0145 GMT - Southern Cross Electrical's latest A$50 million battery contract supports Shaw & Partners analysts' continued bullish view of the stock. They point out in a note to clients that they previously highlighted the possibility of such a development, and remind readers that they have also flagged another similar contract variation worth A$160 million. Unlike the A$50 million contract confirmed last week, this second deal isn't included in the analysts' forecasts. Southern Cross has noted that more battery projects are being rolled out, the Shaw analysts add. They roll forward their target price, raising it 11% to A$2.00, and maintain a buy rating. Shares are down 0.3% at A$1.75. (stuart.condie@wsj.com)

0126 GMT - Austin Engineering continues to appeal to analysts at Shaw & Partners, who liken its provision of products and services to that of a razor-blade manufacturer. They tell clients in a note that Austin enjoys recurring demand for mining-related products such as dump-truck buckets and trays due to the wear and tear they incur, which also supports demand for its repair and maintenance services. This makes exposure to consistent and high production volumes particularly desirable, which they say Austin has secured with customers in iron-ore, coal, copper and gold. Shaw lifts the stock's target price 25% to A$0.75 and keeps a buy rating. Shares are up 2.1% at A$0.6075. (stuart.condie@wsj.com)

0056 GMT - Ansell keeps its bull at Macquarie despite an expectation that the personal-protective equipment-maker will report annual earnings at the lower end of guidance. They tell clients in a note that they expect the Australia-listed company to report fiscal 2024 EPS of US$0.97, compared with guidance of US$0.94-US$1.10. However, they see this increasing to US$1.16 in fiscal 2025 on underlying organic growth and accretion from its recent Kimberly Clark acquisition. The destocking efforts by life-sciences customers over recent reporting periods look to be normalizing, they add. Macquarie keeps an outperform rating and A$28.15 target price on the stock, which is down 0.7% at A$25.45. (stuart.condie@wsj.com)

0033 GMT - REA gets a new bull at Macquarie in anticipation of what the investment bank's analysts reckon should be a stronger-than-expected annual result. Raising their recommendation on the Australian property advertiser to outperform from neutral, Macquarie's analysts tell clients that REA can beat its buy-yield guidance thanks to its exposure to Australia's two most populous states and its Premiere ad product. They forecast buy-yield of 21%, compared with REA's guidance of 18%-19%. The analysts write in a note that REA's India business could break even by FY 2026, a year earlier than the market expects. Target price rises 8.2% to A$212.00. Shares are down 0.3% at A$193.90. REA is 61% owned by News Corp., which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal. (stuart.condie@wsj.com)

0022 GMT - IAG is now Macquarie's preferred exposure in the Australian general insurance sector, its analysts say in a note. The investment bank maintains its outperform recommendation on the stock but downgrades rival Suncorp to neutral from outperform. Macquarie sees that IAG trades at a more attractive multiple, with capital management likely in August, and reckons new reinsurance provides margin stability. Conversely, Macquarie sees a La Niña weather pattern as being a risk for Suncorp and reckons investors will need to wait until February before getting the proceeds of the sale of the insurer's bank arm. (alice.uribe@wsj.com)

0006 GMT - There looks to be limited scope for Australian banks to lift their returns, which are currently broadly in the middle of their 10-year average ranges, say Macquarie analysts in a note. It notes that over the previous twelve months, banks' underlying earnings declined, and multiples have expanded by around 25%-35%, but sees that "ultra low impairment charges cannot underpin earnings recovery over the next few years to allow banks to grow into their elevated multiples." From this, Macquarie still sees banks as expensive at current levels, and the risk of market reassessing abnormally low impairment charge expectations and elevated bank multiples. The investment bank says its remains "comfortable" with its underweight view of the Australian banking sector.(alice.uribe@wsj.com)

2359 GMT - Suncorp's FY 2025 reinsurance renewal update moves out Citi's expectations of a capital return to investors, says the investment bank's analyst Nigel Pittaway in a note. "Given its new FY 2025 reinsurance cover, Suncorp is now increasing its natural perils allowance by around 15% from its FY 2024 allowance or by 27.2% from its estimated catastrophe experience in FY 2024," Citi says. Citi now forecasts a A$3.5 billion capital return to be 100% in 1Q of 2025 and a 25 Australian cents per share special dividend in the same quarter. Previously, it had split the capital return 50:50 between 4Q 2024 and 1Q 2025. Citi also increases the forecast share price at which shares are to be bought back.(alice.uribe@wsj.com)

2340 GMT - The rise of private credit in Australia could mark the emergence of a structural shift in the financial system, rather than an example of late cycle non-bank liquidity, say Citi analysts Brendan Sproules and Thomas Strong in a note. Like overseas, Australia's lessening risk appetite in the banking system could create an opening for private credit, says Citi particularly in commercial real estate. "We think this is a sector to watch for the banks, as a competitive threat in pockets of commercial lending," says the investment bank, seeing private credit has provided strong risk-adjusted returns in recent years which will likely continue to attract capital into the sector. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

July 08, 2024 01:00 ET (05:00 GMT)