0340 GMT - NAB has been cautious in its desire to stay in the range with respect to its dividend payout ratio, CEO Ross McEwan tells analysts after the lender's FY 2023 results. While the bank was in the past "stretching itself to pay out a higher ratio and taking on board more shares," it is now more concerned about getting the share count down, he says. NAB has guided for a dividend payout ratio in the range of 65%-75% of cash earnings. "The path is now [to] have less shares and a good dividend strategy for our shareholders," McEwan says, adding that NAB favors the idea of buybacks as long as the bank is in a strong position.(alice.uribe@wsj.com)

0256 GMT - NAB will stay focused on investing in its business banking unit, with CEO Ross McEwan seeing competition in home mortgages persisting another six months. Speaking to media after the lender's FY 2023 results, McEwan says NAB isn't abandoning the mortgage market, but is biased toward capital going into the business bank as it sees greater opportunity there. "The strength of our business and private division has allowed us to make the decision to slow down the growth of home lending where the returns have been challenged," he says. "Home lending is important for our customers and NAB and we'll continue to approach this in a disciplined and consistent way." At the same time, McEwan says NAB is working harder on its deposit franchise and focused on retaining mortgage customers, rather than competing in the refinancing market. (alice.uribe@wsj.com)

0101 GMT - Xero's historic U.S. investment and free cashflow at group level stand out to Citi analyst Siraj Ahmed as key positives in the cloud-accounting software provider's 1H result. Ahmed tells clients in a note that Xero's NZ$30 million annual net investment in the U.S. over the last 10 years was likely lower than the market had assumed. Stronger cashflow conversion, lower tax payments and lower capital expenditure also supported better-than-anticipated free cashflow across the September half, he adds. Citi has a buy rating and A$135.50 target price on the stock, which is down 9.1% at A$104.27. (stuart.condie@wsj.com)

0038 GMT - Xero's 1H result looks mixed to RBC Capital Markets analyst Garry Sherriff, who sees better-than-expected free cashflow but disappointing revenue and earnings. He writes in a note that subscriber growth fell short of market expectations, with revenue and Ebitda missing average analyst forecasts by 2% and 4%, respectively. Yet looking beyond top-line growth, he observes that average-revenue-per-user was stronger than anticipated and lower capital expenditure drove strong free cashflow. The cloud-accounting software provider needs a material reduction in 2H operating-expenses-to-operating-revenue ratio to hit its FY target, he adds. RBC has a sector-perform rating and A$125.00 target price on the stock, which is down 9.4% at A$104.00. (stuart.condie@wsj.com)

0029 GMT - Consensus on NAB's FY 2024 net interest margin is unlikely to be downgraded following the release of the Australian lender's FY 2023 results, says E&P analyst Azib Khan in a note. However, he sees the risk of consensus FY 2024 costs being increased and the potential for consensus cash earnings being downgraded by 3%-4%. "Moderation in quarterly net interest margin contraction is a positive. However, on the asset quality front, we expect the modest deterioration coming through to result in nervousness about asset quality going forward," E&P says. It also sees soft Markets unit income in 2H FY 2023 as a negative read-through for ANZ which reports next week. (alice.uribe@wsj.com)

