0453 GMT - A dynamic where Australian insurers are hiking premiums to cover higher expenses and claims costs is continuing, but S&P Global Rating sees that potentially moderating going forward. "Any increase in premium will likely slow and similarly, there should be some moderation in the cost of meeting those claims," Craig Bennett, Director, Lead Analyst, Insurance Ratings at S&P Global Ratings said in a webinar. Currently, he says, S&P thinks insurers have been putting up premiums in response to higher reinsurance costs, costs of claims and claims arising in response to inflation. "So we're seeing the cost of repairs impacted by shortage of materials but also a shortage of labor. All of those factors are feeding into the higher claims that need to be covered for the insurers to make a profit," says Bennett. (alice.uribe@wsj.com)

0408 GMT - CSL's share-price decline presents an attractive entry point, although would be investors probably need to be patient for any rewards, UBS analysts say. They say in a note to clients that they see the stock's value appreciating following its 14% decline since early June, but that its upward journey will likely resemble a marathon rather than a sprint. They think that investors generally want to see the blood-products giant provide more detail to support its growth forecasts. UBS has a buy rating and A$340.00 target price on the stock. That would leave it trading at 34 times fiscal 2024 earnings and imply 20% mid-term EPS growth, in-line with international peers. Shares are down 0.1% at A$269.00. (stuart.condie@wsj.com)

0343 GMT - PSC Insurance's FY 2024 guidance is positive, as the Australian insurance broker has been perceived to have less tailwinds from the strong renewal-rate increases seen in property-related risk classes, say E&P analysts in a note. This is because of the company's concentrated exposure to financial and professional lines at its Paragon international wholesale business, it notes. "We understand the implied strong organic growth in the FY 2024 forecast is broadly spread across the business segments," says E&P, noting that PSC's FY 2024 guidance is also ahead of current forecasts. The midpoint of A$124.5 million is up 2% on E&P forecasts, and up 1.5% on Visible Alpha consensus on consolidated Ebitda forecasts, E&P says. (alice.uribe@wsj.com)

0322 GMT - Goldman Sachs analysts are waiting for IDP Education to outline strategies to mitigate market-share losses in English-language testing. The GS analysts tell clients in a note that rival Pearson's 1H volumes were largely in line with their expectations and that they are comfortable for now with their current FY 2024 and FY 2025 estimates for IDP's English-language testing business. Nonetheless, the Australian company's market-share loss is expected to more than offset industry growth in FY 2024 and the GS analysts are looking to IDP's FY 2023 result announcement for commentary on how this might be addressed. GS has a buy rating and a A$28.90 target price on the stock, which is down 0.4% at A$24.67. (stuart.condie@wsj.com)

0143 GMT - Australians are shifting away from online investing as cost of living pressures bite, Investment Trends, a financial services industry research firm, says in a new report. Around 1.3 million Australians placed trades on shares or ETFs in the 12 months to May, down 1.5 million or 15% from six months earlier. "The primary cause of the decline is a remarkable surge in dormancy, 423,000 previously active investors did not participate during the reporting period, combined with lower inflows of new-to-market investors," Irene Guiamatsia head of research says. Amongst dormant online investors, 34% cited not having enough money as the main factor for stopping activity. Concurrently, the report sees a continued growth in allocation to term deposits or high-yielding savings accounts.(alice.uribe@wsj.com)

0108 GMT - Nine Entertainment's significant digital revenue help the Australian media conglomerate keep its buy rating from UBS despite concern that advertising weakness could extend into 1H fiscal 2024. UBS analyst Lucy Huang notes that 70% of Nine's fiscal 2024 earnings are projected to come from digital sources, which offers some protection against softening free-to-air TV ad-market weakness. Industry data suggests that 4Q fiscal 2023 ad markets declined 17% on year, which was better than the 22% drop Huang had anticipated. She continues to assume that a cyclical recovery will kick off in 2H fiscal 2024. UBS lifts its target price on the stock 4.2% to A$2.50. Shares are down 0.9% at A$2.14. (stuart.condie@wsj.com)

0101 GMT - TPG Telecom's potential A$6.3 billion sale of fixed-line assets to Vocus Group has significant appeal but would reduce the quality of the Australian telecommunications provider's business, Morgan Stanley analysts say. They tell clients in a note that TPG could reduce debt and return capital to shareholders if the sale goes through. The analysts calculate that TPG's remaining assets would be trading at an implied 5.2X annual Ebitda, which compares with an average 6.5X across global peers. This looks reasonable given that TPG's Vodafone Australia is the No. 3 operator in Australia, they add. MS has an equal-weight rating and A$5.60 target price on the stock, which is flat at A$5.60. (stuart.condie@wsj.com)

