RBS: ORG – Offtake and set for NSW privatisation sale
May 31, 2010
Metcash Limited (MTS) posted a record annual profit of $227.6 million for the year to 30 April 2010. The company also provided guidance of 6-8% growth in underlying EPS for FY11.
Metcash’s result was in line with guidance and was a 12.4% improvement on the previous year’s $202.5 million profit.
The company said the result was struck on a 4.9% rise in wholesale sales from $10.97 billion to $11.51 billion despite persistent low inflation in core grocery categories and the receding effects of the government stimulus package, which boosted sales in 2009.
Looking at other results, EBITA grew 8.6% to $415.4 million, operating cash flow rose 18.8% to $294.7 million and underlying earnings per share grew 8.4% to 32c per share.
Metcash declared final dividend of 15c per share, which it said would be fully franked at 30%.
CEO, Andrew Reitzer, said every division had focused on cost containment in the prevailing low price inflationary environment, while continuing to secure further supply chain improvements and technological innovations to improve warehouse throughput.
“While current trading conditions remain subdued, we are confident of further growth in our earnings per share in the 2011 financial year, subject to economic conditions remaining stable”, Mr Reitzer said.
The company expects the low sales growth in the food and liquor sectors would continue to December 2010.
”This is due to the government stimulus felt in FY09, low food price inflation and interest rate increases (150 basis points in FY2010),” Metcash said.
”Against this background, the company provides guidance of 6-8 per cent growth in underlying EPS for FY11.”
The company said guidance is given subject to a number of observations including comparative underlying FY10 EPS is 32 cps, FY11 would be a 53 week year, interest costs for FY11 are in line with expectations, the loss of the ALH business previously announced to the market and that the results would include a full year of Metcash’s share of Mitre 10 results.
At the close of trade Monday, Metcash shares were trading at $3.85.
National Australia Bank Limited (NAB) remains committed to its proposed takeover of AXA Asia Pacific Holdings Limited (AXA), with the bank in discussions to address the concerns of the Australian Competition and Consumer Commission (ACCC), which recently blocked its bid for AXA. This morning, AXA and NAB said they had extended an agreement of cooperation on the deal, set to expire today, to 15 July 2010.
In mid-April the ACCC said it would support AMP’s rival bid for AXA Asia Pacific over NAB, saying that NAB’s already had a current wealth management platform, which would result in significantly less competition.
However with the extension of the cooperation and ongoing discussions, the door has been left ajar for a successful bid from NAB.
At the end of March NAB announced the $4.6 billion deal to purchase the wealth management division of AXA Asia Pacific.
At the close Monday, NAB shares were trading at $24.63 each, while AXA shares were at $5.82.
US Markets were closed for Memorial Day.
European Markets
European stocks finished mainly higher Monday, however it wasn’t enough to stop the largest monthly fall in 15 months. German exporters were among the biggest gainers, while banks weighed following Spain’s credit downgrade.
In the US, the Federal Reserve indicated the central bank was unlikely to raise interest rates due to the European sovereign debt crisis.
According to data released yesterday, European confidence in the economic outlook unexpectedly declined in May, while inflation increased less than anticipated.
The UK benchmark FTSE 100 was closed. The French CAC40 retreated 7.50, or 0.21% to 3,507.56, while the DAX added 18.15, or 0.31% to 5,964.33.
French banks BNP Paribas and Societe Generale shed 1.4% and 0.7%, while Germany’s Deutsche Bank added 0.6%.
German companies Infineon and Siemens rose 2.8% and 1.6%.
BP shares slumped 6.8% in Frankfurt after the company’s latest attempt to plug the leak in the Gulf of Mexico failed. There was also a warning the leak may not be stopped until August.
Daimler put on 1.7%% after Deutsche Bank lifted its rating on the luxury carmaker.
Volkswagen advanced 1.6%.
Japanese Markets
Japan’s Nikkei finished the worst month since October 2008 by edging higher on Monday. Stocks were mixed as several broker upgrades pushed the market above the gain line.
In economic news, Japan’s factory production increased a lower than expected 1.3% in April.
The Nikkei 225 added 5.72, or 0.06% to 9,768.70.
The major exporters moved higher, albeit only slightly, after the yen depreciated against major currencies. Automaker Toyota added 0.8%.
Astellas Pharma Inc. rose 1.7% after Mizuho Securities lifted its rating on the drugmaker to ‘neutral’.
Kao Corp. climbed 3.8% on a broker upgrade.
