ASB Securities Morning Brief for Monday, 29 August 2016
Monday, 29 August 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares fell on Friday as Air New Zealand declined after warning its record profit might not be repeated and investors cashed in recent gains in an earnings season where companies have responded to increasing demand for yield with bigger dividend payments. Sky Network Television gained after beating earnings expectations. The S&P/NZX 50 Index declined 35.98, or 0.5%, to 7391.3. Within the index 28 stocks fell, 17 rose and six were unchanged. Turnover was $160 million... Read more

The New Zealand dollar was little changed, holding above 73 US cents as traders debate whether Federal Reserve chair Janet Yellen will give a clear signal on the timing and pace of US interest rate hikes when she addresses fellow central bankers at Jackson Hole. The kiwi traded at 73.10 US cents as at 5pm in Wellington, from 73.16 cents late yesterday. The trade-weighted index slipped to 77.40 from 77.50.... Read more

More than 60 construction-related Christchurch companies have been liquidated this year, owing creditors an estimated $40 million. Analysis of hundreds of insolvency records found about 160 companies in the building industry registered in Canterbury have gone bust since January 2015... Read more

Average Auckland house prices are tipped to pass $1 million this month. CoreLogic analyst Nick Goodall said it was "safe to assume" the average residential property value in the Auckland urban area would pass $1 million when the August figures are released by Quotable Value (QV) on September 6 - months earlier than expected... Read more

Kahurangi Park road is subdivision's great hope. Developers of a remote lifestyle subdivision at the top of the South Island are hoping the Government will approve a road going through a national park. Kahurangi Ridge is a 15-lot development covering 100 hectares of bush some 20km south of Karamea at the top of the West Coast, and close to Kahurangi National Park... Read more

Tourist cash has helped keep Taranaki's economy buoyant and some of the money has come from people lured to the region for the first time. For the year to the end of July, Ministry of Business, Innovation and Employment figures show the tourism spend in the region was $314 million, up by three per cent when compared to the same time last year... Read more

Formal Financial Advice NZ conversations start next month. More of the countries’ adviser associations will be approached more formally early next month about the possibility of becoming involved with Financial Advice New Zealand.... Read more

Human rights and KiwiSaver: Death penalty, extra-judicial killings, and repression. It's time to talk about the human rights records of the country's KiwiSavers schemes, says the chairman of the Human Rights Foundation. The past two weeks has seen the re-emergence of concern over KiwiSaver schemes investing in land mine and cluster bomb makers, first covered by Stuff in August last year... Read more

Seeka Kiwifruit Industries hiked its interim dividend to shareholders as the first harvest from its recent Australian acquisition and record crops contributed to a first-half profit that almost doubled. Net profit rose to $7.1 million, or 43 cents per share, in the six months ended June 30 from $3.7 million, or 24 cents, a year earlier, the Te Puke-based company said in a statement. Revenue climbed 39 percent to $134.2 million, and the board declared an interim dividend of 10 cents per share, payable on Sept. 29 to shareholders on the register on Sept. 22. That's up from 9 cents a share a year earlier. ... Read more

Transtasman stoush over manuka honey name. New Zealand beekeepers say transtasman rivalries have nothing to do with their bid to protect the use of the term "manuka honey". They're trying to restrict the term to honey which actually comes from bees pollinating native manuka trees, in New Zealand. But the Australians also want to use the term... Read more

Air New Zealand’s shares have bounced around in sharemarket trading today despite reporting record full-year earnings as the country's largest airline warned of an earnings drop ahead due to growth in international carriers also wanting to cash in on New Zealand’s tourism boom while fuel prices remain low. The shares were recently up 0.5 percent at $2.24, having traded between $2.155 and $2.27 since trading opened today... Read more

Nearly 70 per cent of submitters have voiced their opposition to the proposed $300 million Wellington Airport runway extension. Figures released by the Greater Wellington Regional Council showed 525 of 776 submissions (68 per cent) were against the proposal, which would involve extending the southern end of the runway by 355m into Cook Strait. That would allow long-haul flights to land in the capital for the first time... Read more

