0213 GMT - Westpac's operating restructure announced earlier this week appears to signify that the lender's 'fix' agenda is largely complete, say Morgan Stanley analysts in a note. They reckon that the separation of consumer and business banking gives Westpac a better chance to execute its 'perform' ambitions. "Alongside the management changes, we view these developments as a step in the right direction," MS says. But a sustained re-rating will require more consistent margin management, better cost control and improved franchise performance, MS says. It sees the potential for more investment and higher cost growth over the next couple of years.(alice.uribe@wsj.com)
0158 GMT - NAB is on track with its four financed emissions targets for thermal coal, oil & gas, power generation and cement, Macquarie analysts say after the Australian lender's climate briefing. NAB says it may reach its 2030 target for zero exposure to thermal coal ahead of time, Macquarie notes. NAB's engagement with 100 high-emitting customers shows that the transport sector is lagging on transition pathways, particularly due to the fact there are a number of private companies that may not be as advanced on disclosures. Of the 100 customers, 72% have climate reporting aligned with the Task Force on Climate-related Financial Disclosures, and 67% have a net-zero target. (alice.uribe@wsj.com)
0151 GMT - Some of the cost inflation pressuring miner BHP in FY 2023 is expected to subside over the fiscal year ahead, while the company will likely also benefit from higher commodity prices during the period, Jefferies analysts say in a note. "Better margins and cash flow should lead to substantial capital returns and a higher share price," say the analysts, who argue that BHP's premium versus other diversified miners is justified in part by its low geopolitical risk and high-quality assets. In a quarterly report, BHP's CEO Mike Henry highlights inflationary pressures that continued to impact the miner during FY 2023 and says the company remains focused on productivity to remain competitive. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0148 GMT - QBE's headline 1H FY 2023 combined operating ratio is likely to be around 99.0%, much higher than the market anticipates, Citi analysts say in a note. That is also higher than the investment bank's previous estimate of 98.0%, it adds. QBE has said in an update that its 1H results are likely to be affected by items including US$40 million of adverse crop development and a catastrophe overrun of US$165 million, above Citi's US$100 million estimate. Still, Citi notes this is being absorbed in the guidance, with QBE reiterating its FY 2023 COR estimate of 94.5%. With topline growth also slightly ahead of Citi's expectations, it keeps a buy call and A$13.70 target on the stock, which is up 2% at A$15.55. (alice.uribe@wsj.com)
0141 GMT - Life360's risk-reward continues to look attractive despite the stock's 60% climb so far in 2023, Morgan Stanley analysts say. They say margins will be critical to how the market perceives the family-safety app developer's June quarter results. The analysts use a note to clients to highlight the fact that Australia-listed software peers including Xero and Megaport have been re-rated on margin expansion. Life360 has multiple levers to protect or exceed its 2023 guidance, they add. MS lifts its target price 12% to A$9.50 and stays overweight on the stock, which is down 0.4% at A$7.85. (stuart.condie@wsj.com)
0125 GMT - Evolution Mining delivers a weak 4Q result, marred by higher costs and challenges at Red Lake, RBC Capital Markets analyst Alex Barkley says in a note. The miner's gold output misses RBC's estimate by 4% and consensus by 6%, he says. All-in sustaining costs are 16% higher than both RBC's expectations and the market's, Barkley adds. "Red Lake missed Q4 guidance set as recently as April," he says. While the weak 4Q result does cast somewhat of a shadow heading into a new fiscal year, "FY24 guidance already being set does reduce any potential downside from the result," says Barkley. Evolution is up 0.7% at A$3.765/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0106 GMT - Flight Centre's improved FY 2023 earnings guidance appears to be driven by the Australian travel agent's corporate division, Citi analysts say in a note. They admit that Flight Centre's trading update is light on detail but point out that guidance for A$11 billion of total transaction value at the corporate division compares with the average analyst forecast of about A$10.5 billion. This inspires some optimism at Citi, with the tilt toward corporate the key driving factor in achieving a forecast 2% pre-tax profit margin. Citi has a last-published A$25.50 target price and buy rating on the stock, which is up 4.1% at A$21.67. (stuart.condie@wsj.com)