0054 GMT - The Early signs are that Xero is delivering on management's recent commentary that the cloud-accounting provider will balance price with volume across its global markets, Goldman Sachs analysts say. They raise their annual revenue forecasts for the three fiscal years through FY 2026 by 3% each, telling clients in a note that price rises in Australia and New Zealand were stronger than they had anticipated. They say the rises show Xero has meaningful levers to deliver price-led expansion in its mature markets. Subscriber growth is marginally softer than GS had predicted, but customer churn looks resilient despite macro challenges. GS raises the stock's target price 13% to A$147.00 and maintains a buy rating. Shares are up 0.9% at A$124.99. (stuart.condie@wsj.com)

0054 GMT - MoneyMe's 4Q FY 2023 trading update shows its strategic focus on maintaining profitability while tempering loan-book growth amid the current macro environment, Morgans analyst Steven Sassine says in a note. A highlight of the update is that the credit quality of the financial-services company's book continued to improve and it now has a higher overall percentage of secured assets, Morgans says. MoneyMe is also now profitable thanks to pivoting to a more moderated rate of book growth. Still, it faces near-term risks that include macro uncertainty and volatility, and Morgans thinks the stock that would likely suit a more risk-tolerant investor. (alice.uribe@wsj.com)

0040 GMT - Profit expectations for Ramsay Health Care heading into its FY 2023 result on Aug. 24 look too high to RBC Capital Markets. Ramsay hasn't provided annual guidance, and RBC expects an Ebitda of A$1.92 billion and a net profit of A$312 million. Those forecasts are 5%-10% below consensus hopes, RBC says. Also front of mind for RBC is staffing productivity at Ramsay's private hospitals, given the company's 3Q update that this was a headwind to profit. RBC says profitability at Ramsay's U.K.-based Elysium business has been impacted by high staff turnover. "We will look for evidence of whether that has improved and the extent of April price increases," RBC says. Its price target falls 10% to A$61.00/share. Ramsay is down 0.8% at A$58.88. (david.winning@wsj.com; @dwinningWSJ)

0033 GMT - The slower pace of deposit growth at Australian banks, driven by a fall in household deposits growth, potentially has negative implications for bank margins, Citi analysts say in a note. The slowing pace comes at a time of surging lending growth, thereby magnifying a funding gap that is already being impacted by banks' maturing term funding facility payments, they say. As a result "banks have been forced to rely on expensive deposits from financial institutions and business, pressuring margins." Against this backdrop, Citi prefers ANZ, with the least TFF share amongst the majors, as well as because of its institutional tilt and low retail home loan exposure. (alice.uribe@wsj.com)

0031 GMT - TPG Telecom could return about A$2.7 billion in capital to shareholders if it completes the A$6.3 billion sale of fixed-line assets to Vocus Group, Goldman Sachs analysts say. They reckon that TPG could offset tax obligations from the sale by deferred tax losses and use the majority of proceeds to repay debt. That would leave plenty of capacity for a special dividend to shareholders, they tell clients in a note. TPG has said there is no certainty of a transaction but the GS analysts point out that the ASX-listed telecommunications operator has already pushed out revenue targets for the assets in question. GS has a neutral rating and A$5.50 target price on the stock, which is flat at A$5.60. (stuart.condie@wsj.com)

0030 GMT - BWP Trust's dividend guidance appears to be ahead of consensus expectations, Citi says in a first look at the Australian Reit's annual result. BWP said it expects its FY 2024 distribution to be similar to the 18.29 Australian cents payout for FY 2023. That's higher than the 18.24 Australian cents that the market had been expecting from BWP in FY 2024, Citi say. "The FY 2023 dividend included A$3.9 million of capital profits released from undistributed income reserve (3.3% of distributable profit and up from A$2.8 million in FY 2022) and this may be utilized to support distribution in FY 2024," Citi says. BWP is down 0.8% at A$3.64 today, with the benchmark S&P/ASX 200 index also lower. (david.winning@wsj.com; @dwinningWSJ)

(MORE TO FOLLOW) Dow Jones Newswires

August 02, 2023 00:55 ET (04:55 GMT)

