0426 GMT - Westpac could consider a special dividend at its 1H FY 2024 results, rather than another buyback later in the year, say Morgan Stanley analysts in a note. The investment bank sees a special dividend as a possibility because of the Australian major lender's healthy capital position and its around A$3.5 billion of franking credits at FY 2023. "Westpac has not commented publicly on its plans, but Commonwealth Bank has previously noted that dividends are now the 'only distribution mechanism' for surplus franking credits," notes MS. It adds that Westpac's new chair Steven Gregg isalso a chair at Ampol, which recently paid special dividends. "Unfortunately, we don't see much scope for Westpac to lift its ordinary dividend," MS says. (alice.uribe@wsj.com)

0253 GMT - March marks the lowest level of Australian mortgage stress so far this year, a drop driven by rising household incomes, says new research from Roy Morgan. It finds that 30% of mortgage holders were "at risk" of mortgage stress in the three months to March. This, Roy Morgan says, is well below the record high reached during the financial crisis because of the increased size of the Australian mortgage market. The record high of almost 36% of mortgage holders in mortgage stress was reached in mid-2008, it adds. Still, if the RBA raises interest rates by another 0.25% in June to 4.85%, there will likely be 31% of mortgage holders considered "at risk" in June, Roy Morgan says. (alice.uribe@wsj.com)

0049 GMT - 29Metals' lower-than-expected cash balance at the end of March drives the stock some 6.4% lower to A$0.44 in early trading in Australia. 29Metals ended 1Q with A$106 million in cash, below RBC Capital Markets' A$114 million forecast and consensus expectations for A$142 million. In a note, RBC analyst Paul Wiggers de Vries says the miss had its roots in lower zinc output and slightly higher debt repayments. RBC says 29Metals's decision to mothball its Capricorn copper mine should help stem some of the cash outflows through 2024. "But cash balances will remain a concern, and as such we expect 29Metals will have to draw down on the US$50 million offtake debt facility provided by Glencore," RBC says. (david.winning@wsj.com; @dwinningWSJ)

0042 GMT - Ramelius Resources is the cash-flow king among Australian gold producers, according to Ord Minnett. Ramelius generated A$125 million of free cash flow in 3Q, and analyst Paul Kaner says this illustrates the leverage that the miner has to a rising gold price. At spot gold prices, Ramelius could generate A$130 million of free cash flow in 4Q, and A$430 million in FY 2025 when the Cue project starts up. "We believe this will generate further momentum in the name," and enable Ramelius to develop deposits it already owns and pursue M&A, Ord Minnett says. (david.winning@wsj.com; @dwinningWSJ)

0033 GMT - Ord Minnett shrugs off a weak quarter for cash generation by Aurelia Metals. In a note, analyst Paul Kaner says lower concentrate sales in the three months through March more than offset the deferral of some capex to FY 2025. That led to Aurelia reporting a cash balance of A$107 million in 3Q, below Ord Minnett's A$118 million forecast. "However, there was a significant concentrate build through the quarter (A$14 million) which should unwind this June quarter," Ord Minnett says. As a result, Aurelia's balance sheet remains strong and continues to offer a point of difference to its peers, the bank says. It thinks Aurelia Metals has enough cash to bring its Federation base-metals project into production. (david.winning@wsj.com; @dwinningWSJ)

0024 GMT - Australian pension funds are on track for a 13th year of positive returns out of 15 years, says Chant West. With one quarter of the fiscal 2023-24 remaining, the return of the median growth fund is sitting at 8.8%, following a better-than-expected 9.2% return in the prior fiscal year, the research company says. The performance of growth funds retreated 1.9% from July to October, says Chant West senior investment research manager, Mano Mohankumar. However, from November to March pension funds gained 11% on the back of the strong share market rally, he adds. Chant West notes that there was increased market volatility in April mainly due to inflation concerns, with tensions in the Middle East adding to those worries. (alice.uribe@wsj.com)