KiwiRail, the state-owned rail and freight operator, posted earnings before interest, tax, depreciation and finance costs of $85.5 million in the year to June 30, down $5 million on the previous year despite a 300,000 tonne reduction in Solid Energy coal freight and lower milk volumes because of a shorter-than-normal season... Read more

Wellington's SuchCrowd just the ticket for Melbourne entertainers. Moving to Wellington has boosted business for a group of young entrepreneurs, who are now expanding into Australia... Read more

Cavalier Corp, the carpet maker, returned to profit in 2016 after a year-earlier loss from assets impairments although sales in the latest period were down 12 percent. Profit was $3.1 million in the year ended June 30, from a loss of $25.7 million a year earlier, the Auckland-based company said in a statement. That's the biggest profit since 2011. Cavalier rose 1.1 percent to 89 cents and has jumped 44 percent this year.... Read more

Delegat Group will pay a bigger dividend to shareholders after reporting a record operating profit for the 2016 financial year, with North American sales driving revenue growth. The Auckland-based company's board declared a dividend of 12 cents per share payable on Oct. 14 to shareholders on the register on Sept. 30, up from 11 cents it's paid in the past two years... Read more

Television New Zealand reported a 55 percent fall in annual profit as it booked losses from foreign exchange markets and faced declining revenue. Still, it resumed full dividend payments as it nears the end of refurbishing its Auckland headquarters, paying out more than it earned in the year... Read more

Soccer shocker: beIN won't launch standalone streaming service in NZ. A senior executive involved with negotiations tells NBR: "beIN paid the dollar number you quoted $4 million a season above and beyond what Lightbox Sport and Sky TV bid. The total winning bid was much more than $4 million. Hence why Sky and Lightbox Sport stopped at a point that there would be no return on the investment." ... Read more

Specialist telecommunications, broadcast and cybersecurity business Kordia Group has reported a 2016 net profit after tax of $12.3m, exceeding its target by $5.6m (85 per cent) and achieving a 33 per cent increase over the preceding year’s $9.2m. Kordia has also delivered special and interim dividends during the past year with a final dividend of $7.5m bringing the total for the year to more than $13m.... Read more

A new Hoyts three-level, seven movie-screen and dining complex is being developed in the heart of Christchurch by Calder Stewart Development. Work will start early next year on the Auckland-based Ignite Architects-designed 10,800sq m complex on a 4500sq m site on a Crown-owned car park site on the corner of Colombo, Lichfield and Tuam Sts. Before the earthquakes the site contained a row of small shops... Read more

Tauranga to get new 1000-seat multiplex cinema... Read more

The Supreme Court has dismissed the latest appeal in the long-running Trinity tax case after architect Garry Muir gave up his argument during the hearing. Chief Justice Sian Elias and Justices William Young, Terrence Arnold, Mark O'Regan and Ellen France today dismissed Muir's application to amend the grounds of appeal and revoked his leave... Read more

The Wellington High Court has heard about "extensive and virulent" accusations following a breakdown in relationship between the two directors of Carrickmore, an infant formula manufacturer based in Paraparaumu. The accusations between the two were aired in an interlocutory hearing... Read more

Opinion - Liam Dann: What US Fed boss Janet Yellen said to make the kiwi dollar fall... Read more

Opinion - Christopher Niesche: Mind the GAAP when judging results. Alternative measures can be useful but accounting standards are key for investors to understand performance.... Read more

Opinion - Bernard Hickey: Tax the land bankers . Bernard Hickey argues a land tax and/or targeted rates would change the expectations of unending tax-free capital gains with low holding costs that is driving a frenzy of land-banking in Auckland... Read more

New Zealand Herald Editorial: Easter trading relief likely to be temporary. The Prime Minister said he was sick of the Easter Sunday trading issue flaring up year after year, so it appears the whip was applied to National MPs to enact legislation last week that passes the buck to city councils... Read more

Opinion - Susan Edmunds: Should you buy a house to live in, or rent and invest the savings?... Read more

