Australian general insurance claims inflation for the September quarter is sitting at around 8% for personal motor and 4% for home, according to Macquarie analysts. The analysts say in a note that according to their calculations both IAG and Suncorp's pricing 12 months ago captured claims inflation at these levels for motor but not for home. Macquarie notes that IAG expects below market inflation next year for motor and in-line for home, while Suncorp expects above market for motor and below for home. "We believe both stocks look cheap at current levels," Macquarie says. IAG is up 0.7% at A$5.62/share while Suncorp is 0.9% higher at A$13.36/share. (alice.uribe@wsj.com)

0314 GMT - Treasury Wine's purchase of Californian winemaker DAOU delivers on management's previous comments on the possibility of making acquisitions to complement the Australian company's U.S. business, E&P analyst Phillip Kimber says in a note. He writes that the acquisition of DAOU improves Treasury's share of the U.S. luxury market, especially at the US$20-US$40/bottle price point. Interestingly, Treasury will use its distribution network to expand the DAOU business, he adds. Shares in Treasury are in a halt at A$12.10. (stuart.condie@wsj.com)

0253 GMT - The Australian companies that will have to comply with the Australian Accounting Standards Board's initial climate-reporting requirements seem relatively well-placed to do so, Macquarie analysts say in a note. According to Macquarie's analysis, 68% of companies under its research coverage will be required to start disclosing climate information when the new standards kick in. The analysts see scenario analysis--a tool used to asses climate-related risks and business implications--as a potential area of weakness in corporate disclosures. The AASB has released a draft version of sustainability standards for Australia, which if passed in parliament will apply to annual reporting periods beginning on or after July 1, 2024. (alice.uribe@wsj.com)

0241 GMT - Symbio is likely to accept Aussie Broadband's takeover offer, Wilsons analysts say. With due diligence complete and the offer fully funded, they wonder in a note whether Aussie Broadband would, if it acquires Symbio, support the communication-services company's focus on expanding further into Asia. Another option they see would be for Aussie Broadband to divest the international business and focus on gaining scale and finding synergies in Australia. (stuart.condie@wsj.com)

0229 GMT - Cochlear keeps its bull at Goldman Sachs, where analysts are increasingly confident that hearing implants offer investors the most straightforward way to leverage long-term population aging. The GS analysts write in a note that, while the hearing-implant manufacturer's earnings multiple appears high, its earnings profile looks pretty simple relative to peers. Writing in a note following Cochlear's first capital markets day since before the Covid pandemic, the GS analysts are impressed by the scale of the volume opportunity ahead of Cochlear. About 20% of the global population suffers from hearing loss, they observe. GS has a buy rating and A$280.00 target on the stock, which is up 0.2% at A$242.46. (stuart.condie@wsj.com)

0206 GMT - Australian institutional investors have switched out of Westpac into ANZ and NAB over the September quarter, Macquarie analysts say in a note. Investors look to be more bearish on Westpac amongst its rivals, while regional lender Bank of Queensland is still the most shorted despite a recent de-rating, they note. Macquarie still sees earnings pressures from lower margins and higher expenses for Australian banks, and remains underweight the banking sector. NAB is its preferred major bank exposure. (alice.uribe@wsj.com)

0004 GMT - The sharp pullback in IGO shares on news that its joint venture with Tianqi chose not to take its full spodumene entitlement from Greenbushes this quarter looks too severe, Goldman Sachs analysts say in a note. Shares fell 9.0% Monday and are continuing to slip this session, recently trading down 0.3% at A$9.66/share. "Simplistically, if the 25% downward flex to offtake volumes lasted the rest of FY24 with volumes sold at a lower price at a later date such as circa US$2,000/ton (spot) or as low as circa US$1,000/ton, this would drive a net impact to IGO of circa A$72 million-A$145 million (before any offsetting impacts)," the analysts say. They keep a buy rating on IGO although trim their target 4.5% to A$12.70/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2347 GMT - Adore Beauty's 1Q FY 2024 sales were slightly lower than UBS expectations, amid some softer growth in the latter part of the quarter, says the investment bank's analyst Apoorv Sehgal in a note. Even so, he says the company's 1Q performance represents an 18% compound annual growth rate versus 1Q FY 2020, which UBS regards as "reasonable" particularly in a softer macroeconomic environment. Still, UBS says it would consider a more positive view if sales growth can accelerate, and cuts its price target by 8% to A$1.15. Adore rises 3.5% to A$1.03.(alice.uribe@wsj.com)

