Australian Financial News from the Australian Stock Market.

  • Share to buy – Magellan Financial (MFG)

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    MFG's recent numbers speak for themselves:

    • 41% increase in profit
    • 38% increase in dividend
    • exceptional net inflows and a reduction in employee expense to income

    Technically, after a sharp pullback the stock found support around $20 and has bounced strongly.

    The recent bullish candle was a confirmation candle and a signal that traders should be happy to buy into.

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  • Share to Buy Macquarie Group LTD (MQG)

    Macquarie Group (MQG) is Australia’s leading listed Investment bank and has offices all around the globe. The company is well diversified with six different operating groups:

    • Macquarie Capital: Includes corporate advisory, equity, debt and private capital markets businesses, and undertakes principal investing
    • Macquarie Securities: Activities include institutional and retail derivatives, structured equity finance, arbitrage trading, synthetic products, capital management, collateral management and securities, borrowing and lending
    • Fixed Income, Currencies and Commodities (FICC): Provides a variety of trading, research, sales and financing services across the world with an underlying specialisation in interest rates, commodities and foreign exchange
    • Macquarie Funds Group: Full-service asset manager
    • Banking and Financial Services: The primary relationship manager for Macquarie Group’s retail client base
    • Corporate and Asset Finance Group: The lending and leasing business of Macquarie Group
    Big 1H14 result MQG’s 1H14 results were a standout, with net profit of $503 million representing a 39% increase on 1H13 and beating analyst estimates. An interim dividend of $1 was declared, franked to 40c. Revenue over the period was up 20% to $3.68 billion, with the funds management business a highlight. Assets under management (AUM) were $385 billion at the end of September 30, up 11% from 2H13 and driving a corresponding 11% jump in Macquarie Funds earnings. There was also a strong rebound at Macquarie Securities, which experienced a 23% surge in operating income from 2H13, as improved equity volumes led to increased commissions.  

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  • Share to Buy Perpetual Limited (PPT)

    Perpetual Limited (PPT) is an Australian financial services company that has been operating in one way or another since 1886. The company offers investment advice to a variety of different clients including individuals, families, financial advisers and organisations. PPT provides its clients with a broad range of investment, superannuation and retirement income products, with features such as savings plans, tax-effective structures, and online servicing. The group has three main business units:

    • Perpetual Investments
    • Perpetual Private
    • Perpetual Trusts
    FUM growth Australian fund managers have enjoyed strong share price gains over the past 12 months alongside with rallying equity markets. The equity market rally has translated into stronger investment performance among funds, and contributed to rising funds under management (FUM). PPT’s FUM increased 17.7% over the 12 months to September 30, 2013. There was really good momentum during the September quarter, where FUM jumped 10% from the June quarter. This followed a successful FY13 where net profit soared 128% to $61 million, due largely to $37 million in annualised pre-tax cost savings achieved from the Transformation 2015 program. The cost benefits are likely to become more pronounced in FY14, where PPT is targeting $50 million in annualised pre-tax savings. Trust Company acquisition Last year PPT acquired smaller financial services provider, The Trust Company in a part scrip, part cash bid. Trust shareholders received 0.182 PPT shares for each share owned, with PPT also offering $78 million in cash as part of the bid. PPT estimates post-tax cost synergies of at least $15 million two years after merger completion. Revenue synergies are also expected to arise due to cross-selling opportunities across a greater customer base.

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  • Fairfax Media (FXJ) On The Way Back

