Current
(WOW)
Battling away with a few positives
In a retail environment subject to numerous negative influences - frugality, below trend consumer confidence, cool and wet weather and meaningful deflation - a 5% increase in headline sales for 1H12 is considered reasonable achievement.
A 13.5% lift in average petrol prices boosted group headline sales by 1.3%. While comparable sales (comps) growth in the vital Australian Food & Liquor division declined in 2Q to a marginal 1.1%, real growth was still a relatively solid 5.2% after deflation. This should allow further productivity loop gains to be wrung out of the supply chain.
Read Report.. » | Company Profile.. »
Previous
(WBC)
Funding costs pressure earnings growth
WBC is to release a 1Q12 trading update on 16 February and we expect unaudited cash NPAT of $1.6bn for the three months to 31 December 2011. Our full-year FY12 forecast is an aggressive $6.8bn, representing a 6.3% increase in EPS, and could be under pressure if funding costs continue to rise. Earnings growth is heavily influenced by credit growth, net interest margins, non-interest income, bad debts and operating expenses. ROE for the quarter is unlikely to be released, but after stabilising in FY11 at 16.0%, we forecast a 16.5% full-year FY12 ROE.
Read Report.. » | Company Profile.. »
(RIO)
Iron Ore Still Leading the Way
CEO Tom Albanese characterised the second half of 2011 as bouncing back following severe weather in the first half. Most significantly impacted were iron ore, coal and uranium.
Fourth quarter iron ore volumes came in 3% ahead of 3Q11 while coal production was 6% higher. The iron ore division accounts for 46% of our RIO valuation and more than two-thirds of FY11 earnings.
Compared to 1H11, 2H11 equity iron ore production increased 11% to over 100Mt. Equity output in 4Q11 was a record 51.2Mt also generating record sales volumes thanks to ports operating at above annualised capacity rates.
While 4Q11 coal production was down on 3Q11, it was still well ahead of expectations, particularly the important coking coal fraction. Hard coking coal production was 16% ahead of the same time last year continuing the recovery from severe flooding.
Copper production was sharply higher versus 3Q11 though not quite to the levels anticipated. Higher throughput at Escondida and grades at Kennecott drove the improvement. RIO says a return to even higher grades is anticipated in 2H12 and into 2013.
Aluminium remains under pressure, 4Q volumes steady but pricing detracting. RIO will upgrade asset quality via sell-downs and closures. The company flags a "slightly worse than breakeven" 2H11 underlying loss including one-off closure costs. Less said the better!
Read Report.. » | Company Profile.. »
(WES)
Downgrade but long term stance still positive
The final weeks of 2011 saw some corporate tidying with the completion of the sale of Premier Coal and the non-cash write down in the carrying value of Coregas. Both will be treated as non-trading items. The net result is a pre tax negative around $100m - a $90m profit on the sale of Premier and a write down of $190m on Coregas. The sale of enGen in July for a pre tax gain of $40m will also be reported as a non-trading item.
Elsewhere the Chemicals, Energy and Fertilisers Investor Site Tour and subsequent presentation provided insight into the CEF division. In summary we see the chemicals and fertiliser businesses meaningfully advantaged in their respective WA markets while the Energy operations are more susceptible to competitive pressures nationally.
Read Report.. » | Company Profile.. »
(ORG)
More APLNG Sell-Down and Off-Take
The APLNG JV recently signed a non-binding Heads of Agreement for the sale of an additional 3.3Mtpa of LNG to China's Sinopec through to 2035. If completed the agreement finalises the marketing of product from APLNG's second LNG train. In conjunction APLNG has agreed that Sinopec's JV interest will increase from 15% to 25%, reducing ORG and ConocoPhillip's respective interests by 5% each to equal 37.5% stakes - also non-binding and subject to sanction of the second LNG train expected early next year. The agreements are subject to Chinese Government and Australian FIRB approval.
It's thought that consideration for Sinopec's equity increase is on like terms with the transaction in April 2011 when 15% was acquired for US$1.5bn or US$100m per percentage point. Sinopec will be on the hook for 88% of combined production from Trains 1 and 2 - that is all of the first train's 4.3Mtpa output and 73% or 3.3Mtpa from the second train. Japan's Kansai Electric is the purchaser of Train 2's 1Mtpa balance.
Read Report.. » | Company Profile.. »
© Copyright 2011 Morningstar, Inc. All rights reserved. This information is to be used for personal, non commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Some of the material provided is published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO").
DISCLAIMER: The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for any use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, ASFL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain appropriate financial, legal and taxation advice before making any financial investment decision. If applicable, investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg or phone Morningstar on 1800 03 44 55 to request a copy.
DISCLOSURE: Employees may have an interest in the securities discussed in this report.