Toray Industries gained 2.8% on reports it was part of a consortium that developed carbon fiber that can be used to make automobile bodies and engine parts.
Heavyweight financials Mizuho, Sumitomo Mitsui and Mitsubishi UFJ dipped 1.2%, 0.9% and 0.7% respectively.
Hong Kong Markets
The Hang Seng was virtually unchanged Monday. The euro debt crisis weighed on sentiment, while the prospect of US interest rates being kept on hold buoyed investors.
The Hang Seng dipped 1.52, or 0.01% to 19,765.19.
Bank of China was 0.3% below the line, while Bank of Communications edged 0.2% higher.
Heavyweight banks HSBC was 0.6% weaker.
Yue Yuen Industrial, the world’s largest contract shoemaker, put on 0.8%.
Cathay Pacific, Hong Kong’s official airline, was 2.7% above the line.
Property developers retreated after the government reportedly was taking steps to reign in prices after house prices rose nearly 13% over the last year.
Guangzhou R&F Properties was 2.1% weaker, while Sun Hung Kai Properties lost 1%.
Interestingly, house prices in Sydney are reported to have risen by around the same amount.
Carmakers were stronger after saying output would be 15% higher than last year.
BYD, the automaker backed by Warren Buffett, added 2% and Geely Automobiles surged 4.2%.
The Aussie market closed lower following a disappointing lead from Wall Street overnight as the European debt crisis reared its ugly head again, with Spain having its debt downgraded. Heavyweight resource and financials led losses, however they were somewhat countered by gains among defensive stocks.
On the domestic economic front, The TD Securities-Melbourne Institute gauge of consumer price inflation rose 0.5% in May, following a 0.4% increase in April.
The increase, to 19-month highs, has been attributed in part to the Federal Government’s hike in tobacco tax, however it seems the flow effect might be for the Reserve Bank to increase mortgages across the country to counter this move.
In other economic news, according to the Australian bureau of Statistics the gross operating profits of companies increased by seasonally-adjusted 3.9% to $57.2 billion in the March quarter. It was the fastest pace in 18 months.
Meanwhile, the Housing Industry Association said the volume of new home sales increased 6.2% in April on the back of a 27.6% rise in Victoria. Home sales rose 0.9% the previous month.
At the end of the day, the All Ords retreated 25.4 to 4,453.6, while the ASX/200 shed 27.8 to 4,429.7. Around 1.8 billion shares worth around $4.7 billion had changed hands.
The big four banks finished lower, with the Banks and Financials sector down 1%.
Westpac and CBA dipped 45c and 75c to $22.95 and $51.37 respectively.
Meanwhile, ANZ slid 21c and NAB eased 0.6% down.
Among the insurers AMP and IAG weakened 1.1% each. QBE capped losses with a 4c gain to $19.66.
The Property Trusts sector eased 0.1% lower, with Westfield down 6c to $12.74.
GPT lost 1.5%, however Goodman Group and Mirvac advanced 1.6% each to 63c and $1.31.
BHP Billiton and Rio Tinto lost ground as the Materials and Resources sector fell 1.2%. Their shares were down 1.9% and 1.6% respectively.
Fortescue slumped 15c, or 3.6% to $4.04.
Orica was up 31c to $25.65 after announcing it would spin-off its Dulux paints business as a separate entity.
Incitec Pivot gained 1c to $3.02.
The Energy sector slumped 0.4% with Woodside easing 51c, or 1.2% to $42.95.
Uranium stocks were lower. Extract and ERA lost 24c and 40c to $7.05 and $13.95 respectively.
Among the Industrial stocks, Virgin Blue put on 6.5% recovering some of Friday’s 30% slump. The airline received cautious support among broker reports this week, albeit at greatly reduced price targets.
Qantas rose 5c to $2.50 as the sector advanced 0.2%.
Meanwhile, Brambles rose 1.7% to $6.65 and Leighton dipped 7c to $32.62.
The Consumer Staples sector was one of the best performers across the ASX/200, adding 0.7%. Woolworths and Wesfarmers rallied 0.9% and 0.7% respectively.
Beverage makers Foster's and Coca-Cola gained 8c and 4c to $5.58 and $10.88 respectively.
The Consumer Discretionary was a mixed bag, easing just 0.4% lower overall.
Retailers were down, including Myer which weakened 5c to $3.16. Gamer Crown gained 12c, to $7.82 and Flight Centre put on 32c, or 2.0% to $16.72.
Fairfax added 1c lower to $1.51.