0023 GMT - Boss Energy's maiden production of uranium from the Honeymoon mine in South Australia represents a key milestone for the company, and will help to support its stock, says Jefferies. "That said we are cognisant that it may take some time to ramp to full nameplate capacity," analyst Mitch Ryan says in a note. Jefferies expects Boos Energy to reach that point in the March quarter of 2026. "With production capability now demonstrated, we do not see the timing of first sales as being a material driver of the stock," Jefferies adds. Boss Energy's share price has doubled in value over the past year. It is last down 2.1% at A$4.66.(david.winning@wsj.com; @dwinningWSJ)

0018 GMT - A tailwind from rising commodity prices should help South32 reduce its net debt more, says Jefferies. South32 on Monday said its net debt fell to US$937 million at the end of March, down some US$154 million on three months earlier. In a note, analyst Mitch Ryan highlights stronger aluminum prices as being a key driver of South32's ability to bring its debt down. The aluminum price has risen 12% in 4Q so far to US$2,467/ton when measured against the average for 3Q. "We see net debt in 4Q FY 2024 of US$815 million, a further US$122 million reduction assuming an average 4Q price forecast of US$2,205/ton, or flat prices to 3Q," Jefferies says. (david.winning@wsj.com; @dwinningWSJ)

0010 GMT - 29Metals' new US$50 million offtake facility with Glencore, and a A$16 million interim payment from insurers, ease pressure on the base metals miner's balance sheet a tad. In a note, Jefferies analyst Daniel Roden says these moves defer additional funding requirements to 2H of FY 2025. Still, a funding gap remains, with A$140 million of additional capital required by FY 2026 to meet debt and stamp duty obligations, Jefferies says. "While we are bullish on base metals, the path for 29Metals to meet its debt and stamp duty obligations is beset with risk." Jefferies retains a hold call on the stock. (david.winning@wsj.com; @dwinningWSJ)

0005 GMT - Australian consumer confidence is plumbing new lows for this year, amid concerns around household budgets and economic prospects. Consumer confidence fell 3.2 points to 80.3 points last week, according to ANZ Roy Morgan. Madeline Dunk, an economist at ANZ, says confidence in the outlook for the economy and for households' personal finances each recorded their largest weekly declines since October. She also highlights a particularly sharp fall in confidence amongst renters. "Meanwhile, those paying off a mortgage recorded their lowest level of confidence this year," she adds. (david.winning@wsj.com; @dwinningWSJ)

2255 GMT - With South32's Australian manganese operation offline for longer than expected, there's an opportunity for other miners to benefit from rising prices. Euroz Hartleys lifts its price target on Jupiter Mines by 25% to A$0.40/share, estimating the Tshipi manganese mine that it part owns will generate A$230 million of Ebitda in FY 2025. "We estimate that every US$0.25/ton in long term manganese prices is A$0.06-A$0.07 increase to our Jupiter Mines valuation," analyst Trent Barnett says in a note. "Hence, the leverage to manganese prices is huge." South32 on Monday said its Gemco--Groote Eylandt Mining Company--operation in Australia's Northern Territory likely wouldn't be in a position to export manganese until 3Q of FY 2025 due to cyclone damage. (david.winning@wsj.com; @dwinningWSJ)

2255 GMT - There's a silver lining to lithium miner Pilbara Minerals's costs rising in 3Q, reckons Euroz Hartleys. Pilbara Minerals reported 3Q operating costs of A$675/ton in 3Q, up 6% on the previous three months, driven by the use of temporary mobile equipment for sorting ore. In a note, analyst Trent Barnett says the uptick in costs is "arguably positive for industry sentiment as it provides price support for lithium prices (i.e. the cost curve is higher than many in the industry believe)." Euroz Hartleys views Pilbara Minerals as the best stock for investors when lithium prices eventually rise to a level that incentivizes new production. It estimates prices for the metal need to reach US$1,500-US$2,000 for that to happen. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

April 23, 2024 01:00 ET (05:00 GMT)