0402 GMT - Alliance Aviation's fiscal 2023 earnings guidance was comfortably ahead of what had been anticipated by Ord Minnett analysts, who see further earnings growth ahead. They tell clients in a note that Alliance's 2H performance showed only some of the earnings power of the charter company's assets. They point out that numerous craft were deployed during the period and that utilization increased significantly. Fiscal 2024 should demonstrate the full earnings power of the current fleet and the ramp-up of additional jets announced this week, they say. Ord Minnett lifts the stock's target price 2.3% to A$4.50 and maintains a buy call. Shares are up 6.25% at A$3.40. (stuart.condie@wsj.com)
0342 GMT - Production at Rio Tinto's majority-owned Oyu Tolgoi copper and gold project is ramping up ahead of schedule, say Goldman Sachs analysts after visiting the site in Mongolia. They tell clients that, by July 12, Rio had 56 draw bells in operation at the project's Panel 0, compared with 25 in its plan. That represents 45% of the panel's total, they write in a note. They reckon this means there is some upside risk to Rio's production forecasts. They add that about 86% of the project has been completed with US$1.2 billion of the project's US$7.1 billion of growth capital still unspent. GS raises the stock's target price 0.8% to A$129.40 and maintains a buy rating. Shares are up 1.4% at A$118.845. (stuart.condie@wsj.com)
0313 GMT - St Barbara gets a new bull at Macquarie following the Australian gold miner's divestment of its Leonora assets. The investment bank resumes coverage of the stock with an outperform rating. Its analysts tell clients in a note that St Barbara's production in 4Q FY 2023, its last quarter to feature a contribution from Leonora, was about 35% higher than they had anticipated. With the Simberi project set to be St Barbara's key producing asset to FY 2027, the Macquarie analysts place a A$0.35 target price on the stock. Shares are up 7.3% at A$0.295. (stuart.condie@wsj.com)
0305 GMT - Telstra's mobile segment could be at risk of disruption from the proliferation of satellite-to-mobile services in Australia, Goldman Sachs analysts say. They tell clients in a note that Telstra's superior coverage area is significant in maintaining its outsize share of Australia's mobile market and pricing premium. A shift toward 100% satellite-to-mobile coverage and rival Optus's agreement with Starlink could reduce Telstra's coverage advantage in regional areas, they say. (stuart.condie@wsj.com)
0210 GMT - Term deposits are likely to be a more material headwind for Australian banks' NIMs in 2H FY 2023, say Goldman Sachs analysts Andrew Lyons and John Li in a note. "As cash rates have risen, deposit spreads initially expanded as banks lagged in passing them through. However, over the past three months, we have seen a contraction across most products," says GS. It reckons that term-deposit repricing will be at a higher rate later in the cycle, and there will likely be an acceleration in the shift from at-call deposits into term deposits. As part of GS's deposit product pricing review, the investment bank sees that term deposits remained a tailwind for sector NIMs in the March half from the prior half, but GS reckons this will turn into a headwind in 2H. (alice.uribe@wsj.com)
0142 GMT - Australian wealth-management platform Netwealth is likely to see headwinds from elevated gross outflows, say Macquarie analysts in a note. Due to this, and on valuation grounds following its recent outperformance versus listed peers and the Small Ordinaries index, Macquarie cuts its rating on the stock to neutral from outperform. "Elevated gross outflows continue to weigh on net flows," says Macquarie. Additionally, the attractiveness of term deposits relative to Netwealth's cash transaction account and equities is causing headwinds on margins and net flows. Macquarie cuts its target price on the stock by 4% to A$14.40. Netwealth falls 7.8% to A$13.32.(alice.uribe@wsj.com)
0125 GMT - Woolworths, Coles and Metcash are better placed than other retail and consumer companies to weather challenges including rising labor costs, say UBS analysts Shaun Cousins and Jarrod Chisholm in a note. They attribute this to the fact that these companies sell essential products and have previously been able to raise prices. In general, UBS see the Australian supermarkets sales outlook as positive due to population growth and expectations that there will be a shift from out-of-home to at-home consumption. They could also be assisted by elevated, but moderating, food inflation, which could offset the risk of customers moving to lower gross profit private-label products and losing market share to Aldi. (alice.uribe@wsj.com)
0129 GMT - AGL Energy should continue to benefit from higher power pricing and a lack of new entrants in energy retail, Morgan Stanley analysts say. They reckon that fiscal 2023 customer churn from incumbents AGL and Origin Energy fell by 9% from the prior fiscal, and by 56% on fiscal 2021. They tell clients in a note that a concentrated industry structure means that a return to aggressive discounting looks unlikely, supporting AGL's revenue outlook. They raise target price by 4.4% to A$11.88 and maintain an equal-weight rating on the stock, which is up 1.2% at A$11.34. (stuart.condie@wsj.com)
2240 GMT -- Speculation is rife that Treasurer Jim Chalmers will officially announce that RBA Gov. Philip Lowe's term at the helm of the central bank will end in September, but there's huge uncertainty about who will replace him. Media reports suggest the most likely candidates include RBA Deputy Governor Michele Bullock, Treasury Secretary Steven Kennedy and Jenny Wilkinson, who currently heads up the Department of Finance. Ousting Lowe against a backdrop of a generational high in inflation carries risks. Financial markets will likely react to the appointment as they weigh what policy direction might come. (james.glynn@wsj.com)
0601 GMT - Westpac Chief Executive Peter King wants housing-approval regulations to be standardized across Australia to speed up construction and improve supply. King tells lawmakers in Canberra that approvals processes are often too slow and that the lender's customers say it is easier to build in Queensland state than in New South Wales, which is Australia's most populous state. He says that "we do need population growth" to support the economy and he believes that more homes are needed. (stuart.condie@wsj.com)
Netwealth's 4Q FY 2023 funds flow update shows funds under administration and net funds flow was ahead of UBS forecasts, say its analysts. Even so, they see high interest rates are impacting client appetite, and that no FY 2024 guidance or cost commentary was provided by the company. "We anticipate lumpy flows to continue with new client wins and client transitions, the quarterly timing of which are both hard to predict," says UBS, adding that 4Q outflows were surprisingly high. UBS keeps its buy call and A$16/50/share target price, and says Netwealth is its preferred name in the wealth platforms sector. Netwealth rises 5.7% to A$14.53/share.
0518 GMT - Westpac hasn't seen a significant increase in hardship arrangements for its borrowers, CEO Peter King tells an Australian parliamentary committee. Instead, most of the customers contacting Westpac want to understand available options, he says. At the same time, King says in Westpac's loan book, credit quality is still sound, with the level of stressed assets at historical lows. On the cost of living, however, Australian families are feeling the strain as savings buffers run down, he says. "We recognize it will get harder from here." (alice.uribe@wsj.com)
(END) Dow Jones Newswires