Much of the market news today revolved around the Healthcare stocks, with the sector up 0.9%.
Sigma announced it would open its books to potential suitor, South African based Aspen Pharmaceuticals, sending its shares 7% higher to 53.5c.
Meanwhile hospitals operator Healthscope rose 5.0% after revealing it had received two bids for the company at $5.80 per share, saying they were both superior to a previous private consortium bid of $5.75 for each share.
Around the region, the Nikkei 225 gave up 5.7 to 9,768.7, while the NZSE50 added 13.5 to 3,061.2. The Straits Times Index put on 22.5 to 2,762.2. The Hang Seng slid 2.7 to 19,764.0.
Spot gold was trading at US$1,213.10 per ounce, while the Aussie was buying US$0.8493.
At the end of the day, Healthscope shares were up 26c to $5.49.
Sigma opens books to Aspen
Sigma Pharmaceuticals said it has opened its books to South African pharmaceutical manufacturer, Aspen Pharmacare, to conduct due diligence on the company as a part of its previously announced takeover offer. On 21 May Aspen offered to buy Sigma at an indicative price of 60c cents a share, valuing the company at around $700 million.
At the close, Sigma shares were trading up 3.5c at 53.5c each.
Orica set to spin off Dulux
Orica has raised the prospect of spinning off its paint and garden business, Dulux. Orica said a shareholder vote in favour of the demerger was in their best interests, citing Grant Samuel, an independent expert, which said the benefits were ‘collectively compelling and that shareholders are likely to be better off if the demerger proceeds, notwithstanding the disadvantages and risks.
At the final whistle, Orica shares were trading up 31c to $25.65.
Takeovers Panel declines to conduct proceedings on Transurban
The Takeovers Panel has declined to conduct proceedings on an application made by CP2 Limited last week requesting Transurban to not be allowed to conduct a $542.3m capital raising. The Panel said it did not consider the rights issue would have a material effect on the control of Transurban and accordingly there was no reasonable prospect that it would declare the circumstances unacceptable.
At the close, Transurban shares were down 8c to $4.29.
Tox awarded contract but downgrades guidance
Tox Free Solutions said it has been awarded a five-year contract worth an estimated $30m to provide Industrial Services to Murrin Murrin Operations Pty Ltd at the Murrin Murrin Nickel / Cobalt operation in Western Australia. The company also said even with a strong finish to FY10 it is now unlikely the company would achieve its initial guidance of $26 million to $28 million EBITDA, which was provided in August 2009.
At the end of the day, Tox shares were up 2c to $2.39.
Riversdale Mining Limited (RIV) announced an upgrade to the Coal Resource Estimate for its 100% owned Zambeze project in Mozambique. The company said the total Coal Resource for the project is now estimates at 9 billion tonnes, including 6,680 million tonnes Inferred Resources and 2,365 million tonnes Indicated Resources. Riversdale said products comprise hard coking coal and thermal coal. The company’s resources under management in Mozambique now totals 13 billion tonnes.
Cazaly Resources Limited (CAZ) requested its shares be placed in trading halt. The company said the halt would remain in place until an announcement is made regarding the finalisation of an agreement with respect to the development of the Parker Range Iron Ore Project.
Cape Lambert Resources Limited (CFE) requested its shares be placed in trading halt pending an announcement regarding the sale of the Lady Annie Project. Shareholders of China Sci-Tech Holdings Limited approved the Hong Kong company’s $135 million acquisition of the mine over the weekend. Cape Lambert requested the halt end on the earlier of the commencement of normal trading this Wednesday, or when the announcement is released to the market.
Lihir Gold Limited (LGL) this morning said the mineral reserves and resources at its Bonikro operation in Côte d’Ivoire as at 31 March 2010 was 760,000 ounces against the previous stated reserve of 930,000 oz at October 2006. Lihir said the reserve estimate was partly due to mining depletion of 275,000 ounces, however was offset by a higher price for gold over the last four years. This doesn’t take into account mining since November last year, the company noted.
Arrow Energy Limited (AOE) said its subsidiary, Arrow Energy (Dajing) had signed production sharing contract with Chinese oil giant Petrochina, with the purpose of exploring for unconventional gas in the Dajing block, far-western of China. The Dajing block is an exploration block with an area of 3,969 km2 located in the East Junggar Basin in the Xinjiang Autonomous Region, an area which contains 30% of China’s oil reserves and 35% of its gas reserves. Arrow said it expected the cost of the planned preliminary work program to be around US$4.0 million, while plans suggest commencement of a full commercial development from 2014 onwards, with expected gas sales building to around 20 Bcf per annum.
