Stockland (SGP) On Market Buy Back

Stockland is a property trust which invests and manages in retail and commercial properties in Australia and is a member of the S&P/ASX 200.

The Group also provides property development and management services, hotel management services and other related services including financing.

Stockland group announced today that it will extend its on-market share buy-back to as much as 10% of issued capital, as it seeks to increase return via capital management.

The company also revealed that it had entered into an agreement to sell its 55% stake in the Moorebank Industrial Property trust to Qube logistics for $123 million.

CEO John Schroder said the sale supported Stockland’s strategy to reweight its commercial property portfolio when assets are no longer in line with the company’s strategy.

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Weekly Share Tips: Sell on Suncorp

Suncorp Group (SUN) is one of the largest general insurance groups in Australia, and one of the biggest regional banks in Queensland.

The group’s services span banking, insurance, investment and superannuation whilst its focus is primarily on retail customers and small to medium businesses.

The insurance industry has had to contend with a number of natural disasters since 2010, the latest of which was the recent flooding in VIC and NSW.

SUN’s exposure to the flooding has yet to be fully determined, creating uncertainty that may pressure its share price in the near-term.

Flood claims

This week SUN admitted it had received hundreds of claims related to the flooding in VIC and NSW.

SUN declined to give an estimate of the final number of claims it will eventually receive, as well the potential cost to the company.

Not helping matters today was the Insurance Council, which said that although less than 4000 claims had been received so far, the number was expected to rise in coming days.

Considering SUN derives a significant bulk of its insurance business from VIC and NSW, the odds are its profitability will be hit by the increased number of claims.

Funding squeeze

SUN’s 2012 term funding requirements of approximately $2 billion were expected to be sourced via covered bonds, senior unsecured debt or the Residential Mortgage Backed Securities (RMBS) markets.

The European debt crisis has driven up the cost of wholesale funding for the bigger banks. However higher wholesale costs also have ramifications for SUN’s preferred funding sources.

Faced with higher wholesale funding expenses, financial institutions are likely to compete more aggressively for funds in the RMBS and covered bond markets.

This means for companies like SUN, they will be forced to pay even more for funding, thus heaping further pressure on their margins.

Positive longer term

In late February, SUN reported a 74% year-on-year surge in 1H12 net profit to $389 million. An interim dividend of 20 cents was declared.

The profit was built primarily on the Suncorp Life business, which more than doubled its net profit and recorded an 8% lift in revenue.

There was top line growth across all business lines, whilst the company’s $1.2 billion in surplus capital not only provides it with a buffer against economic uncertainty but also gives it flexibility to bump up dividends and/or announce a share buyback.

Outlook

Although SUN still has appeal as a longer-term investment, short-term storm clouds may be gathering on the horizon.

Insurers appear to be getting hit constantly by natural disasters, and the latest flooding in VIC/NSW raises concerns over the impact to insurance profitability.

SUN has already faced a spike in the number of flood-related claims, and there is still no word on the impact to its own profitability.

Moreover, the European debt crisis has driven up funding costs for many financial institutions, threatening to squeeze SUN’s margins.

So whilst the longer-term story for SUN remains sound, we at Australian Stock Report feel recent headwinds will continue to dog its share price in the near-term.

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QBE First State Negotiations For two Bolt On Acquistions

QBE Insurance Group Limited is an insurance company which underwrites most forms of commercial and industrial insurance policies, as well as individual policies.

QBE also manages Lloyds syndicates and provides investment management services. The Company provides its services both domestically and internationally.

Financial Stock QBE Insurance announced that it is in the final stages of negations to acquire two ‘bolt on’ acquisitions.

The acquisitions are expected to contribute up to US$500 million in annual written premium to the QBE business.

The company which recently raised $450 million from an institutional capital raising said that it will pay for the acquisitions from internal resources.

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Westfield Group (ASX:WDC)  is the largest retail property group in the world by equity market capitalisation. It has investment interests in 126 shopping centres in Australia, New Zealand and the United States.

Westfield, which is among the blue chip stocks, has released its 3^rd quarter operating update for the nine months to 30 September 2011.

WDC reaffirmed its full year earnings forecast, saying it is seeing growth in all of its markets.

Current full year forecast for distribution per security is 48.4 cents, whilst operational segment earnings are expected to be 74.6 cents per security.

