0329 GMT - None of the concerns raised by Australia's competition regulator in relation to Sigma Healthcare's proposed merger with Chemist Warehouse look insurmountable to Citi analyst Mathieu Chevrier. He tells clients in a note that the concerns come as no surprise given the complexity of the transaction and the regulatory framework for pharmacy retailing and distribution in Australia. He points out that the number of independent pharmacies is already declining and that operators can switch to other pharmaceutical suppliers if they no longer want to work with Sigma. The impact on rival suppliers also looks small, he adds. Citi has a neutral rating and A$1.21 target price on Sigma, which is down 5.8% at A$1.135. (stuart.condie@wsj.com)

0232 GMT - The New Zealand insurance market may witness rapidly rising margins across personal lines classes into FY 2025, with commercial classes on the cusp of cooling, Jarden analysts say in a note looking at the investment bank's recent on-the-ground "temperature check" of the market. Insurers IAG and Suncorp are leading NZ insurers, with books skewed toward personal lines. This prompts Jarden to think that NZ exposures offer upside risk to these companies' underlying insurance trading ratio outlooks in 2H and FY 2025. Concurrently, a benign catastrophe backdrop year-to-date gives extra upside risk to FY 2024 forecasts for reported earnings, Jarden says. It stays overweight on IAG and Suncorp, preferring the former over the latter. (alice.uribe@wsj.com)

0204 GMT - Major Australian banks return on tangible equity levels have trended lower over the past 20 years and may decline further as the cost of risk normalizes, says E&P Capital analyst Azib Khan in a note. "We believe the ROTE for Australian retail banking is now down to around 11%, almost at the cost of equity." ANZ and Westpac have the lowest ROTE of the majors and have lower percentages of capital allocated to Australian business banking, E&P says. Still, Westpac remains E&P's preferred major bank, as it has the opportunity over the medium term to improve its Group ROTE by expanding in business banking. Both Westpac and ANZ have indicated they will increase focus on business banking, E&P adds.(alice.uribe@wsj.com)

0149 GMT - Codan gets a new bull at UBS, where analyst Evan Karatzas highlights the mining-tech provider's potential for margin expansion and bolt-on acquisitions. Initiating coverage of the Australia-listed company with a buy recommendation, Karatzas sees Codan's heavy investment in the cost base of its communications business paying off over the next few years. Karatzas sees the division driving group EBIT margin past 30% by fiscal 2027--an increase of about 500 basis points on fiscal 2023 levels. A conservatively leveraged balance sheet could also allow for M&A that expands its offering or reach, he tells clients in a note. UBS has a A$13.10 target price on the stock, which is up 8.2% at A$11.56. (stuart.condie@wsj.com)

0145 GMT - Bursa Malaysia's average daily trading value could be robust in 2H, due to expectations that the Fed may begin cutting rates in the U.S. from September, UOB Kay Hian analyst Keith Wee Teck Keong, says in a note. The Malaysian bourse operator's average daily trading value year-to-date average stands at MYR3.1 billion, exceeding the brokerage's 2024 assumption of MYR2.8 billion, he says. Wee raises Bursa's 2024-2025 earnings by 7% and 6%, respectively. "We believe Bursa's share price could potentially peak above [MYR]10.00 if the current equity market ADV continues into late-24 and early-25," he adds. UOB KH raises the stock's target to MYR9.42 from MYR8.76 with an unchanged buy rating. Shares last at MYR8.81.(amanda.lee@wsj.com)

0115 GMT - ASX's FY 2025 cost growth guidance given at its investor day is broadly in line with Citi's own expectations. But the investment bank's analysts say in a note that they see the potential for cost growth is little more than what Citi has currently forecast. For FY 2024, Citi notes ASX has revised its expense growth to 15%, at the top end of its 12%-15% guidance range. Still, the investment bank says this is in line with Citi's forecasts and is "no surprise." Citi forecasts expense growth of 14.8% in FY 2024 and 6.0% in FY 2025. Overall, Citi says after an initial look that it doesn't expect the investor day to move ASX's share price much. ASX falls 9.0% to A$57.51. (alice.uribe@wsj.com)

0037 GMT - Origin Energy is tipped by Jarden to pay out an average 55% of free cash flow from FY 2025 after updating its dividend policy. Origin has long targeted a payout of 30%-50% of free cash flow, but now says it is seeking to return a minimum 50% of free cash flow as dividends. "We have increased our forecasts for distributions by 10% for FY 2025 and FY 2026, with a higher APLNG valuation partly offset by a more tempered medium-term gas gross profit outlook," says analyst Nik Burns in a note. "Origin's balance sheet is well positioned to fund its organic growth pipeline (along with potential Octopus Energy equity top-ups) and maintain an average dividend yield of 5.2% over FY 2024-2027." Origin is up 1.8% at A$10.17. (david.winning@wsj.com; @dwinningWSJ)

2342 GMT - Location-app provider Life360 only needs to monetize its user base at a fraction of the level targeted by U.S. ride-hailing company Lyft to double its annual revenue, Morgan Stanley analysts say. Theanalysts are already positive on Life360 and its rollout of third-party advertising to its free users, and tell clients in a note that Lyft's monetization targets are about 40 times larger on a per-user basis than their forecasts for Life360. They acknowledge the comparison isn't perfect, but observe that both companies have access to location, travel and personal details. MS has an overweight recommendation and A$17.50 target price on Life360's Australia-listed securities, which are at A$13.78 ahead of the open. (stuart.condie@wsj.com)