Jindalee Resources Limited (JRL) soared Monday after the company announced that a 55c fully-franked dividend would be paid to shareholders on 23 July 2010. The company said it had for several years been concerned that it had been trading at an unacceptable discount to the value of its liquid assets and as a result had been investigating ways to break this holding company discount and maximise the value of its investments for the benefit of shareholders. The company said the sale of its controlling stake in Energy Metals Limited (EME) late in 2009 and the distribution of some of the proceeds of this sale to Jindalee shareholders via this dividend represents a significant step in this process. Jindalee said based on current prices, and after payment of this dividend and tax liabilities, it would still hold liquid assets worth approximately $17 million.
Australian shares edged lower Monday following a negative lead from an increasingly volatile Wall Street. International markets were lower as Europe’s debt crisis came to the fore again, following Spain’s debt downgrade.
On the domestic economic front, The TD Securities-Melbourne Institute gauge of consumer price inflation rose 0.5% in May, following a 0.4% increase in April.
The increase, to 19-month highs, has been attributed in part to the Federal Government’s hike in tobacco tax, however it seems the flow effect might be for the Reserve Bank to increase mortgages across the country to counter this move.
At midday, the All Ords retreated 21.7 to 4,457.3, while the ASX/200 shed 20.3 to 4,437.2. Around 700 million shares worth around $1.7 billion had changed hands.
The big four banks were mixed, although trended lower, with the Banks and Financials sector down 0.7%.
Westpac and CBA dipped 20c and 76c to $23.20 and $51.36 respectively.
Meanwhile, NAB and ANZ were virtually unchanged.
Among the insurers AXA Asia Pacific, AMP and IAG slid 0.5%, 0.7% and 0.8% respectively. QBE outperformed with an 18c gain to $19.80.
The Property Trusts sector eased 0.6% lower, with Westfield down 6c to $12.74.
GPT lost 2.2%, however Goodman Group capped losses with a 1c gain to 63c.
BHP Billiton and Rio Tinto were the major losers among the Materials and Resources stocks. Their shares were down 1.3% and 1.8% respectively.
Fortescue retreated 5c to $4.14, while the broader sector was down 0.9%.
Orica was up 10c to $25.44 after announcing it would spin-off its Dulux paints business as a separate entity.
Incitec Pivot gained 6c, or 2% to $3.07.
The Energy sector slumped 0.6% with Woodside easing 53c, or 1.2% to $42.93.
It was a mixed day for uranium and coal stocks.
Whitehaven and ERA lost 10c and 34c to $4.75 and $14.01 respectively.
Meanwhile Centennial Coal and Paladin were 1.3% and 2.1% stronger.
Among the Industrial stocks, Virgin Blue put on 4.8% recovering some of Friday’s 30% slump. The airline received cautious support among broker reports this week, albeit at greatly reduced price targets.
Qantas put on 5c to $2.50 as the sector climbed 0.1%.
Meanwhile, Brambles and Leighton, the two biggest stocks in the sector, rose 0.6% and 0.1% respectively.
The Consumer Staples sector was one of the best performers across the ASX/200, adding 0.7%. Woolworths and Wesfarmers rallied 1% and 0.7% respectively.
Beverage makers Foster's and Coca-Cola gained 7c and 10c to $5.57 and $10.94 respectively.
The Consumer Discretionary was a mixed bag, easing just 0.1% lower overall.
Retailers were down, including Myer which weakened 5c to $3.16. Gamer Crown gained 14c, to $7.84 and Flight Centre put on 40c, or 2.4% to $16.80.
Fairfax eased 2c lower to $1.48.
Much of the market news this morning revolved around the Healthcare stocks, with the sector up 1.2%.
Sigma announced it would open its books to potential suitor, South African based Aspen Pharmaceuticals, sending its shares 3% higher.
Meanwhile hospitals operator Healthscope rose 5% after revealing it had received two bids for the company at $5.80 per share, saying they were both superior to a previous private consortium bid of $5.75 for each share.
Around the region, the Nikkei 225 gave up 13.2 to 9,749.7, while the NZSE50 added 12.9 to 3,060.7. The Straits Times Index put on 12.3 to 2,752.0.
Spot gold was trading at US$1,210.95 per ounce, while the Aussie was buying US$0.8476.
At midday, Healthscope shares were up 26c to $5.49.
