0442 GMT - Westpac's multi-brand strategy makes sense, with customers still choosing brands, says the Australian lender's CEO Peter King. Still, speaking to analysts and media after the Australian lender issued its 1H FY 2024 results, King says Westpac is being "more thoughtful" about how it uses its brands. For example, he says the private wealth business is moving to the Westpac brand and BankSA is another attractive brand. "Certainly reusing technology over time will provide efficiency," King says. "So, we use brands where it makes sense and we're thoughtful about how we can reuse the assets of the bank to service all the brands." (alice.uribe@wsj.com)

0439 GMT - Australia's interest rates may stay higher for longer, but a rate rise is probably not on the cards, Westpac CEO Peter King tells analysts and media after the Australian lender issued its 1H FY 2024 results. With the economy going well at the moment, a rate cut may come in 2025, King says. "Certainly our economics team is forecasting a cut in the fourth quarter, my personal view is I think that's a bit too early," King says. He reckons that there still needs to be a further slowdown in employment numbers with certainty in demand for infrastructure, housing and energy transition remaining. Still, he says he's "not in the camp of more interest rates." (alice.uribe@wsj.com)

0300 GMT - A higher bid from BHP for rival Anglo American is both warranted and required, says Ben Cleary, portfolio manager for Tribeca Global Natural Resources Fund. Tribeca holds shares in both BHP and Anglo. "An all-scrip bid is obviously favored by BHP as it does not stretch their balance sheet while also leaving cash to pursue their growth ambitions," Cleary tells WSJ. A scrip bid may be easier for the Anglo board to eventually recommend, he says, as unlike a cash bid, it gives shareholders ongoing exposure to the assets. "There are the obvious risks related to potential flowback of BHP stock given it is no longer contained in any European indices, but that would be somewhat countered by increased weight in the Australian market along with the prospect of greater flow into a more attractive diversified investment proposition." (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0256 GMT - BHP has picked the right time to pounce on longtime rival Anglo American, according to Ben Cleary, portfolio manager for the Tribeca Global Natural Resources Fund, which holds shares in both BHP and Anglo. While a takeover would be complicated, if "we are entering a structural change in the copper market over the coming years due to the decarbonization transition, as we believe we are, then BHP needed to act now, no matter the deal complexities," he tells WSJ. BHP has picked a time when Anglo is in a vulnerable position and some peers may arguably find it hard to place a rival bid, says Cleary. There could also be value to be had for BHP in Anglo's diamonds and platinum group metals assets, which are unappealing to many but are top-tier mines in those industries, he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0215 GMT - Westpac's credit profile is likely to remain robust even as it increases its share buyback by A$1.0 billion and announces a special dividend, says S&P Global Ratings in a note. As of end-March, Westpac's common equity Tier 1 ratio stood at 12.55%, notes S&P, adding that the lender will manage its CET1 ratio above 11%, which is above the Australian Prudential Regulation Authority's regulatory capital requirement of 10.25%. Westpac's capital return is "consistent with many domestic peers, who are also reducing the considerable capital buffers they have held above their targeted and regulatory requirements," says S&P. (alice.uribe@wsj.com)

0147 GMT - Westpac's 1H FY 2024 results are largely in line with consensus views, with the capital returns element "encouraging," says UBS analyst John Storey in a note. The performance of Westpac's business and wealth unit supported the results, while overall cost growth met consensus expectations. "Against this we note a worse-than-expected deterioration in asset quality, and lower overall provision coverage," says UBS, adding that return on equity is still low. The results suggest cost inflation is moderating, but UBS thinks investment and software amortization expenses will remain high, and expects to see some deterioration in credit quality. (alice.uribe@wsj.com)

0115 GMT - GrainCorp's profit warning catches RBC Capital Markets off guard. GrainCorp says it expects 1H underlying Ebitda of A$164 million, representing a 5% miss to RBC's A$172 million forecast. Its projection of a 1H underlying net profit of A$57 million also falls short of market hopes. "Honestly we were surprised by the 1H miss," analyst Owen Birrell says in a note. That's because GrainCorp has historically taken a conservative approach to its guidance. Also, recent rains and market commentary have suggested a more positive near-term contribution may have been forthcoming, says RBC, which has an underperform call on GrainCorp's stock. (david.winning@wsj.com; @dwinningWSJ)

0056 GMT - Macquarie is likely to deliver 22% net profit growth in FY 2025, say Morgan Stanley analysts in a note. This is despite guidance for slower-than-expected Macquarie Capital FY 2025 investment gains recovery and weaker margin trends for Macquarie's banking unit, says the investment bank. MS cuts its FY 2025 earnings per share by 7.5% on weaker margins in the banking unit, and slower investment gains recovery in Macquarie Capital, but reckons Macquarie is likely to benefit from capital markets recovery. (alice.uribe@wsj.com)

0053 GMT - Could industrial property owner Goodman raise its earnings view again? Citi thinks so, and that the upgrade could come as soon as Wednesday. Goodman currently expects 11% growth in operating EPS in FY 2024, which Citi analyst Howard Penny views as easily achievable. Supports for Goodman's profit include the internalization of its New Zealand management company, the strength of its industrial logistics portfolio and the rollout of more data centers. "We see potential and justification for further guided growth because of both inorganic and organic earnings drivers at the update on Wednesday 8 May and/or the FY 2024 results later in the year," Citi says. (david.winning@wsj.com; @dwinningWSJ)

