0224 GMT - Champion Iron could benefit from tax breaks and funding support after Canada classified high-purity iron as a critical mineral, say Macquarie analysts, upgrading the miner's stock to outperform from neutral. Macquarie's targets on the company's ASX and TSX shares are raised by 4%-5% to A$7.90 and C$7.00, respectively. "This classification change enables access for companies, such as CIA, to grants, tax breaks and funding for exploration, capital projects and innovation, a key positive in our view," the analysts say. Champion Iron is up 0.2% in Sydney at A$6.61/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0149 GMT - Rio Tinto's acquisition of Mitsubishi's nearly 12% interest in an Australian aluminum smelter illustrates the company's continued commitment to its aluminum business, especially Pacific Aluminium, Morgan Stanley analysts say in a note. "We see Rio as a key long-term player that could benefit from long term aluminum demand," especially through its low-cost and low-carbon Canadian operations, the analysts say. Rio's aluminum unit is estimated to account for 11% of 2024 group Ebitda, and the Boyne smelter in which the company has raised its stake accounts for roughly 9% of its attributable aluminum output. "Pacific Aluminium (of which Boyne is a part of) is the biggest single contributor to Rio's production carbon footprint," which the company is seeking to reduce, the MS analysts add.(rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0136 GMT - Gold miner Evolution might need to write down the value of its Red Lake operation in its FY profit result in August, according to RBC Capital Markets analyst Alex Barkley, who reckons operational consistency could remain a problem at the mine into the future. RBC and consensus forecasts now suggest that Red Lake, which has a book value around A$1.5 billion, might miss already downgraded FY 2024 guidance, says Barkley. Evolution's latest guidance of a 26,000-ounce hit to group production from recent rainfall and seismic events imply 4Q production of 218,000 ounces, 6% below RBC's expectations and 4% below consensus, he says. "A miss to guidance was already expected," although production could end up being lower than 218,000 ounces too, says Barkley. RBC has an underperform rating and A$3.70 target on the stock, which trades down 1.3% at A$3.71/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0050 GMT - Australian vehicle loan provider Solvar is on track to return to double-digit underlying earnings growth in fiscal 2025 and fiscal 2026, Morgans analyst James Filius says. Initiating coverage of the stock with an add rating, Filius tells clients in a note that he is positive on management's efforts to reset the direction of the business by scaling back its New Zealand operations, right-sizing its funding and improving lending quality. He also sees potential for Solvar to deploy surplus capital from its New Zealand loan book toward inorganic opportunities. Morgans places a target price of A$1.40 on the stock, which is up 3.0% at A$1.04. (stuart.condie@wsj.com)

0043 GMT - Jarden's analysts are looking for Beach Energy to update the market on its revised growth strategy following the Australian energy producer's impairment of its Bass Basin and Taranaki Basin assets. They write in a note that they expect the ASX-listed company to use its June 18 investor day to detail a revised strategy for organic and inorganic growth, as well as update investors on its cost-saving program. Jarden's production forecasts are unchanged by the impairments since its analysts hadn't anticipated progress on either asset. It keeps an overweight rating and target price of A$1.75 on the stock, which is down 0.3% at A$1.59. (stuart.condie@wsj.com)

0022 GMT - The increasing growth in cloud demand flagged by U.S. tech giants in recent quarterly results looks positive for Australian data-center operator NextDC, Citi analyst Siraj Ahmed says. He sees commentary from Microsoft, Alphabet and Meta pointing to a pick-up in cloud growth, strong demand for data-hungry AI services, and an acceleration in AI infrastructure spend. Ahmed points out in a note to clients that the increased multi-year spend on cloud infrastructure looks positive for NextDC's demand outlook. Meta upgraded its capex guidance by 12% at the midpoint of the range, he adds. Citi has a A$19.75 target price on NextDC shares, which are down 0.3% at A$17.865. (stuart.condie@wsj.com)

0002 GMT - The successful migration of AGL Energy's retail customers onto Kaluza could be a catalyst to kickstart growth in the energy-management platform, Macquarie analysts say. They tell clients in a note that AGL's agreement to pay A$150 million for a 20% stake in Kaluza suggests that the platform's value has stalled over the past five years. For contrast, they point out that Origin Energy's stake in the owner of rival platform Kraken has risen by up to four times since 2020. AGL's investment was expected but still positive, with the Australian generator and retailer enhancing its growth prospects. Macquarie lifts its target price 1.6% to A$10.86 and stays neutral on the stock, which is at A$10.31 ahead of the open. (stuart.condie@wsj.com)

2343 GMT - It sounds increasingly likely to Macquarie analysts that Eagers Automotive's retail JV with BYD will cease to be the automaker's exclusive retail distribution partner in Australia. The analysts tell clients in a note that the Australian auto dealer has flagged the risk, already highlighted by at least one global distributor in contact with Macquarie, that Chinese manufacturers can end agreements even when partners have done a good job. The analysts see risk around the end of the current distribution contract. Macquarie has a neutral rating and A$10.60 target price on the stock, which is at A$10.27 ahead of the open. (stuart.condie@wsj.com)

2318 GMT - Green wind prices are likely to remain mixed in the near-term, but in the longer-term the appetite of all levels of government to decarbonize remains the key for companies like Macquarie and its Green Investment Group unit, say Citi analysts Brendan Sproules and Thomas Strong in a note. Citi recently hosted an investor call with Orsted's investor relations team to gain insights into Macquarie's GIG, which is a competitor with Orsted in the development of wind assets around the world. From this Citi finds that the appetite for more government support has been slow, but is heading higher, adding that asset prices have been falling reflecting higher rates and "insufficient government support for the current market reality." (alice.uribe@wsj.com)

2308 GMT - NAB's move to defer its agriculture sector financed emissions target highlights the challenge in setting hard targets to measure sectors such like agri, given the lack of localized data, say Macquarie analysts in a note. In a review of the Australian major lender's mid-year climate roundtable, Macquarie says NAB noted that reference pathways are not sufficiently localized and capable of being applied to NAB's large and diverse Agri portfolio. Macquarie says NAB has hopes that further work will provide more certainty, with an update likely with NAB's 2025 climate report. NAB has a new environmental financing target of A$80 billion by 2030 with around 70% to come from lending and around 30% to come from capital markets activities, Macquarie notes. (alice.uribe@wsj.com)

0501 GMT - AGL Energy's decision to switch its retail customers to Kaluza and to take a 20% stake in the energy platform has strong echoes of rival Origin Energy's 2020 tie-up with Octopus, RBC Capital Markets analyst Gordon Ramsay writes in a note. Kaluza is a competitor to Octopus's Kraken platform, he tells clients. Ramsay points out that both Australian power companies took a 20% stake in their respective platforms, while customer numbers and total investments are also similar. RBC has a sector perform rating and A$10.00 target price on AGL shares, which are down 1.3% at A$10.35. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

June 12, 2024 01:01 ET (05:01 GMT)