2329 GMT -- Macquarie says theft is likely to drag on Aussie supermarket Coles's financial performance in the current half despite the retailer accelerating security upgrades. Macquarie says theft was one of the key issues for Coles in its fiscal 2023 result, and that it appears to have dragged on Coles's results to a greater extent than chief competitor Woolworths. Coles is responding by putting in place new technology to catch un-scanned items, entry and exit gates to prevent walkout, and trolley locks to prevent people running away with full shopping carts--though the measures are being rolled out at a slower pace than Woolworths. Despite the challenges, Macquarie keeps an outperform rating on Coles, saying that it expects the drag from theft to improve from the second half of fiscal 2024, and that the gap between Coles and Woolworths will narrow. (mike.cherney@wsj.com; @Mike_Cherney)

2310 GMT -- While the August reporting season wasn't as bad as expected for Australian retail and consumer stocks, the sector still faces big headwinds, UBS says. Consumer spending habits are likely to change as buyers trade down to cheaper-priced apparel and general merchandise. Consumers are also likely to buy cheaper private label food products, and spend less out of home, the bank says. UBS says it prefers companies like Treasury Wine that are exposed to affluent households, or younger shoppers that aren't yet renting, such as Lovisa. It also likes stocks that serve older consumers, and retailers that are lower priced or able to win from shoppers trading down, such as Wesfarmers's Kmart chain. Stocks to avoid include Harvey Norman, Domino's Pizza Enterprises, Premier Investments and Super Retail, UBS says. (david.winning@wsj.com; @dwinningWSJ)

2301 GMT -- The next detailed assessment of Chalice Mining's Gonneville base-metals deposit in Western Australia is likely to look very different, UBS says. A scoping study outlined two developments of 15 million tons/year and 30 million tons/year. "We believe the next round of project optimization will look at a smaller and higher grade project," analyst Levi Spry says in a note. UBS now forecasts a smaller 3.75 million tons/year development, rising to 7.5 million tons. Benefits of this approach include lower capex, higher grades and higher recoveries. "The smaller scale start may even bring forward first production (we forecast six months earlier in late 2028) and comes with reduced permitting risk," UBS adds. It upgrades Chalice to neutral, from sell. (david.winning@wsj.com; @dwinningWSJ)

2245 GMT -- It's positive that Australian reits have continued to lift interest-rate hedging profiles, Macquarie says, noting the sector was 71% hedged at the end of June compared to 67% six months earlier. "This should to some extent limit the potential downside risk at a sector level from higher interest rates over the near term, albeit other active earnings items linked to the macroeconomy may still be at risk," Macquarie says. "We note outside of the Covid period, Reit earnings have typically been more resilient than industrials." (david.winning@wsj.com; @dwinningWSJ)

2243 GMT -- Fortescue is facing deepening scrutiny over how it intends to allocate capital between its lucrative iron-ore business and the clean-energy division it wants to aggressively expand. At a sell-side roundtable with Fortescue, talks focused on capital allocation between iron ore, clean energy and shareholder returns, say Macquarie analysts. That follows a decision by Fortescue to no longer set aside 10% of group profit for its energy arm and assess all projects individually. "Projects from Fortescue Energy would have an IRR of low- to mid-teens, while iron ore projects in its pipeline would have an IRR of [more than] 20%," the analysts say. "It is unclear to us how FMG could recover the [circa] 10% return difference as a green premium is not yet evident in the equity market for iron ore miners." (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2242 GMT -- Turns out, Australian property companies were more conservative during the August earnings season than investors. Macquarie notes that FY 2023 earnings growth across the sector fell to 2.5% at the end of the month, from a forecast of 5.7% ahead of the first results. "More broadly, the market is contending with the impact from a slowing economy and rising costs, especially labor and interest costs," Macquarie says. "Given these challenges, we believe companies have guided conservatively and that this often disappointed the street and drove consensus FY 2024 earnings downgrades." Macquarie says the market now appears to be projecting 4% earnings growth for Aussie reits in FY 2024, down from 5% before reporting season began. (david.winning@wsj.com; @dwinningWSJ)

2232 GMT -- Chalice Mining's stock has been heavily sold off since a scoping study for its Gonneville base-metals deposit in Western Australia suggested any development would be less profitable than the market had hoped. Still, Macquarie stays bullish and highlights the study didn't integrate any underground ore sources. "The addition of a 3 million tons per annum underground operation would materially increase the economics of Gonneville due to the addition of higher-grade ore," Macquarie says in a note. "But we note 97% of the underground resource at Gonneville is in the inferred category, and further resource definition drilling is required to enable its integration into the upcoming pre-feasibility study." (david.winning@wsj.com; @dwinningWSJ)

2227 GMT -- IT services company Fineos is downgraded by Goldman Sachs to neutral, from buy, after revenue guidance for FY 2024 missed expectations by 5% with Subscription and Services growth softer than expected. In a note, GS said uncertainties regarding operating leverage, scale margins, and the relationship of Research & Development to revenue growth also fed into its decision to become less bullish about the stock. "Fineos may announce new material deals which could present upside risk to our estimates," GS says. "But we also see offsetting risks to the Services business after the last 6-12 months where customers consciously reduced Fineos spend." (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires