0242 GMT - The RBA will likely need to lift the official cash rate once more this cycle, possibly twice, with a realistic risk of inflation re-accelerating in Australia, says Schroders fund manager, multi-asset, Adam Kibble in a note. "More rate increases, this late in the cycle, will significantly increase the risk of recession," he says, noting Schroders expects volatility in both credit and interest rate markets in coming months. For this reason, the fund manager has started to reduce risk, shifting from preferring credit risk to preferring interest rates as the primary risk factor to generate its excess return targets. "That will mean reducing Exposure to Australian Credit Securities, particularly corporates, as the risk of default increases during recessions necessitating a widening in credit risk premia," says Kibble.(alice.uribe@wsj.com)

0211 GMT - The level of pay for CEOs at Australian-listed companies decreased over FY 2023, but bonus payments have become more normalized, says the Australian Council of Superannuation Investors in a new research report. It finds that realized pay for Australia's S&P/ASX 100 CEOs fell marginally in FY 2023, with the median dropping from A$3.93 million to A$3.87 million--the lowest median in the 10 years the ACSI study has collected realized pay data. Still, only two CEOs in the ASX 100 didn't take home a bonus in FY 2023, says ACSI. "Bonuses should not become a given in Australian companies. At a time when companies are focused on productivity and performance, it is critical that bonuses are only paid for exceptional outcomes," says Ed John, executive manager, stewardship, at ACSI. (alice.uribe@wsj.com)

0125 GMT - Technology One is likely to maintain its fiscal 2024 profit guidance at its inaugural investor day later this month, Bell Potter analyst Chris Savage says. He reckons that the Australian software provider will stick to its existing guidance for 12%-16% growth in pre-tax profit, before slightly exceeding it when it reports in November. Savage tells clients in a note that Technology One will try to educate the market on growth opportunities including the U.K. and its app-builder tool, hoping to support confidence in its existing net revenue retention target. Bell Potter lifts its target price 1.2% to A$20.50 and keeps a buy rating on the stock, which is up 0.7% at A$18.85. (stuart.condie@wsj.com)

0107 GMT - Aristocrat Leisure keeps its bull at Citi amid signs of positive performance relative to the broader gaming industry. Citi's data analysis suggests that bookings at Aristocrat's Raid title rose 3% in June, coinciding with a sharp revenue decline since April at rival AFK Journey. Analyst Adrian Lemme tells clients in a note that Aristocrat's social-casino portfolio is also outperforming the broader genre. He raises his profit forecasts by 2.5% for FY 2024, by 6.6% for FY 2025 and by 8.1% for FY 2026. Citi lifts its target price by 11% to A$59.00 and keeps a buy rating on the stock, which is up 1.1% at A$52.57. (stuart.condie@wsj.com)

0042 GMT - Xero could see an increase in customer churn at the lower end of its pricing plans due to Intuit's aggressive pricing of its rival accounting software, Citi analyst Siraj Ahmed says. He tells clients in a note that he has heard from staff at Intuit's Quickbooks that the company is being more aggressive on pricing following Xero's decision to raise its prices twice in the past year. The move may have an impact on Xero's 1H FY 2025 subscriber growth, he says. Ahmed adds that Intuit's accelerated investment in AI could increase competition for talent and put pressure on Xero to keep up with product investment. Citi has a buy rating and A$158.20 target price on Xero shares, which are down 0.7% at A$140.57. (stuart.condie@wsj.com)

0028 GMT - Netwealth's 4Q FY 2024 net fund flows were strong, beating UBS's expectations and this momentum may sustain as financial advisors transition client accounts and balances, says the investment bank's analyst Scott Russell in a note. Also, account opening is at multi-year highs, which UBS reckons provides Netwealth--an Australian wealth management platform- with a very positive lead for future inflows. While outflows in 4Q were also above UBS's expectations, it sees these as being improved from "stubbornly high" outflows a year earlier. UBS has a buy call on the stock.(alice.uribe@wsj.com)