0105 GMT - Macquarie is surprised the market hasn't reacted more negatively to Woodside's setback with its Sangomar oil development. Woodside this week raised the cost estimate for Sangomar by as much as 13% after identifying issues with its floating production storage and offloading facility that need fixing. Remedial work on the FPSO will happen in Singapore before it is moved to Senegal. "The lack of oversight and awareness of the issue by Woodside management raises questions," Macquarie says. "FPSO build quality must be attributable to the yard (COSCO Shipping Heavy Industry Co's Dalian yard) and MODEC, however, Woodside should have been closely overseeing this." China's Covid-19 policies may have contributed to the quality issues, the bank speculates. (david.winning@wsj.com; @dwinningWSJ)
0059 GMT - Zip Co.'s 4Q performance was stronger than what RBC Capital Markets analyst Wei-Weng Chen had anticipated, despite declining customer numbers. Chen says in a note that the Australian buy-now-pay-later provider's outperformance was driven by a strong improvement in revenue margins even as total transaction value missed expectations. He points out that the bad debt performance was mixed, with U.S. operations performing well but Australia and New Zealand deteriorating meaningfully amid increasingly challenging macro conditions. RBC has a last-published sector-perform rating and A$0.80 target price on the stock, which is up 11.5% at A$0.485. (stuart.condie@wsj.com)
0057 GMT - Santos recently submitted its new environmental plan for the development of the Barossa natural-gas field offshore northern Australia, Citi says, citing a conversation with the energy company. Drilling at Barossa has been suspended since an Australian court ruled in favor of an indigenous leader on the remote Tiwi islands who argued that Santos didn't properly consult his clan on its impact. "Our expectation is an expedited review process will take 2 months to complete, inferring a return of confidence in the project by the market around September and adding confidence to Santos expecting to complete the project on schedule," Citi says in a note. (david.winning@wsj.com; @dwinningWSJ)
0037 GMT - Mining company BHP continues to meet production targets and, while its fiscal 2024 copper-output projection is a tad softer than expected, "in general we think the company is continuing to execute in its key areas," RBC Capital Markets analysts Tyler Broda and Kaan Peker say in a note. "The biggest delta to expectations is probably the net debt guide, which could temper payout expectations at the FY results and indicate higher costs/capex coming" when BHP reports FY earnings next month, they say. The analysts stick with their sector-perform rating and A$38 target price. BHP is up 0.5% at A$44.88. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
2352 GMT - Ansell's FY 2023 earnings look slightly stronger than Macquarie analysts had expected but they still see plenty of near-term challenges. The protective-garment manufacturer's guidance for EPS of between US$1.17 and US$1.18 compares with Macquarie's forecast of US$1.15. Yet the analysts say in a note that guidance for FY 2024 EPS of US$0.92 to US$1.12 is 17% lower at the midpoint than their forecast of US$1.22. This is before investment program costs, they add. The impact of customer destocking still makes near-term demand uncertain, they say. Macquarie cuts its target price 7.0% to A$25.10 and keeps a neutral rating on the stock, which was at A$23.28 ahead of the open. (stuart.condie@wsj.com)
2336 GMT - Northern Star's path to producing 2 million troy ounces of gold by fiscal 2027 will likely be less linear than initially guided at the time of its merger with Saracen Mineral Holdings in early 2021, says Jefferies. That view reflects surprise at Northern Star's FY 2024 production goal of 1.6 million to 1.75 million oz. Analyst Mitch Ryan says in a note the guidance materially missed his 1.89 million oz forecast and consensus expectations for 1.81 million oz. Jefferies trims its price target on Northern Star by 8% to A$11.50/share in response. Northern Star ended Wednesday at A$12.59. (david.winning@wsj.com; @dwinningWSJ)
(END) Dow Jones Newswires