    Fairfax Media Share TipFairfax Media Limited (FXJ) is an Australian multi-platform media group with a broad range of activities including news publishing, information and entertainment, advertising sales in newspaper, magazine and online formats, and radio broadcasting. FXJ conducts its core activities throughout Australia and New Zealand.  Its major newspaper brands are The Sydney Morning Herald, The Age and The Australian Financial Review. Additionally, FXJ owns a range of business magazines, websites, and regional and community newspapers. Stayz sale part of restructure This week FXJ announced the sale of Australian holiday rentals site, Stayz, to HomeAway for $220 million. The sale is part of a focus on restructuring the business in response to an ongoing deterioration in advertising revenue. Earlier this year the group consolidated its Australian publishing businesses under the Australian Publishing Media division in an effort to drive efficiencies and simplify its business model. Also, the Domain and Digital Ventures businesses were separated into standalone divisions, allowing the group to devote increased resources and management attention to areas of the business likely to drive its future growth. FY13 results FXJ’s FY13 results revealed a net loss of $16.4 million and a 5.9% slide in revenue to $2.2 billion. On an underlying basis, net profit fell 28.6% 108.3 million. This accounts for the divestments of Trade Me Group, US Agricultural and Victorian Community Publications, as well as continued impairments of mastheads, goodwill and licenses. The asset sales and impairments were needed, however, to streamline the business and repair the balance sheet. Net debt to EBITDA fell from 1.8x in FY12 to 0.4x in FY13. Also, interest cover increased from 4.5x to 6.4x. On both measures, FXJ is comfortably ahead of its debt covenants. Outlook Following the Stayz sale the balance sheet is in even stronger shape. FXJ said it is on track to achieve cost savings of $1.6 billion in FY14. This will help alleviate pressure on the Metro and Regional businesses, which were suffering falling revenue at the start of FY14. In a positive, however, the group is expanding its digital footprint, with The Sydney Morning Herald and The Age experiencing strong growth in digital subscriptions. So it appears the FXJ is growing by shrinking, shedding non-core assets and driving cost efficiencies to offset weak revenue. At the same, the investment into its digital capabilities is yielding early success, helping to improve sentiment towards the stock.

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  • Suncorp Group (SUN) Share To Buy

    suncorpSuncorp Group (SUN) is one of the largest general insurance groups in Australia, and one of the biggest regional banks in Queensland. The group is split up into three main divisions:

    >> General Insurance, which offers personal and commercial insurance products in the motor, home and contents, travel, boat, and workers’ compensation segments.
    >> Suncorp Bank, which offers banking services to personal, agribusiness, small business and commercial customers.
    >> Suncorp Life, which offers life insurance and superannuation products.
    Recent Results SUN revealed a 32.2% drop in FY13 net profit, but that was due to losses booked from the sale of its non-core bank. Underlying earnings were up 19.3%, driven by strong growth from General Insurance. This division saw its underlying insurance margin jump from 12.1% in FY12 to 13.5% in FY13. This occurred amid price and volume growth in the motor and home insurance product categories. Importantly, the group has flagged further premium increases in FY14, which should help support further underlying margin growth. Suncorp Bank’s net profit was unchanged at $289 million, but in a positive, the net interest margin of 1.89% was above the 1.75% - 1.85% target range. FY14 interest margin was likely to be impacted by the consolidation of the remaining non-core assets into the core bank. However we expect a significant improvement in FY15 once these legacy issues are fully resolved. A key concern remains Suncorp Life, which reported a 76.1% slide in FY13 net profit. Higher claims and policy lapses weighed on the division, but as with AMP, these problems are affecting the entire industry. Outlook SUN appears attractive on a valuation basis, trading on a forward P/E of 12.5x. This is cheaper than its rivals Insurance Australia and QBE, which trade at 13 times forward earnings. Whilst the discount is not too great, we think SUN should be trading on higher multiples given the potential capital return on offer for shareholders following its non-core asset sale. A final dividend of 30 cents was declared in FY13, along with a special dividend of 20 cents. With the group looking to reduce its surplus capital, more special dividends are expected to follow over FY14 and FY15. For all of our latest australian share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Share To Buy Telstra Limited (TLS)

    telstra logoTelstra Corporation Limited (TLS) is a full service domestic and international telecommunications provider and is without question the dominant telco in Australia. The company provides telephone exchange lines to homes and businesses, supplying local, long distance and international telephone calls and supplying mobile telecommunications services. TLS also provides data, internet, on-line services and directory services. TLS has five key business segments:

    >> Telstra Consumer and Country Wide, which is responsible for servicing metropolitan, regional, rural and remote parts of Australia with a full range of products and services.
    >> Telstra Wholesale, which provides a wide range of wholesale products and services to the Australian domestic market.
    >> Telstra Business is responsible for serving the unique needs of Australia’s small to medium enterprises (SMEs).
    >> Telstra Enterprise and Government unit is responsible for providing innovative Information and Communications Technology (ICT) solutions to large corporate and government customers in Australia and New Zealand.
    >> Other, which includes all division that are not covered above and includes; Telstra Operations, Sensis and Telstra International Group.
       
