0232 GMT - NIB is preferred to rival Medibank in the near term due to upside risk in its international and travel segments, and fallout due to last year's cyberattack at the latter, say UBS analysts Scott Russell and Shreyas Patel in a note. NIB announced a further deferral of premium increase until Oct. 1 in its recent trading update, with UBS noting that the health insurer continues to gain market share. "We have a positive view of the private health insurance sector currently and our buy rating on Nib is unchanged," it says. Margins are likely to remain higher for longer at NIB, UBS says, and sees a favorable backdrop into FY 2024, forecasting a net margin of 8.8% relative to the company's longer-run target range of 6%-7%.(alice.uribe@wsj.com)

2352 GMT - BHP CEO Mike Henry reckons Australia got its new critical minerals strategy right by not focusing on handouts. "I did see some criticism that the new strategy didn't contain even more by way of subsidies," he says in prepared remarks for an industry forum in Australia. "For what it's worth, I think this is absolutely the right approach," he says. Henry says trying to match the Inflation Reduction Act would be a losing game. "What governments here--federal and state--should focus on are those things within their control to make investment fundamentally more attractive," like permitting and industrial relations policy, rather than the "sugar hit" of subsidies, he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2351 GMT - Spending in the mining industry needs to rise sharply as the world decarbonizes, urbanizes and continues to increase in population, BHP CEO Mike Henry tells an industry forum in Australia. "We need a massive wave of capital investment--perhaps an additional US$100 billion per year in capital investment in the resources sector--if the world is to get on track to meet the Paris-aligned 1.5 degree scenario," he says in prepared remarks. According to S&P Global Market Intelligence, capital expenditure in the mining industry peaked in 2012 at US$164.1 billion and totaled roughly US$100 billion last year. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2321 GMT - Metcash's hardware business eked out revenue growth of 1% in 2H and Citi thinks demand will continue to ease. In a note, analyst Adrian Lemme highlights that Metcash's Total Tools business recorded flat like-for-like sales in Metcash's snapshot of trading in FY 2024 so far, compared to 4.8% growth in FY 2023. This indicates that mature stores are seeing sales decline, Citi says. "We see demand softening from here and believe the space is becoming more crowded with the rollout of stores by Total Tools, Sydney Tools and The Tool Kit Depot (owned by Wesfarmers) among others," Citi says. "We forecast Hardware margins to stabilize at 6.3%, aided by the greater mix of Total Tools earnings." (david.winning@wsj.com; @dwinningWSJ)

2313 GMT - Interest costs and inflation pressures are offsetting rental growth for neighborhood mall owner Region, says Citi analyst Howard Penny in a note. "Relatively strong underlying supermarket sales growth continues to drive attractive total occupancy cost ratios," says Citi, which rates Region a buy. "However, current operational cost inflation is not fully captured by Region's 4% fixed lease escalation profile which places pressure on underlying real rental growth rates." Region is also one of the more prudent valuers of retail cap rates, which remains a headwind in the broader sector, Citi says. (david.winning@wsj.com; @dwinningWSJ)

2309 GMT - Citi trims its earnings outlook for Charter Hall Retail REIT, citing higher funding costs. In a note, analyst Howard Penny notes that 3-month BBSW interest rates have risen to 4.3% and operating cost pressures have also intensified, including for salaries and insurance. While Citi's FY 2023 EPS forecast is largely unchanged, the bank lowers its FY 2024 and FY 2025 EPS forecasts by 2.7% and 3.1%, respectively. That drives a 4.4% reduction in its target price to A$4.30/share. Charter Hall Retail REIT ended Monday at A$3.59. (david.winning@wsj.com; @dwinningWSJ)

2302 GMT - Metcash delivered a creditable FY 2023 result but it hasn't shaken Jefferies's view that the best is behind the supermarket supplier. "Food is giving back Covid share gains, and macro factors are starting to impact Hardware & Tools, which will weigh on margins given elevated costs," analyst Michael Simotas says in a note. "This is compounded by higher interest cost, with increased rates and elevated investment, including on Total Tools put options which don't add to underlying Ebit." Jefferies trims its price target on Metcash by 2.6%, to A$3.80/share, and retains a hold call on the stock. Metcash ended Monday at A$3.76. (david.winning@wsj.com; @dwinningWSJ)

2258 GMT - With the ammonia price declining more in July, Jefferies debates how far the current downturn has to run. The Tampa settlement for July fell by US$55/ton to US$285/ton, which was at the high end of expectations. In a note, analyst Richard Johnson says the price has now dropped by more than 75% in Incitec Pivot's FY 2023 alone and is 83% off its peak. "Whilst the near term outlook remains cautious, it is important to recognize that gas prices are showing some signs of life again and at sub US$300/ton, the price is not a mile away from a cyclical low," Johnson says. Jefferies retains a hold call on Incitec Pivot. (david.winning@wsj.com; @dwinningWSJ)

2254 GMT - Perenti's acquisition of engineering contractor DDH1 looks opportunistic to Jefferies. In a note, analyst Nicholas Rawlinson says a deal helps to solve Perenti's issues pertaining to leverage, tax, cash flow, exposure to West African Resources and perhaps scale. "However, it increases exposure to the more cyclical drilling industry," Jefferies says. It says a FY 2025 price-to-earnings multiple below 5 times is compelling. "But the short-term will now become an even greater focus given the increased cyclicality of earnings," it adds. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

June 27, 2023 01:17 ET (05:17 GMT)