0411 GMT - Australian companies' approaches to nature will be a key ESG theme in 2024, Jarden analysts Michaela Jamison and Madeline Thompson say in a note. This is partly due to the fact that the Taskforce on Nature-Related Financial Disclosures, a framework for assessing nature-related risks and impacts, were finalized in October. There is also increasing recognition of how many sectors and companies depend on nature, and the role it plays in decarbonization. "We expect action in the nature space to increase as companies continue adopting TNFD to better understand nature risk and opportunity, and impacts and dependencies," says Jarden. It expects this to be reflected in corporate sustainability reports alongside more commentary on nature being an important ESG consideration for companies, particularly those most exposed to nature-related risks. (alice.uribe@wsj.com)

0348 GMT - Australia's comparatively drier weather should help protect insurer profitability due to lower catastrophe costs, say Morgan Stanley analysts in a note. With rainfall in Australian capital cities at 10-year lows in the year to date, IAG and Suncorp are being set up to over-earn in FY 2024, MS says. History shows that a 2%-3% change in domestic motor vehicle insurance loss ratios is possible from an increase or reduction in rainfall, although this will also depend on how well insurers manage pricing versus claims inflation, says MS. At the same time, a new government reinsurance pool should protect insurers from Cyclone Jasper, and help them come in below their catastrophe budgets. MS reckons Suncorp, which is skewed toward customers in Queensland, is most exposed to Cyclone Jasper, while IAG has limited exposure to northern Australia.(alice.uribe@wsj.com)

0144 GMT - Australia's competition regulator could reject Australian drug supplier Sigma Healthcare's proposed merger with Chemist Warehouse, says Morningstar analyst Shane Ponraj in a note. He says ACCC's view of the transaction, which would create Australia's largest pharmacy retailer, remains uncertain. "With Sigma's Amcal and Discount Drug Store pharmacy chains, we estimate it would command over 50% market share," says Morningstar. It reckons that the regulator will most likely reject the deal, and therefore hasn't factored the merger into its base case for Sigma. (alice.uribe@wsj.com)

2254 GMT - In vitro fertilization specialist Monash IVF appears to be well placed in FY 2024, says Ord Minnett, which starts the stock at accumulate with a A$1.40/share price target. Monash IVF is gaining market share through M&A and recruitment, supporting domestic cycle growth of 17% so far in 1H FY 2024. In a note, analyst Tom Godfrey highlights Monash IVF's pricing power, which offsets cost inflation and helps to preserve margins in contrast to other health services. Ord Minnett also says Monash IVF's organic growth prospects in the medium term are improving, as genetic carrier testing volumes come through. We "would be a buyer on any sustained weakness," Ord Minnett says. Monash IVF ended Tuesday at A$1.345. (david.winning@wsj.com; @dwinningWSJ)

2248 GMT - Mining stocks continue to be deeply undervalued by investors given the time it takes to build new operations and the scarcity of high-quality mines globally, Jefferies analysts say in a note. While Freeport, Antofagasta and BHP trade at premiums to their replacement cost--the cost of replacing operations, which deplete as they are mined--First Quantum, Lundin, Glencore, Vale and Anglo American trade at large discounts, they say. "We would argue that most of these miners should trade at significant premiums to replacement cost due to the time value of money, their asset quality, and the risks associated with building new mines," say the analysts. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2244 GMT - Charter Hall Retail REIT's sale of two sub-regional shopping centers for A$225.5 million is positive for investors, Ord Minnett says. That's because it reinforces Charter Hall Retail REIT's book values, as the transactions were in line with valuations at end-June, analyst Leanne Truong says in a note. It also reduces Charter Hall Retail REIT's gearing to the lower end of the company's target range. "We forecast the divestments to be 1% accretive (annualized) to earnings," says Ord Minnett, which retains an accumulate call on the stock. (david.winning@wsj.com; @dwinningWSJ)

2241 GMT - Moves by the U.K. and Australia to curtail migration put estimates for IDP Education's IELTS tests in 1H FY 2024 at risk, along with 2H student placement volumes, Jefferies says. That's because these countries are the destination for roughly two-thirds of IDP's student placement business. In a note, analyst Wei Sim says a 70,000 reduction in overseas students to Australia would equate to a 17% decline in the bank's forecast international student volumes for IDP. "Discussion with industry contact suggests net migration target reduction likely to have a larger impact on student visas versus other sub-classes," Jefferies says. "Our sensitivity analysis shows 1% decline in student placement volumes will have 2.2% negative impact on FY 2024 net profit." (david.winning@wsj.com; @dwinningWSJ)

2234 GMT - The latest assessment of the El Niño weather event by Australia's Bureau of Meteorology is tentatively positive for Johns Lyng, which carries out insurance-related repair work, Jefferies says. The BoM said the influence of El Niño on Australian rainfall usually reduces during summer, especially in the country's east where high-impact storms can occur. This is illustrated by Tropical Cyclone Jasper, which is likely to make landfall in northern Queensland this week. Whilst the BoM's climate update provides mixed indications for the next six months, we view it as perhaps if anything slight upside risk if this El Niño period is not as negative for Johns Lyng as first thought," analyst Tom Chapman says in a note. Jefferies has a hold call on Johns Lyng. (david.winning@wsj.com; @dwinningWSJ)

2226 GMT - Dealmaking is likely to remain a prominent feature of the global metals and mining industry in 2024, as valuations are generally very low, Jefferies analysts say in a note. "The optimal time for the major miners to pursue sizable acquisitions is now," the analysts say. "If they wait for the macro environment to improve, the window for highly accretive M&A may have already closed." (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

December 12, 2023 23:29 ET (04:29 GMT)