0051 GMT - Autosports hasn't benefited as much as other car dealerships from exceptionally strong new vehicle sales in Australia. That's because luxury car sales are down some 11% in 2024 so far, reflecting supply constraints associated with quarantine issues at Australian ports. In a note, Wilsons analyst James Ferrier emphasizes that demand hasn't deteriorated. "Regardless, we opt to trim our earnings forecasts, with pretax profit estimates down 4-5%," Wilsons says. "Despite this change, valuation remains attractive, trading on a price-to-earnings ratio of 7X and offering a dividend yield of 8%." Autosports is down 0.8% at A$2.58/share. (david.winning@wsj.com; @dwinningWSJ)

0045 GMT - Engineering contractor Worley gets a new bull in Morgans, which sees it as a big beneficiary of the energy transition. "This should also be supported by elevated energy prices resulting in ongoing early-phase project work within the energy sector," analyst James Filius says in a note. Morgans sees Worley's Ebita growing at a compound annual rate of 14.6% in FY 2024-2026. It also highlights Sidara's recent sale of a roughly 19% stake in Worley at a price around A$14.35/share, which it says "represents a rare liquidity event driving near-term volatility in the share price." Worley is up 0.3% at A$15.42 , well below Morgans' maiden A$18.00/share price target. (david.winning@wsj.com; @dwinningWSJ)

0037 GMT - The muted share-price reaction to GrainCorp's profit downgrade suggests many investors had already scaled back expectations for the grain handler. GrainCorp's stock falls 2.5% to A$8.20 after it reduced FY 2024 underlying Ebitda guidance to A$250 million-A$280 million, from A$270 million-A$310 million, citing softer operating conditions. In a note, Wilsons analyst James Ferrier highlights that margins have been normalizing since FY 2022. "So the concept of margin contraction is not a surprise," Wilsons says. "But potentially the faster rate of normalization brings into question our current assumption of margins plateauing in FY 2025." (david.winning@wsj.com; @dwinningWSJ)

0030 GMT - Westpac's 1H FY 2024 result makes the consensus on net interest margin in future fiscal years look quite pessimistic, says E&P analyst Azib Khan in a note. E&P says core NIM (ex markets and treasury and notables) in 1H is pleasing, with NIM remaining flat at 180 basis points from 1Q FY 2024 to 2Q FY 2024. "As we had expected, Westpac is now showing improved margin/volume discipline, with mortgage growth over the half at one times system," E&P says. It expects consensus statutory net profit after tax upgrades of 2% for FY 2024 and FY 2025 on higher expected NIM. Still, E&P notes asset quality is deteriorating. (alice.uribe@wsj.com)

0029 GMT - Morgans doesn't see any letup in the challenging conditions facing supermarket operator Woolworths, driving an 11% cut in its target price to A$31.00/share. "We see limited upside potential in the share price over the next 12 months and have a hold rating," analyst Alexander Lu says in a note. Woolworths last week said there's been a noticeable change in consumer behavior since Christmas, with households tightening their purse strings. Morgans highlights that Woolworths customers are seeking more ways to save, are cross-shopping more, are buying more own brand items and are buying more products on promotion. Woolworths is up 0.3% at A$30.68. (david.winning@wsj.com; @dwinningWSJ)

(MORE TO FOLLOW) Dow Jones Newswires

0007 GMT - A sluggish recovery in green investments may stymie Macquarie's asset management unit, say Citi analysts Brendan Sproules and Thomas Strong in a note. They reckon the company's commentary on Macquarie Asset Management implies a revenue of around A$4.0 billion in FY 2025, which is significantly below the consensus forecast of around A$5.0 billion, and Citi's forecast of around A$4.7 billion. "We think this relates to a more muted recovery in green investments, where we expect the market to increasingly focus on the returns," it says. Citi sees Macquarie's FY 2024 headline results was in line with consensus, but calls out that MAM's contribution was below consensus. (alice.uribe@wsj.com)

0001 GMT - Westpac's 1H FY 2024 result was relatively in-line, say Citi analysts in a note, believing the market should receive it well. Capital was a highlight of the result, with a slightly better dividend, a special dividend and an increase to its buyback. Still, a risk for the lender is how well its management communicates the future path on costs, given there have been disappointments in this area in recent years, say Citi. "While costs were in-line with the street, we note that investment spend of A$736 million is materially below management's guidance of A$1.8 billion for the year, suggesting a good pickup in spend in 2H FY 2024," says Citi. (alice.uribe@wsj.com)

2349 GMT - Westpac's 1H FY 2024 looks solid and is hard to fault, according to Jarden analysts Carlos Cacho and Jeff Cai. In a note, they say the lender achieved beats across most of its business lines. "The stabilization of core net interest margin over the last six months is a clear positive and suggests that the margin drag is now largely behind it," says Jarden. While Westpac provided limited guidance, continued moderation in competition--Westpac called out lessening mortgage competition--should be positive for the lender, Jarden reckons. The investment bank says it will be looking for more information on collective provision releases and any color on the Unite transformation plan. (alice.uribe@wsj.com)

2254 GMT - Macquarie's better-than-expected FY 2024 performance was driven by a unexpectedly low tax rate rather than strength in revenues, Goldman Sachs says. In a note, analysts Andrew Lyons and John Li point out that Macquarie's guidance for FY 2025 implies downside risk to prior estimates, but they remain optimistic on the business's medium-term outlook. This is partly due to prospects of an improving macro backdrop, as GS expects interest rate cuts to begin later this year. Still, GS stays neutral on the stocks, with the stock trading above its 15-year average. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

May 06, 2024 01:02 ET (05:02 GMT)