2233 GMT - Bank of Queensland's A$79 million of restructuring and integration costs were larger than Goldman Sachs expected. BOQ on Friday said the items--comprising A$35 million of restructuring costs and A$44 million of costs associated with the integration of ME Bank--would weigh on 2H statutory net profit after tax. "While we expect more detail to be provided at the FY 2023 result on Oct. 11, we are disappointed that more detail around the payback from these incremental restructuring and integration costs was not provided by Bank of Queensland," analyst Andrew Lyons says. Goldman retains a sell call on BOQ's stock. (david.winning@wsj.com; @dwinningWSJ)

2227 GMT - Westpac's CET1 ratio is likely to be 12.3% at the conclusion of FY 2023, which should allow the bank to restart a share buyback, Morgan Stanley says. "We assume an on-market buyback of A$2 billion, which would use only 43bp of capital and allow Westpac to maintain a CET1 ratio >11.75% next year," analyst Richard E. Wiles says in a note. "However, we think the half yearly dividend will remain at A$0.70, still >10% below the pre-Covid level." (david.winning@wsj.com; @dwinningWSJ)

2223 GMT - Morgan Stanley trims its price target on Westpac by 2.4% to A$20.10/share, contending the bank will continue to face challenges delivering its turnaround strategy. Competition and inflation are headwinds to Westpac improving its performance, analyst Richard E. Wiles says in a note. "We think revenue growth will lag major bank peers in the three years to FY 2025 and the outlook for cost growth has become even more uncertain," Morgan Stanley says. As a result, Westpac won't narrow its return on equity gap to peers, says Morgan Stanley, citing its FY 2025 estimates. Westpac ended last week at A$21.15. (david.winning@wsj.com; @dwinningWSJ)

2123 GMT - Harvey Norman's property valuation assumptions appear to have become more aggressive given its capitalization rate continued to tighten in FY 2023, Jefferies says. That's in contrast to listed peers, which saw cap rates expand against a backdrop of rising interest rates. "We were surprised to see a circa A$12 million positive revaluation in 2H of FY 2023," analyst Michael Simotas says in a note. By way of comparison, he points out that HomeCo Daily Needs REIT is currently trading at a 21% discount to book values, implying a 6.35% cap rate or 89 basis points expansion. "History suggests the A$3.26/share property portfolio will provide a floor, but this is 15% below the share price, and we see downside, given the earnings headwinds," Simotas says of Harvey Norman. (david.winning@wsj.com; @dwinningWSJ)

2111 GMT - Goodman's exposure to data centers is likely to expand materially, adding a new pillar of growth for the industrial property owner, says Jefferies. Data centers account for around 6% of Goodman's A$81 billion funds under management, but 30% of its A$13 billion development workbook. In a note, analyst Sholto Maconochie says Goodman has a competitive advantage to other data center owners, as it already owns income-producing land at 25% of market prices, resulting in high development margins. "Data centers are typically higher in value (A$500 million-A$1 billion+), so we expect DCs may increase to 50-60% of WIP over the next 3-5 years," Jefferies says. This will support future development earnings at a higher margin, resulting in work in progress remaining elevated at A$13 billion, and increased funds under management, earnings visibility and growth. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

October 02, 2023 00:00 ET (04:00 GMT)