Westfield did outline their new development projects for the next few years with $1.25 Billion to be spent in 2012 and a further $1.5 Billion in 2013.

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Insurance Australia Group (ASX:IAG) is one of the largest general insurers in Australia and New Zealand, providing personal and commercial insurance policies under the brands NRMA Insurance, SGIO, SGIC, CGU, Swann Insurance, State Insurance and NZI.

IAG has been among the shares to sell over the past 12 months due to the natural disasters in Australia and New Zealand.

Today IAG reaffirmed its FY12 insurance margin of 10% – 12%, saying it has been encouraged by the gross written premium growth thus far.

Gross written premium was expected to grow 6% – 9% in the FY12.

The group said it was well capitalised and that it would undertake a NZ$150 million bond offering for general corporate purposes.

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Bank of Queensland (ASX:BOQ) was established way back in 1874 and operates mainly in its home state of Queensland, with operations covering retail financial services and business banking.

It has been one of the shares to sell in recent times due to the macroeconomic headwinds plaguing the financial sector.

Today BOQ reported an FY11 net profit of $158.7 million, down 13% on-year.  The result was impacted by higher bad debts and subdued credit growth.

Underlying profit rose 18% on-year to $447.4 million, helped by a disciplined expense control.  BOQ’s cost-to-income ratio fell 1% to 44.5%.

The group was hit by funding cost pressures in the 2H, but still grew its full year net interest margin by 5 basis points to 1.65%.

BOQ noted FY12 would be turnaround year for the group and that it was confident in the underlyin earnings momentum.

A final dividend of 28 cents was declared.

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National Australia Bank (ASX:NAB) is one of Australia’s big four banks, whose divisions span retail and business banking, wealth management, capital markets and institutional banking.

It is one the biggest companies in the Australian share market and is widely considered among the blue chip stocks.

Overnight, newspaper reports suggested NAB is in talks to acquire more than 600 Lloyds branches in the UK.

The acquisition would see NAB merge its Clydesdale and Yorkshire bank units with the Lloyds branches, creating a new major UK lender.

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Westpac Bank (WBC) is Australia’s oldest bank, operating a significant banking franchise with balance exposures to retail, corporate and institutional sectors.

Following its merger with St George Bank, WBC is not too far behind Commonwealth Bank in the battle to be the biggest in Australia. WBC is also among the market’s leading blue chip stocks.

WBC recently received final approval to open its second branch in China.

The new branch, which will be located in Beijing, follows the 2008 opening of WBC’s first branch in Shanghai.

The group has plans to open a further two branches in China.

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Suncorp Group (SUN) is Australia’s fifth largest listed bank, and one of the largest general insurance groups.

The group is a leader in banking, insurance, investment and superannuation and focuses on retail customers and small to medium businesses.

On 23 February, SUN reported its 1H11 results, keeping the market content.

Net profit after tax (NPAT) of $223 million for the half was down from $364 million in the prior year’s half.

SUN attributed the 39% decline to the succession of natural disasters throughout Australia and New Zealand and write-downs following asset sales.

SUN declared a half dividend of 15 cents per share, towards the midpoint of its stated 50% – 60% target range.

Cash earnings per share (EPS) excluding divestments, the basis of SUN’s dividend payouts, were 27.7 cents.

Suncorp Group noted the total amount of reinsurance protection it will receive is approximately $1.5 billion.

SUN has incurred a further cost of $173 million to reinstate its reinsurance coverage so it is fully protected against major events for the balance of the year.

With the profit loss hardly surprising given the amount of natural disasters occurring over the last year, SUN finished the day up 0.2%, outperforming the share market, which declined 0.2%.

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AXA Asia Pacific (AXA) is a diversified financial services company that has been operating in Australia for over 100 years. The company’s main products are spread across investments, insurance, retirement and superannuation.

AXA was one of the hot stocks late last year after agreeing to AMP’s takeover offer for the group.

On 15 February AXA announced a 1H11 net profit of $602 million, down 11% from a year earlier.

Investment earnings were unchanged at $185.1 million, with the positive impact of falling US bond yields offsetting negative equity market returns.

In Australia, earnings were up 8% to $190 million, mainly due to higher fee revenue.  However, earnings at Hong Kong were down 11% to $297 million.

AXA declared an interim dividend of 9.25 cents (unfranked), which was unchanged from a year ago, whilst its share price fell 0.2%.

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