2341 GMT - Seven West Media loses a bull at UBS on worries that the media conglomerate could lose revenue share in key markets. UBS analyst Lucy Huang points out that industry data suggests that rival Nine Entertainment's cricket broadcasts helped it make strong viewership gains in early July, at the expense of Seven and Paramount-owned Ten. She lowers her longer-term forecast for Seven's share of metropolitan free-to-air ad markets to 37% from 37.5%. More broadly, Huang writes in a note that there is risk of overall media ad markets weakening further over the next six months. UBS cuts its target price 32% to A$0.41 and lowers its recommendation to neutral from buy. Shares are at A$0.38 ahead of the open. (stuart.condie@wsj.com)

2337 GMT - Mortgage growth picked up at some of Australia's second-tier banks in the June quarter, but slowed at Macquarie, Morgan Stanley analysts say in a note looking at APRA and RBA data. Despite stronger growth in June, Macquarie's growth slowed meaningfully in the quarter, while growth picked up at Suncorp, ING, HSBC and Bendigo. Household deposits, which had achieved a high level of growth over the past year, are also shrinking at Macquarie. For the June quarter, HSBC, Bendigo and ING were stronger than the wide system growth. "In our view, recent changes in growth rates and deposit pricing indicate that competition is picking up," MS says.(alice.uribe@wsj.com)

2321 GMT -- ESG is likely to be a key part of the upcoming Australian results season narrative, with companies expected to focus on decarbonization progress updates and social considerations, say Macquarie analysts in a note wrapping up key events in July for ESG. At the same time, Macquarie notes that early findings from APRA's study on cybersecurity reveals a number of common control gaps. These include limited assessment and control of third-party information security capability and incident response plans that aren't regularly reviewed or tested. "Going forward, APRA is continuing its assessment with findings from the final tranches to be rolled out in late 2023," says Macquarie. (alice.uribe@wsj.com)

2307 GMT -- Australia's private health insurance sector is likely to see macro trends become more challenging in 2H FY 2024, say Macquarie analysts in a note. "We are perilously close to the tipping point for post-Covid-19 claims catch-up and industry participation contraction," the investment bank believes. The outlook for policyholder growth is likely to be an important part of results for Medibank and Nib, and with affordability biting, expectations are varied, says Macquarie. It reckons, in general, market growth is on track to be around 50-100 basis points lower in FY 2024 than FY 2023. Visible Alpha consensus has Medibank policyholder growth for FY 2024 at 1.5% and 2.8% for Nib, Macquarie notes. (alice.uribe@wsj.com)

2300 GMT - Historically the strongest lead indicator for AGL Energy's share-price performance has been the forward wholesale electricity price curve, and it's not looking good for bulls. "With the FY 2025 curve down 10-12%, the risk of an earnings disappointment increases," says Macquarie, downgrading AGL to neutral from outperform. Macquarie says the FY 2025 curve is reflecting the current soft demand, strong coal-generator performance and falling underlying commodity prices with 5,500 kilocalorie coal trading at Australia's east-coast price cap of A$125/ton. "The outcome in our opinion is FY 2024 is most probably likely to be peak earnings in this current earnings cycle," the bank says. (david.winning@wsj.com; @dwinningWSJ)

2252 GMT - TPG Telecom could strengthen its balance sheet and return up to A$470 million in capital to shareholders if it completes its A$6.3 billion asset sale to Vocus Group, UBS analyst Lucy Huang writes in a note. She admits that these are just preliminary calculations, but reckons that TPG could pays down A$3.9 billion of debt and hold sufficient cash to fund lease liabilities, while still handing shareholders A$0.09-A$0.25 a share. UBS has a neutral rating and A$5.55 target price on the stock, which was at A$5.60 ahead of the open. (stuart.condie@wsj.com)

2231 GMT - EVT loses a bull in Citi which believes risks to its cinema business have risen, despite moviegoers flocking to theaters to see Barbie and Oppenheimer. In a note, analyst Sam Teeger says the ongoing writers and actors' strike could adversely impact the box office in 2024 and 2025, should it persist. Citi also worries about a potential slowdown in spending on entertainment due to cost-of-living pressures, which was evident in box office trends before the release of Barbie and Oppenheimer. "While we are more positive on the hotel business, industry data also points to slower recent growth," says Citi, moving to neutral from buy. Still, EVT's share price is supported by the company's A$2 billion property portfolio "and we estimate the operating business (ex property) is trading at an undemanding 5x Ebitda," Citi says. (david.winning@wsj.com)

(END) Dow Jones Newswires

August 02, 2023 00:55 ET (04:55 GMT)