2341 GMT - Motor and home insurance pricing is robust and remains near its peak in June, say Morgan Stanley analysts in a note. Still, they also see that premium growth is slowing, despite motor being up 16% over the year in June, while home is up 18% over the same period. MS reckons this is supportive of Australian general insurers Suncorp and IAG's margins into FY 2025, as pricing takes a year to earn. The investment bank still doesn't see high teens price increases translating to gross written premium growth at the same levels, with its survey showing consumers managing sticker shock by reducing insured values and/or raising excesses. (alice.uribe@wsj.com)

2320 GMT - Australian vehicle classifieds provider CAR Group is well placed to maintain annual earnings growth of more than 10% despite currency and U.S. headwinds, Goldman Sachs analysts say. They tell clients in a note that CAR is likely to impose a 4%-5% price rise on dealers in September, observing that dealer margins remain strong and that CAR did not materially increase prices through the Covid-19 pandemic. CAR could always slow investment if Ebitda growth looks like slowing, they add. Less positively, they note that dealer numbers and inventory at CAR's U.S. Trader Interactive unit are being hit by macro weakness, while currency moves are a headwind to Brazil earnings. GS raised target price 5%, to A$41.40, and keeps a "buy" rating on the stock, which is at A$34.76 ahead of the open. (stuart.condie@wsj.com)

2317 GMT - Australian listed banks are a big driver of the country's S&P/ASX 200, making up 30% of the index, and they continued to power ahead in the June quarter, buoyed by rising rates and the prospect of less margin pressure, says Morningstar Regional Director of Equities Research Mathew Hodge in a report. Still, he sees that value for the banking sector is thin on the ground, with only ANZ and Westpac at modest discounts to Morningstar's fair value estimates, but reckons specific risks to the banks appear to have lessened. For example, signs are positive for bank home loan books. Overall, after an unexpectedly strong March quarter, some emerging risks weighed on Australia's benchmark, which declined about 2% to finish the June quarter at close to 7,770. (alice.uribe@wsj.com)

2310 GMT - Caution remains over Platinum's plans to save costs, says Goldman Sachs analysts Julian Braganza and Brian Kim in a note. The Australian fund manager is targeting over A$25 million annualized cost savings from 4Q FY 2024, which are to be mostly realized through FY 2025, reflecting around 26% of Platinum's 1H FY 2024 annualized cost base. But, GS notes the size of the cost out opportunity targeted and says its somewhat concerned about whether these benefits may be offset by growth investments and cost inflation. Still, Platinum this week reaffirmed its target of around A$21 million of one-off costs for FY 2024, and GS says it awaits guidance for FY 2025. (alice.uribe@wsj.com)

2251 GMT -- Australian fund manager Platinum's June funds under management is lower than Bell Potter analyst Marcus Barnard was expecting. In a note, the investment bank reiterated its view that the company remains at risk from further fund outflows and resultant declining revenue. Still, BP sees the investment case for the stock remains balanced between a "short-term rightsizing of the cost base, while finding a medium-term growth strategy." BP reckons actions announced in March should cut A$25 million from the cost base, and the investment bank remains optimistic that the new management team is working to build shareholder value. This prompts BP to keep its buy call, flagging a risk of further outflows remains. (alice.uribe@wsj.com)

2246 GMT -- BHP's suspension of its Australian nickel operations isn't a surprise, but the costs are, says Citi analyst Paul McTaggart. BHP says it will incur costs of roughly $300 million a year from January 2025, following a transition period, to ensure it can restart the operations later if market conditions improve. "The costs are higher than expected," McTaggart says in a client note. BHP ended Thursday at A$43.56. Citi has a buy rating and A$48.50 target on the stock. (rhiannon.hoyle@wsj.com)

0604 GMT - Anglo American's fire incident at a major coal mine in Australia drives downgrades to RBC's earnings forecast and likely delays the sale of its coal division, removing one of its key near-term catalysts from its investment case, RBC Capital Markets says. The bank expects a 12-month stoppage at the Grosvenor mine and $500 million repair cost. Potential buyers of the London-listed miner's coal business will likely wait for more clarity on the incident or a discounted premium, it says. "We see [Anglo's] outlook more balanced in the near term as the sale of the met coal division gets more complicated," RBC analysts write in a research note. RBC cuts its share rating to sector perform from outperform and its price target to 2,600 pence from 3,100 pence. (christian.moess@wsj.com)

(END) Dow Jones Newswires

July 12, 2024 00:57 ET (04:57 GMT)