2350 GMT - Orica is facing some tough market conditions but has "demonstrated strength and resilience to adapt to macroeconomic challenges," Citi analyst Paul McTaggart says in a note. The explosive maker's FY 2023 Ebit was a 1% beat versus consensus, although did fall 2% short of Citi's more-optimistic expectations. While Orica highlighted ongoing challenges including from high energy costs, its outlook looks good, according to McTaggart. "Fundamentals remain strong across commodities, driving strong demand for ORI products and services in most markets," he says. Orica is up 2.1% at A$15.37/share. Citi has a buy rating and A$17.00 target. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2342 GMT - James Hardie is really setting itself up well for a market recovery, according to Macquarie analysts, who say they liked "just about everything" in the building materials supplier's 2Q result. "The group is executing exceptionally," the analysts say in a note. They say the stock's valuation is attractive and raise their target to A$58.40 from A$49.90. They keep an outperform rating. James Hardie is flat at A$46.97 following a 14% gain Wednesday. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2329 GMT - QBE may feel pressure from U.S. crop and catastrophes in 3Q FY 2023, say Macquarie analysts in a note, adding that catastrophes included U.S. convective storms, the Lahaina Wildfire, Greece Wildfire, Hong Kong Flooding, and Hurricane Idalia. As a result, the investment bank expects a downgrade to combined operating ratio guidance of around 50-100 basis points, which it sees as a buying opportunity. In Macquarie's review of 23 offshore results for 3Q as a read-through for QBE, the investment bank estimates premium rates are holding at around 8% for QBE's mix. This is as North American pricing picks up and Australia holds at all-time high, which offsets European weakness. (alice.uribe@wsj.com)

2327 GMT - Xero's 1H result looks solid to Wilsons analysts, who welcome the cloud-accounting software provider's additional detail on its U.S. plans. They say in a note to clients that revenue was in-line with their forecast, albeit lower than the market had expected. Xero's comments that it remains committed to the U.S. market and has identified two key growth opportunities provides welcome insight, they say. They also point out that Xero has almost achieved the so-called Rule of 40 beloved by many investors, where a company's combined revenue growth and profit margin exceeds 40%. Xero was at 37% at the end of 1H, they observe. Wilsons has an overweight recommendation and A$126.32 target price on the stock, which is down 5.9%, at A$108.00. (stuart.condie@wsj.com)

2318 GMT - NAB's FY 2023 result looks weak to Citi analysts, who believe that it will likely be received negatively by the market, particularly as the Australian lender has a relatively fuller valuation to peers. In a note, Citi says the lack of incremental capital management and negative outlook commentary could be seen as further marks against it. "Relative to the recent peer results, investors would recognise the industry-wide cost pressures, but arguably the revenue outlook in NAB looks worse, raising question marks over whether the relative valuation differential needs to be so wide," says Citi. On costs, the investment bank reckons there is upside risk to consensus' around 3% growth in FY 2024. NAB falls 0.9%, to A$28.91. (alice.uribe@wsj.com)

2306 GMT - A strong FY23 result for explosives maker Orica is underpinned by better-than-expected pricing growth, Jarden analysts James Wilson and Jakob Cakarnis say in a note. They say an upgraded return-on-net-assets target of 12%-14% signals management's confidence in the outlook, although note that the company is already meeting its target range at 12.6%. Orica forecast increased earnings in the year ahead but "given the market already expects +10% year-on-year Ebit growth into FY24 [estimates], we think Orica's FY24 guidance may already be largely reflected in consensus," they say. Orica last traded at A$15.06/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2303 GMT - NAB's FY 2023 results were overall in line, and showed the Australian major lender is continuing to manage well versus expectations, say Jarden analysts Carlos Cacho and Jeff Cai in a note. They see that NAB's net interest margin seems to show better management of the volume margin trade off. But, that adverse shifts in the mix of deposit types for NAB highlights rivals CBA and Westpac's superior low cost deposit bases. Investors may be focused on the outlook for NIM and questions over reduced capital expenditure spend. Jarden has an overweight call on the stock. (alice.uribe@wsj.com)

2226 GMT - Shares in Xero are likely to come under pressure after the cloud-accounting software provider's first-half result fell short of analyst forecasts, E&P Capital analyst Paul Mason says. He writes in a note that every key metric fell short of his forecasts, although he acknowledges that he was more bullish than the average analyst forecast. That said, Xero's NZ$799.5 million revenue and NZ$206.1 million Ebitda were well short of broader marker expectations, he adds. Mason notes that one impact of the revenue miss is that Xero's operating-expenses-to-operating-revenue ratio was also lower than some would have wanted. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

November 08, 2023 23:06 ET (04:06 GMT)