Sigma opens books to Aspen
Sigma Pharmaceuticals said it has opened its books to South African pharmaceutical manufacturer, Aspen Pharmacare, to conduct due diligence on the company as a part of its previously announced takeover offer. On 21 May Aspen offered to buy Sigma at an indicative price of 60c cents a share, valuing the company at around $700 million.
At lunch, Sigma shares were trading up 1c at 51c each.
Orica set to spin off Dulux
Orica has raised the prospect of spinning off its paint and garden business, Dulux. Orica said a shareholder vote in favour of the demerger was in their best interests, citing Grant Samuel, an independent expert, which said the benefits were ‘collectively compelling and that shareholders are likely to be better off if the demerger proceeds, notwithstanding the disadvantages and risks.
At noon, Orica shares were trading up 10c to $25.44.
Takeovers Panel declines to conduct proceedings on Transurban
The Takeovers Panel has declined to conduct proceedings on an application made by CP2 Limited last week requesting Transurban to not be allowed to conduct a $542.3m capital raising. The Panel said it did not consider the rights issue would have a material effect on the control of Transurban and accordingly there was no reasonable prospect that it would declare the circumstances unacceptable.
At lunchtime, Transurban shares were down 6c to $4.31.
Tox awarded contract but downgrades guidance
Tox Free Solutions said it has been awarded a five-year contract worth an estimated $30m to provide Industrial Services to Murrin Murrin Operations Pty Ltd at the Murrin Murrin Nickel / Cobalt operation in Western Australia. The company also said even with a strong finish to FY10 it is now unlikely the company would achieve its initial guidance of $26 million to $28 million EBITDA, which was provided in August 2009.
At midday, Tox shares were up 3c to $2.40.
The Takeovers Panel has declined to conduct proceedings on an application made by CP2 Limited last week requesting Transurban Group (TCL) to not be allowed to conduct a $542.3 million capital raising. The Panel said it did not consider the rights issue would have a material effect on the control of Transurban and accordingly there was no reasonable prospect that it would declare the circumstances unacceptable.
Earlier this month Transurban rejected two offers from a consortium of its largest shareholders including CP2, the Canadian Pension Plan Investment Board and the Ontario Teachers Pension Plan.
Instead Transurban announced that it would finance the acquisition of the Lane Cove Tunnel in Sydney partly through a fully underwritten accelerated renounceable 1 for 11 rights issue.
The second proposal was conditional on the rights issue being discontinued but was conditional, among other things, on board approval and funding.
CP2 sought interim orders restraining Transurban from proceeding with the rights issue or allotting shares on exercise of the rights.
The Takeovers Panel said it considered that the proposals did not constitute genuine potential offers such as to make the rights issue a frustrating action and, even if they did, the actions of the Transurban board did not constitute a frustrating action.
As at 1107 AEST, Transurban shares were down 6c to $4.31.
Healthscope Limited (HSP) said it has received two takeover offers since Friday that topped that which was made by Blackstone Group and partners on May 20 valuing the hospital operator’s shares for $5.75 each. The company said the most recent offers both priced Healthscope’s shares at $5.80 each.
Media reports have already suggested Kohlberg Kravis Roberts & Co could be one of the new bidders.
Healthscope said after considering the proposals, its board has formed the view that both proposals are equal to or superior to the consortium’s proposal.
The company said it has therefore concluded that these parties would, subject to negotiation of appropriate confidentially agreements, also be granted the opportunity to conduct due diligence.
“The board considers that at this time the interests of shareholders will be best served by a formal process to thoroughly evaluate whether a change of control offer, at a price and on terms that the board would recommend, can be secured,” Healthscope said.
“In order to ensure that any process operates as quickly and effectively as possible the board does not intend to make any further announcements unless and until a recommended offer is secured, or unless there is a development which it judges should be disclosed immediately.”
The company said such a process would take “several weeks”.
Healthscope recommended shareholders take no action on the offers.
As at 1032 AEST, Healthscope shares were halted at $5.23.
Sigma Pharmaceuticals Limited (SIP) said it has opened its books to South African pharmaceutical manufacturer, Aspen Pharmacare, to conduct due diligence on the company as a part of its previously announced takeover offer.
On 21 May Aspen offered to buy Sigma at an indicative price of 60c cents a share, valuing the company at around $700 million.
Sigma said it had entered an exclusivity agreement over the next four weeks with Aspen, whereby no rival bids for the company would be considered and Sigma would not sell any assets that had not been previously announced.
At 1027 AEST, Sigma shares were trading up 1c at 51c each.