells clients in a note. RBC has a last-published sector-perform rating and A$3.50 target price on the stock, which is up 1.2% at A$3.31. (stuart.condie@wsj.com; @StuartLCondie)

2336 GMT - TPG Telecom will raise its mobile prices in early 2023, not waiting for the resolution of its attempt to share assets with rival Telstra, Goldman Sachs analysts say. Noting that Optus used inflationary pressure across the telecommunications sector to justify its recent price rises, TPG is likely to increase its pricing once it finalizes wage negotiations with staff, the analysts tell clients in a note. GS sees a variety of outcomes as TPG and Telstra prepare to appeal against the competition regulator's block on their asset-sharing agreement, including the renegotiation of a less ambitious agreement or an alternative deal for TPG with Singapore Telecommunications-owned Optus. (stuart.condie@wsj.com; @StuartLCondie)

2323 GMT - Beach Energy's drilling campaign in the Perth Basin of Western Australia could create value for investors, says Macquarie, with Mineral Resources's bid for Norwest Energy and a recent takeover tussle for Warrego Energy underscoring the area's potential. Beach is drilling 5-8 wells with Mitsui in the basin. In a note, Macquarie says its modeling suggests this program could be worth up to A$600 million, or A$0.27/share, to Beach based on a 40% chance of each well being successful. "The first well (Elegans-1) may have been dry, given no disclosure from Beach yet (should be in the second well by now)," Macquarie says. "Regardless of Elegans-1 results, there are plenty more targets to come, which we expect should support Beach's share price as the anticipation builds." (david.winning@wsj.com; @dwinningWSJ)

2303 GMT - Weak production guidance by 29Metals and increased operational uncertainty at its Capricorn operation prompt Macquarie to turn bearish on the stock. 29Metals signaled flat copper output in 2023 compared to this year, with zinc production up 5-10% on year and gold-and-silver output down 10-15%. In response, Macquarie cuts its production estimates by 19-35%. 29Metals also signaled reduced milling rates at Capricorn while permitting is underway for a tailings dam lift at the mine. "Due to EPS downgrades, along with deceasing our EV/EBITDA multiple from 5.5x to 5.0x to reflect increased uncertainty at Capricorn we reduce our target price by 44% to A$1.50 per share and change our recommendation to underperform," Macquarie says. 29Metals falls 19% to A$1.88 in early trading. (david.winning@wsj.com)

2255 GMT - Transurban's latest Sydney motorway widening project looks likely to strongly lift the toll-road operator's earnings from FY27, Macquarie analysts say. They point out in a note to clients that traffic on the Sydney M5 motorway rebounded 23% over three years after it was widened. The rebound at the latest M7 project is likely to be even stronger due to the construction of a second Sydney airport nearby, they say. They characterize the M7 widening as a low-risk, high-value project. Macquarie has an outperform rating on the stock and lifts its target price 0.8% to A$14.19. Shares last traded at A$13.69. (stuart.condie@wsj.com; @StuartLCondie)

1152 GMT - Jefferies drops Treasury Wine Estates to hold from buy, after the vintner's stock rallied by more than 1/4 since mid-June to edge closer to the bank's price target of A$15.00/share. That outperformance was achieved despite broader market turbulence and increasing global consumer uncertainty, analyst Michael Simotas says in a note. "China wine reallocation has exceeded expectations, premiumization trends have continued, and there are signs of progress in the U.S. market," the note says. "Continuation of these trends, coupled with supply chain cost-out should underpin strong growth, but with modest upside to our unchanged price target and some signs of consumer risk, we cut to hold." Treasury Wine ended Wednesday at A$13.70. (david.winning@wsj.com; @dwinningWSJ)

2149 GMT - Wesfarmers is not benefiting from strong lithium prices because its refinery won't be complete until FY 2025, Jefferies says. "However, satellite imagery suggests the Mt Holland mine and concentrator are well progressed, and we expect Wesfarmers to sell spodumene ahead of this to capitalize on the buoyant market," analyst Michael Simotas says in a note. Jefferies now forecasts maiden spodumene sales in the December quarter of 2023, noting ore stockpiles are already mounting. That drives an around 9% earnings upgrade in FY 2024. Jefferies retains a hold call on Wesfarmers. (david.winning@wsj.com)

0548 GMT - The failure of TPG Telecom and Telstra to get their mobile-network asset-sharing arrangement past Australia's competition regulator looks like a positive for Singapore Telecommunications-owned rival Optus, Macquarie analysts say. They had estimated that the arrangement could have raised free cash flow at Telstra by about 1% and at TPG by about 4%, although much depended on customer movements between the networks. Optus had objected to the arrangement, saying that it would grant Telstra additional sway over the market. The analysts say in a note that they hadn't included the proposal in their forecasts, which remain unchanged. They have neutral ratings on both TPG and Telstra. (stuart.condie@wsj.com; @StuartLCondie)

0410 GMT - Australian financial advisers, who have modeled scenarios in the last 90 days, could potentially direct more inflows into managed accounts and term deposits in the next 60 days, says a new report by ARdata. Managed funds and Australian-listed shares are likely to see an outflow of investments, it said. The report called "Future Flow Intention," tracked the market intention of retail advisers using a modeling platform to move funds into or out of products. The modeling platform covers around 20% of Australian Financial Services license holders in the retail advice market. The report says there's a strong possibility that Hub24 and Netwealth, along with BT Panorama will see a greater inflow of investments on their platforms, while Macquarie may see an outflow of investments in the next 60 days. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

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