0053 GMT - Premier Investments' FY 2023 results were a mixed bag. Citi says Premier's final dividend of A$0.60/share was below consensus expectations and its 2H gross profit margin also missed. However, Premier says global sales have fallen by only 2% in the first six weeks of FY 2024, tracking below Citi's forecast of a 6% decline in 1H. "Positively, the company sees good opportunity in store expansions in Peter Alexander with six new locations confirmed to be opened in 1H of FY 2024 and another 20 to 30 opportunities to go, in addition to offshore expansion plans," Citi says. Developments in Smiggle are also encouraging, Citi says. Premier's partners aim to open seven freestanding stores before Christmas, a sign of positive momentum. (david.winning@wsj.com; @dwinningWSJ)
0052 GMT - ANZ remains Morgan Stanley's most preferred Australian major bank partly on its business mix and improved operating performance. While all Australian banks are likely to face revenue headwinds next year, ANZ may deliver revenue growth at the top end of the peer group over the three years to FY 2025, MS analysts say in a note. "This reflects improved performance in Australian mortgages, a business mix which supports margin management, and opportunities for market share gains in Institutional payments and cash management," MS says. At the same time, MS sees that ANZ's credit risk profile has continued to improve due to ongoing changes in its risk appetite and business mix. MS raises ANZ's target prices 3.1% to A$27.00. The stock is 1.3% higher at A$25.53.(alice.uribe@wsj.com)
0044 GMT - Patriot Battery Metals' latest drilling results in Canada suggests there's a big enough spodumene deposit away from any glacial lake that could be mined first, making permitting potentially easier, Euroz Hartleys says. "We speculate that an initial +5 years could be mined away from the lake," analyst Michael Scantlebury says in a note. Euroz Hartleys has a speculative buy call on Patriot, and says the recent pullback in lithium and sentiment represents an opportunity for investors to buy stock. "A bright spot in the lithium sector remains the corporate interest, who seem to be taking a longer-term view on the lithium market," Euroz Hartleys says, citing deals such as Albemarle-Liontown. "We believe that there will be ongoing interest from potential acquirers looking for an entry into the strategic North American lithium supply chain." (david.winning@wsj.com; @dwinningWSJ)
0033 GMT - UBS starts National Storage REIT at neutral with a A$2.34/share price target, and lists five triggers that could see it take a more bullish view of the stock. In a note, analyst Cody Shield says the bank would look for strong interstate migration to southeast Queensland to continue as this is National Storage REIT's core market. UBS also wants to see a rebound in acquisitions from current depressed levels, noting transactions totaled A$130 million in FY 2023 versus an average of A$286 million a year in FY 2018-2022. Rounding out its wish list is an improvement in housing turnover, aback book rate growth above UBS's estimates of 12.5% in FY 2024, and a sustained decline in bond yields. National Storage REIT is unchanged at A$2.17. (david.winning@wsj.com; @dwinningWSJ)
0023 GMT - Uranium companies restarting shuttered mines with proven track records in stable jurisdictions should trade at a premium as a nuclear revival sparks demand for the fuel, Bell Potter analyst Regan Burrows says. In client notes, he highlights Australia's Paladin Energy, which is restarting the Langer Heinrich mine in Namibia, and Boss Energy, which is restarting the Honeymoon mine in Australia. Burrows raises his valuation on Boss to A$5.53 from A$3.90 and keeps a speculative hold recommendation. It trades in Sydney at A$4.775, up 0.3%. "BOE's Honeymoon operation is set to restart production in [the December quarter of 2023], offering utilities stability of supply/jurisdiction from a known asset and management team." He raises his valuation on Paladin to A$1.31 from A$1.12, but downgrades to speculative hold from buy after a multimonth rally. It is down 0.9% at A$1.09. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
2315 GMT - Santos's Pikka oil project in Alaska is likely to cost more to develop than the energy company expects, UBS says, but there is better news on production. In a note, analyst Tom Allen predicts gross capex for Pikka will total $3.1 billion, which he calls a "conservative" estimate even though it is above Santos's current guidance of $2.6 billion. After a site visit to Alaska, UBS revises its expectations for the plateau period of oil production to six years, from 4.5 years before. "We now assume Pikka oil production is sold at an Alaska North Slope (ANS) crude index price, which we forecast will generate a $0.50/bbl premium to Brent," UBS adds. (david.winning@wsj.com)
2306 GMT - Jefferies raises its price target on ReadyTech by 13%, to A$4.30/share, and predicts that the Australian software provider's capitalization of research and development costs has now peaked. In a note, analyst Wei Sim says R&D capitalization is likely to moderate back toward historical averages in coming years. "In our view, this alleviates one of the key concerns for the company," says Jefferies, which rates ReadyTech a buy. Jefferies says R&D capitalization is likely to fall to 40% in FY 2026, from 58% in FY 2023. ReadyTech's shares ended Wednesday at A$3.70. (david.winning@wsj.com; @dwinningWSJ)
2259 GMT - The ammonia price is now rising as fast as it fell, says Jefferies. "After a drastic fall of over 80% from its peak to trough in the space of 16 months, it has now risen by 95% (or $280/ton) over the last two months," analyst Richard Johnson says in a note. The October Tampa settlement, an industry benchmark, rose by $185/ton to $575/ton and Johnson says rising cash costs are finally feeding through to end product prices and the global market balance is supported by world-wide supply shortages. A rising price is a tailwind for Incitec Pivot, which is rated at hold by Jefferies. (david.winning@wsj.com)
2259 GMT - Another weak month for container volumes doesn't shake Jefferies's expectation that Qube's FY 2024 earnings should improve on the year before. Container volumes fell by 6.3% across all four key ports--Melbourne, Sydney, Brisbane and Fremantle--in August with full imports down a steeper 9.7%. "While container volumes are expected to remain weak at least until October from the tough comps in the prior corresponding period, we continue to see the diversified nature of Qube's activities as supportive of earnings growth in FY 2024," analyst Anthony Moulder says in a note. (david.winning@wsj.com; @dwinningWSJ)
(END) Dow Jones Newswires
September 28, 2023 01:06 ET (05:06 GMT)