2345 GMT - The market appears to be pricing $81.33/metric ton iron ore into the stocks of the world's top three iron-ore producers, Rio Tinto, Vale and BHP, Jefferies analysts say in a note. That's well below today's price of nearly $122/ton and Jefferies long-term forecast of $90/ton, say the analysts, who reiterate their buy rating on each of the three stocks. "Valuation alone is usually not reason enough to buy mining shares, and there may be some downside to iron-ore prices if there is no more China stimulus, but fundamentals appear to be positive and improving, and seasonality should be a tailwind for a 3-4 month horizon," they say. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2304 GMT -- Aussie insurance brokers are likely to see their organic growth supported by higher premiums and interest rates, says Morningstar analyst Nathan Zaia in a note. He points out that the country's three largest independent insurance broker networks, Steadfast, AUB Group, and PSC Insurance have all guided to continued profit growth in fiscal 2024. AUB, Zaia says, is the strongest and is benefiting from earnings accretion from small acquisitions. Currently, the firms all trade below Morningstar's fair value estimates, with Zaia nothing that insurance brokers and agencies continue to gain from higher commissions as insurers increase premium rates due to high claims inflation. (alice.uribe@wsj.com)

Macquarie's capital surplus should still be strong when it reports its 1H FY 2024 results this week, say Goldman Sachs analysts Andrew Lyons and John Li in a note. They point out that the Australian financial company reported A$12.6 billion of surplus capital at its FY 2023 result and while they reckon this will have fallen a little in 1H to A$11.8 billion, they still say that it leaves Macquarie with "a significant capital surplus." GS sees that a buyback is highly unlikely, but can't discount Macquarie looking to payout towards the top-end of its 50%-70% target range over FY 2024. GS forecasts 1H net profit after tax to be down 29% from the prior corresponding period at A$1.63 billion, and an interim dividend of A$2.10, down 30% from the prior corresponding period. (alice.uribe@wsj.com)

0421 GMT - Caution remains around Bubs Australia's China infant formula prospects given the amount of inventory the company has in the channel, say Citi analysts. In a note reviewing Bubs' 1Q FY 2024 update, Citi says the U.S. appears to be performing well, however the brand is now ranged in over 5,900 physical stores down from over 6,500 earlier this year, with the e-commerce now representing more than 60% of U.S. revenue. Citi cuts Bubs'sFY 2024 to FY 2026 net profit after tax estimates by A$7.3 million to A$1.0 million primarily due to higher costs, and cuts its stock target price 4.8% to A$0.20. Bubs is up 1.5% at A$0.17. (alice.uribe@wsj.com)

0417 GMT - The general focus for the upcoming Australian banks reporting season looks to be net interest margins and costs, but Citi reckons bad and doubtful debts could provide the largest surprise. With banks sitting on material excess provisions over and above base case forecasts, the resiliency of the economy may push auditors to challenge banks over just how realistic those forecasts are, and whether they need to set provisions above current loan loss expectations, Citi analysts say in a note. At the same time, Citi sees costs could provide the biggest negative, while a moderation in excess provisions, plus capital management, could provide a mitigating positive. ANZ remains Citi's pick of the sector, given its funding advantage, strong capital and provisions. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

October 31, 2023 00:01 ET (04:01 GMT)