Opinion - John Roughan: Central bankers have the world's big economies in a hole. This weekend in a little place called Jackson Hole, Wyoming, US, central bankers of the world are gathering for their annual contemplative retreat on the craft of monetarism and the state of the global economy... Read more





Australian Headlines

Australian Market Report: The Australian market looks set to open lower after Wall Street retreated, pulled lower by materials and health care sectors weakness and amid nervousness over a possible upcoming interest rate rise. At 0645 AEST on Thursday, the share price index was down nine points at 5,534. Locally, in economic news on Thursday, The Australian Bureau of Statistics releases Labour Force figures for July, along with Assets and Liabilities of Australian Securities for the three months to June and the private new capital expenditure and expected expenditure for the same quarter... Read more

Two main lessons from the 2016 earnings season are that the Australian economy is well and truly in a low-growth era and the earnings-growth potential of some of the nation’s favourite blue-chip stocks is not invincible. Solid dividend growth has proved not to be nearly as bankable as many income-dependent investors believed... Read more

Malcolm Turnbull urges Labor to meet him in 'sensible centre' over budget repair... Read more

Large companies banned from making excessive credit card charges from Thursday. Australian families should find a range of goods and services cheaper after excessive surcharging on using the plastic is banned from Thursday. The Turnbull government passed legislation in February that prevents large businesses charging excessive fees on using cards or face substantial penalties, while smaller merchants will have a further 12 months to comply... Read more

South Australian senator Nick Xenophon says legislation to set up industry trademarks — such as for feta cheese in Greece or champagne in France — would help protect Australian generic products, such as Ugg boots and barramundi. Senator Xenophon has proposed such laws in the wake of court action in the US that could force a western Sydney company to abandon the word Ugg, when selling Ugg boots in Australia or overseas... Read more

Traders have been caught out shorting oil after the commodity saw a 20 per cent rally in two weeks. Short selling occurs when traders sell a security they do not own, in the belief the price will fall and the security can be bought back at a lower price to make a profit... Read more

The Pilbara’s mid-tier iron ore producers are at risk from a predatory buyer if the State Government does not amend legislation allowing the sale of Port Hedland’s Utah Point terminal, a Government-dominated Parliamentary committee has found. The report is a warning shot to Treasurer Mike Nahan over his plan to sell long-term leases at Utah Point and Fremantle Port... Read more

U.S. onshore oil and gas company Sundance Energy Australia Ltd has successfully raised $9 million from existing shareholders via a share purchase plan at $0.13 per share. The company, which operates only in the U.S., had recently completed an $80 million share placement to professional and sophisticated investors at the same price... Read more

Moreton Resources has appointed Alexander Jason Elks as executive chairman. He plans to resign from the role of CEO at an appropriate time and post resolution of the AAT matters... Read more

Woodside chief executive Peter Coleman has called on oil-and-gas explorer FAR to make its intentions known over a disputed Senegal oilfields deal. Melbourne-based FAR has questioned the expiry of pre-emption rights over partner ConocoPhillips’ $US430 million ($563 million) deal to sell Woodside its 35 per cent stake in the venture... Read more

Ausdrill subsidiary, African Mining Services, has been appointed as preferred contractor by Toro Gold. AMS expects to enter into a contract with Petowal Mining Company, a subsidiary of Toro Gold, to provide a full suite of open pit mining services at the Mako project located in Senegal, West Africa... Read more

Oro Verde Ltd secures cash to advance gold project with Newcrest. Oro Verde Ltd has agreed to place 70 million shares to institutional and sophisticated investors priced at $0.012 to raise $840,000.... Read more

Nationals WA leader Brendon Grylls is Rio Tinto’s “No. 1 global risk”, according to the miner’s boss, Jean-Sebastien Jacques. Speaking ahead of last night’s dinner to celebrate the 50th anniversary of Pilbara iron ore shipments, Mr Jacques said Brazilian producers would celebrate if Mr Grylls’ $5-a-tonne charge was imposed... Read more

Moodys Investors Service has raised St Barbara and its senior secured debt rating from B3 to B2 on August 25, 2016.... Read more