    Key Points FY13 Results:
    >> Revenue over the year grew by 1.9% to $26 billion.
    >> Net profit for the year came in at $3.9 billion a 12.9% increase on the prior year’s result. The profit increase was ahead of consensus estimates of $3.69 billion.
    >> The strong results continue to be driven by a lead mobile growth with revenue rising by six per cent to $9.2 billion.
    >> The mobile division added 1.3 million subscribers for the year, which is likely the result of glitch-plagued Vodafone Australia whose network infrastructure has become overstretched.
    >> Telstra continued to build momentum in its Network Applications and Services (NAS) portfolio, with revenue increasing 17.7% for the year.
    >> The group returned a dividend of 28 cents per share fully franked dividend for FY13.
       
    Outlook The groups FY13 results were solid and showed impressive growth for a company of its size. TLS’s is committed to stabilise its core businesses remains, but we have noted an increase focus on some of its underdeveloped sub divisions, in particular Network Applications and Services. We like the move as the product compliments its other offerings, whilst has relatively lower capital outlay requirements. TLSs current businesses still continued to benefit from previous network upgrades, whilst a new focus on its underdeveloped business will see continued growth for its earnings and its share price. For all of our latest buy share options and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Caltex (CTX) Share To Sell

    Caltex (CTX) is Australia's leading transport fuel supplier and convenience retailer and the only integrated oil refining and marketing company listed on the ASX. Under its Refining and Supply business, CTX operates two major refineries, at Kurnell in Sydney, and Lytton in Brisbane. In 2014, Lytton will be the only refinery following the planned transformation of Kurnell into purely an import terminal. The Marketing business sees CTX sell through its retail arm petroleum, motor oil lubricants, diesel and jet fuel. CTX also operates convenience stores, fast food stores and service stations throughout Australia. Currency Slams Profit

    >> CTX reported a 13% drop in 1H13 replacement cost after tax profit (excludes the impact of fluctuating oil prices) to $171 million.
    >> The group blamed poor performance in its Marketing and Distribution division, which suffered a $5 million wipeout from the sharp drop in the AUD/USD in May and June.
    >> Because CTX pays for its crude in US dollars, it was hit hard by the significant depreciation in the Aussie dollar.
    >> The group reported a net exchange loss of $39 million due to the impact of a fall in the AUD/USD from 104 US cents to 93 US cents from late April to the end of June.
    >> Loss of premium petrol sales in the key Sydney market due to a pipeline outage at Kurnell also hurt Marketing and Distribution earnings, in addition to the Refining and Supply business.
    >> Marketing and Distribution EBIT of $367 million was flat on-year, whilst Refining and Supply suffered an EBIT loss of $43 million.
    Outlook CTX has been a significant casualty of the collapse in the Aussie dollar. The company has been forced to pay more for its crude, hurting overall profitability. Moreover, it said that refining margins were likely to come under pressure in the 2H13 amid increased competitive pressures and comparatively weaker demand growth. The loss of premium petrol sales in Sydney, along with expectations of weak regular petrol sales growth due to aggressive price competition from Coles Express, is also expected to hurt the downstream business. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Buy, Sell, Hold Recommendations – Herald Sun 29/9/2013

    As featured in the Herald Sun on September 29th 2013, here are the latest buy, sell and hold recommendations from Geoff Saffer Equity Analyst & Educational Facilitator at the Australian Stock Report. Geoff has over 10 years’ experience researching and analysing Australian shares, with a passion for fundamental analysis and specialty in identifying undervalued companies – particularly at the smaller end of the market. Buy Shares Lend Lease (LLC) – Expect LLC to build on solid FY13 performance, underpinned by strong project pipeline, infrastructure activity. Balance sheet allows for possible acquisitions. Empired Ltd (EPD) – Expanding IT Services company looks set to continue fast-paced growth on back of recent strategic acquisition. Expect earnings to almost double in FY14. Hold Shares Medusa Mining (MML) – We remain wary of the gold sector, but MML’s production is now ramping up, costs remain extremely low and valuation is more appealing than its peers. Australian Agricultural (AAC) – Has just undertaken a massive capital raising, shoring up its balance sheet. Needs to successfully shift sales overseas to achieve higher beef prices. Sell Shares SCA Property (SCP) – Property trust offers solid yield and surety of Woolworths tenancy. But more than offset by lack of growth and underlying weakness in specialty store occupancy. Oroton Group (ORL) – Has some growth prospects, but lucrative Ralph Lauren contract has ended, highly-regarded CEO has left and stock trades at too high a premium to sector. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Buy, Sell, Hold Recommendations – Herald Sun 8/9/2013