2326 GMT - SiteMinder's partnership with Cloudbeds points to the strength and value offered by the Australian tech company's core channel-manager offering, according to its bull at Citi. Analyst Siraj Ahmed tells clients in a note that Cloudbeds had previously spoken positively to him about SiteMinder, telling him that the San Diego-based company's biggest rival used the accommodation-management platform for connectivity. Ahmed doesn't see any effect to SiteMinder's near-term property growth or earnings. Citi keeps a buy rating and A$6.30 target price on the stock, which is at A$4.79 ahead of the open. (stuart.condie@wsj.com)

2314 GMT - DFS Furniture's guidance downgrade increases the risk that Nick Scali could miss its target of returning its Fabb Furniture subsidiary to profitability within 18 months, Citi analyst Sam Teeger says. He points out in a note to clients that DFS's fiscal 2024 downgrade was driven by Red Sea shipping disruptions, higher-than-anticipated freight costs and general weakness in furniture retail. These factors could also affect Fabb, which Australia's Nick Scali acquired in April. However, Teeger adds that DFS's fiscal 2025 outlook is positive and that lower interest rates and inflation in that period could be tailwinds for Nick Scali in the U.K. Citi has a buy rating and A$17.30 target price on Nick Scali shares, which are at A$14.00 ahead of the open. (stuart.condie@wsj.com)

2256 GMT - Macquarie pares expectations for Origin Energy's dividend to reflect weaker cash flow as the electricity generator and retailer spends more on maintenance. Origin aims to pay out at least 50% of free cash flow as dividends, which enables it to smooth out volatility in Australia's power markets, commodity prices and the timing of new investments. Macquarie had expected Origin's dividend to total A$0.60/share in FY 2024, but lowers this forecast to A$0.575. Still, it expects the payout to grow progressively, projecting dividends of A$0.60 in FY 2025 and A$0.62 in FY 2026. Macquarie retains an outperform call on Origin's stock.(david.winning@wsj.com; @dwinningWSJ)

2247 GMT - The rapid return to growth by WiseTech Global's warehouse solution comes as a nice surprise to Bell Potter analyst Chris Savage. He tells clients in a note that the warehouse product, which allows real-time visibility of pallets and packages including in transit, grew by about 20% in the logistics software provider's fiscal 1H. Savage raises his fiscal 2025 and fiscal 2026 revenue and earnings forecasts on WiseTech's progress into landside logistics, and customs and compliance, both of which represent bigger market opportunities the Australian company's core freight-forwarding market. Bell Potter raises target price 7.8% and keeps a hold rating on the stock, which is at A$96.93 ahead of the open. (stuart.condie@wsj.com)

2245 GMT - Lovisa's surprise change of CEO this month has cost the costume jewelry retailer a bull. In a note, analyst John Campbell says a more conservative approach to Lovisa's valuation is warranted because Lovisa offered no insight or guidance around a potential change in strategy following the departure of Victor Hererro and appointment of John Cheston as CEO. "We cut our rating to hold, reflecting elevated store rollout trajectory uncertainty which was a key plank in our initiation," Jefferies adds. Lovisa ended Wednesday at A$31.36. Jefferies cuts its price target by 10% to A$35.00/share. (david.winning@wsj.com; @dwinningWSJ)

2233 GMT - Autoparts retailer Bapcor is in the takeover crosshairs of private-equity firm Bain Capital, and Jefferies thinks others will soon join the fray. Bain has made a $1.83 billion proposal to acquire Bapcor that analyst John Campbell sees as the opening salvo in what will likely be a drawn-out battle involving multiple parties. "We assume this will include the two leading U.S. auto aftermarket players, AutoZone and O'Reilly, as well as potentially Marubeni (owner of XL Parts, a major U.S. trade parts supplier)," he says. Jefferies has a hold call on Bapcor and A$5.30/share price target. Bain's offer is pitched at A$5.40/share, representing a 24% premium to Bapcor's stock price before the bid became known. (david.winning@wsj.com; @dwinningWSJ)

0548 GMT - Australian health insurers Nib and Medibank look to have similar gross margin buffers, Goldman Sachs analysts Julian Braganza and Brian Kim say in a note. An analysis of the companies' reserves finds that they both have buffers to gross margins of around 3%. "Compositionally, Nib's reserving position appears stronger than Medibank; however, Medibank flags in period claims savings as well," says GS, adding that Nib doesn't appear to flag any in-period claims benefit savings versus expectations. GS says it currently prefers Nib over Medibank, reflecting strong underlying top-line growth through policyholder growth and premium rate increases, greater earnings diversity outside of regulated resident health insurance and valuation appeal. (alice.uribe@wsj.com)

0526 GMT - There is upside risk to Visible Alpha consensus on insurer QBE's combined operating ratio of 92.8%, say Goldman Sachs analysts Julian Braganza and Brian Kim in a note. They see a COR of less than 92.5% as possible, which partly reflects improvements in its North America non-core business. The lower the COR, the more profitable an insurer is. At the same time, GS sees that reinsurance markets are increasingly more positive, with commentary from June 1 renewals suggesting lower rates. "All in, there appears to be strong COR tailwinds to offset moderating yield pressures which is supportive of return on equity/ valuation into FY 2025," GS says. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

June 13, 2024 01:01 ET (05:01 GMT)