The Super Retail Group's auto and sport businesses have performed strongly, offsetting weakness from its outdoor leisure chains Ray's Outdoor and BCF. The group, which also owns Supercheap Auto, Amart Sport and Rebel, suffered a 23 per cent slide in net profit in the year to July 2 to $62.8 million... Read more

There has never been a more exciting time to love hardware. You should empty your shed, because it is time to fill your shed. Masters Hardware is closing all its stores by December 11, and the next few months are going to be an absolute hardware bonanza.... Read more

Mirvac Group has issued $200 million worth of seven year medium term notes.... Read more

Armidale Investment Corporation will raise $12.5 million to partially fund the cash component of proposed acquisition of 80% of the issued capital of Consolidated Finance Group, 50% of the issued capital of Qld Pacific Finance and 50% of the issued capital of Linx Finance Australia... Read more

Godfreys says weaker sales and a 36 per cent fall in profit is unacceptable, and has vowed to restore the trust of its shareholders. The company's net profit of $7.8 million in the year to June 30 was down from $12 million in the prior year, and comparable store sales dropped 10 per cent. The results sent its share price tumbling, losing 21 cents, or 17 per cent, to $1.02.... Read more

Australia Post is back in the black, unveiling a $36 million profit a year after posting losses of $222 million. But what chief executive Ahmed Fahour has claimed as a triumph conceals the bare fact that our national carrier is still bleeding cash from its letters division... Read more

Wangle Technologies Ltd has been granted a trading halt by the ASX, with its shares placed in pre-open... Read more

Mayne Pharma is predicting significant growth in the year ahead from its recent purchase of a suite of US generic drugs and is on the lookout for more acquisitions. The pharmaceuticals maker more than quadrupled profit in the 12 months to June 30 to $37.4 million, following the February acquisition of acne treatment Doryx and June launch of anti-cardiac arrhythmia drug dofetilide, which achieved a 100 per cent return on investment in its first week following US regulatory approval... Read more

Ellex Medical Lasers has been awarded a grant of $2.5 million from the Federal Governments Next Generation Manufacturing Investment Program.... Read more

Hot Chili Ltd has successfully closed the second tranche of a $4.4 million two tranche placement to sophisticated and institutional investors. Following approval from shareholders as per standard procedure, the second tranche of shares priced at $0.05 were issued. Hot Chili is testing a number of large-scale copper porphyry targets at its Productora copper-gold project in Chile... Read more

Queensland-based insurance outfit Youi could be in hot water with the industry watchdog in Australia following allegations it used “misleading sales techniques” to sell policies to New Zealand customers. NZ’s Commerce Commission, which acts similarly to the Australian Securities and Investments Commission, recently filed 15 charges against Youi NZ in the Auckland District Court... Read more

Emmanuel and Julie Cassimatis, the founders of the notorious Storm Financial advice group, breached their duties as directors and provided inappropriate advice to clients, the Federal Court has found. The Australian Securities and Investments Commission launched the civil case in 2010, alleging that as the executive directors of Storm Financial the Cassimatises breached their fiduciary duties under Australian corporate law... Read more

The former directors of Storm Financial broke the law by allowing inappropriate financial advice to be given to vulnerable clients, the Federal Court has found. The company crashed in 2009, leaving three thousand of its 14,000 client-base destitute, with losses of over $3 billion... Read more

Vic taxi owners contemplate legal action. More than 500 concerned Victorian taxi owners and drivers are contemplating legal action as the government moves to legalise ride sharing and dump taxi licence fees. The Victorian government on Tuesday announced taxi licences will be scrapped and owners compensated at a fraction of what licences were once valued... Read more

Opinion/Analysis - Ross Gittins: Foreign investment, the economic stimulus we love to hate... Read more





International Headlines

U.S. Market Report: Wall Street will fixate on a wave of U.S. economic data next week, crested by payrolls data on Friday that could sway expectations about the timing of future interest rate hikes and spark volatility in record-high stock prices. Fresh data about employment and consumer confidence could help investors solidify expectations for a December interest rate hike from the U.S. Federal Reserve, or lend weight to a minority of strategists predicting a rate rise as early as next month... Read more