    As featured in the Herald Sun on August 4th 2013, here are the latest buy, sell and hold recommendations from Geoff Saffer Equity Analyst & Educational Facilitator at the Australian Stock Report. Geoff has over 10 years’ experience researching and analysing Australian shares, with a passion for fundamental analysis and specialty in identifying undervalued companies – particularly at the smaller end of the market. Buy Shares Credit Corp (CCP) – Debt collection business boasts robust margins, high ROE yet trades @ 13x P/E. Low interest rates and strong balance sheet will allow more debt ledger purchases. Pura Vida Energy (PVD) – Speculative energy play is high risk, but Moroccan project offers huge upside. Capital raising and $15m farmout fee provide funding for exploration efforts. Hold Shares JB Hi-Fi Limited (JBH) – FY13 results beat expectations, highlighted by same store sales growth in 2H. With 14 new stores set for FY14, JBH looks to be in for solid year ahead. Santos Limited (STO) – High energy prices have helped cushion dips in production and sales volumes. LNG production in PNG on track for second half of 2014. Sells Shares Treasury Wine Estate (TWE) – We see more trouble ahead in the US, where a wine glut led to writedowns. TWE still trades on high multiples and will struggle to boost profit margins. Paladin Energy (PDN) – Recently raised capital but operations are still leaking cash as prices plummet. Outlook for uranium sector remains bleak, highlighted by failed asset sale. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files. Share Tips Trial

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  • M2 Telecommunications Group (MTU)

    m2 telecommunicationsM2 Telecommunications Group Ltd (MTU) is Australia's largest network independent telecommunications provider. The group offer a range of services specifically tailored towards small-to-medium businesses in Australia and New Zealand. MTU encompasses the following brands: >> Commander - offers a wide range of bundled telecommunications services with telecommunications equipment through a national exclusive dealer network. >> iPrimus –  offers broadband, phone, mobile and data services to consumers. >> M2 Wholesale - is the exclusively endorsed wholesale aggregator of Optus third generation (3G) mobile services, and wholesale supplier of choice for fixed-line and data services. >> Black + White - is a retail and wholesale provider of the full suite of telecommunications services to small-to-medium sized businesses and reseller telcos in New Zealand 1H13 Results MTU’s 1H13 results were impressive with the company on track to deliver its 8th straight year of earnings growth. The group’s 1H13 results showed spectacular growth when compared to 1H12, with the period benefiting from the acquisition of iPrimus. A few of the key highlights of the results were: >> Revenue was up 65%, to $305.2 million >> EBITDA grew by a staggering 99%, to $55.1 million >> Underlying NPAT rose by 67%, to $31.7 million >> Underlying EPS increased by 32%, to 20.2 cents per share The group was also able to expand its EBITDA margin from 14.9% in 1H12 to 18% in the 1H13. We were particularly impressed by MTU’s ability to expand its margins, as it shows management’s competency and ability to successfully integrate and deliver on synergies benefits. Acquisition based growth MTU first-half growth was driven by the acquisition of iPrimus, with the acquisition still expected to show benefits in the second half. As well as iPrimus the company in March announced the acquisition of Dodo Australia. Dodo is a retail focused of essential services to residential customers that include: >> Broadband >> Mobile >> Home phones >> Wireless broadband >> Power and Gas >> Car, home building and contents insurance The group has a customer base of over 400,000 clients, with 660,000 active services. We think the acquisition is good move as Dodo’s business is a profitable and organically growing business, which is highly complementary to M2’s existing consumer division. Outlook As mentioned, MTU is on track to record its 8th straight year of annual EPS growth and we think the recent acquisitions will see this record continue for many years to come. The group’s has a solid record of successfully integrating new businesses to its current infrastructure. This is evident in the recent results in which iPrimus synergy benefits helped contribute to expanding margins. This gives us high hopes that the Dodo acquisition will be a success, with current estimates expecting the acquisition to result in underlying FY14 EPS accretion of approximately 20%. Overall, we see expect MTU’s FY13 results (due to be released on 28 August) to show solid growth and with think the share price will rise in anticipation of this outcome. M2 Telecommunications was listed as a buy share for our members on August 2nd. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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Nov 2014 - Nov 2016

Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 23.58%*

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DISCLAIMER:
*Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014
*Return figures are gross returns and do not take into account fees or brokerage costs.
*Returns are calculated based on a $50,000 hypothetical portfolio, risking 2% of the overall portfolio balance ($1,000) as a starting point for each trade.
*Due to slippage and gapping, losses can sometimes exceed $1,000 on an individual trade.
*Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published.
*ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015

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