North/South Americas Market Report: North and South American markets finished lower on Friday with shares in Mexico leading the region. The IPC is down 0.76% while U.S.'s S&P 500 is off 0.16% and Brazil's Bovespa is lower by 0.01%... Read more

European Market Report: European markets finished higher on Friday with shares in France leading the region. The CAC 40 is up 0.80% while Germany's DAX is up 0.55% and London's FTSE 100 is up 0.31%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.41% and the Shanghai Composite rose 0.06%. The Nikkei 225 lost 1.18%... Read more

The Federal Reserve is getting closer to raising interest rates again, the head of the U.S. central bankand other policymakers said on Friday in comments that left the door open for a hike as early as next month. Fed Chair Janet Yellen told a global monetary policy conference that the case for a rate increase had grown stronger, while Fed Vice Chair Stanley Fischer suggested a move could come at the central bank's September policy meeting if the economy was doing well... Read more

Central Bankers Spurn Call for Radical Approach at Jackson Hole... Read more

A group of 29 large companies have signed a White House pledge to help close the wage gap between men and women. The companies include Apple, Facebook , Intel, Microsoft and Target, as well as Anheuser Busch, Delta Air Lines, Coca-Cola, General Motorsand Nike ... Read more

US vice president Joe Biden has announced plans to lend railway operator Amtrak $2.45bn (£1.86bn) to expand services and make upgrades. Amtrak's plans include expanding high-speed trains between Washington DC and Boston. The vice president said "America needs to go big on infrastructure" investment... Read more

Embattled startup Theranos is hoping federal health regulators will rethink the sanctions imposed on the company. The Centers for Medicare and Medicaid Services said earlier this year that it would revoke the company's license to operate a lab in California. It also said it would bar CEO Elizabeth Holmes, 32, from owning and operating a lab for two years. The agency said the company's Newark, California lab practices posed a safety threat and recommended immediate action... Read more

Bankrupt U.S. teen retailer Aeropostale Inc received bids this week for its business from private equity firm Sycamore Partners, as well as liquidators, firms that wind down businesses, according to people familiar with the matter. Investment firm Versa Capital Management LLC did not submit a bid for the business, the people said. Versa had been preparing a stalking horse offer for Aeropostale as a going concern business, and the retailer had received court approval to pay some of the expenses incurred by Versa in putting together the proposal... Read more

U.S. Proposes Immigration Rule Aimed at Entrepreneurs. Foreign entrepreneurs building new companies in the United States could soon gain a new immigration option that would grant them temporary entry for up to five years, under a rule proposed on Friday by the Department of Homeland Security... Read more

Michigan may soon become the first state to allow self-driving cars on the road without a human driver sitting behind the steering wheel. Lots of companies are already testing self-driving cars on the road all over the country, but they have an actual driver at the controls, ready to take over if there is a hazard... Read more

European Central Bank rates could remain low unless other policy areas start contributing, raising the risk that they could increasingly hit their effective lower limit, a top policymaker said on Saturday. In a largely academic speech, ECB Executive Board member Benoit Coeure also warned the effect of monetary stimulus in such an environment could be weakened and come with increasing side-effects... Read more

The boss of the energy company hoping to build a new nuclear power station at Hinkley Point in Somerset has made a plea for the government to approve it. Writing in the Sunday Telegraph, EDF chief executive Vincent de Rivaz accuses critics of "overlooking the positive impact" of the scheme. EDF's board voted to approve the £18bn nuclear power plant in late July... Read more

Germany's Economy Minister Sigmar Gabriel said on Sunday that talks on the Transatlantic Trade and Investment Partnership (TTIP), a free trade deal being negotiated by the United States and the European Union, had essentially failed. "The negotiations with the USA have de facto failed because we Europeans did not want to subject ourselves to American demands," he said, according to a written transcript from German broadcaster ZDF of an interview due to be broadcast on Sunday... Read more

German Finance Minister Wolfgang Schaeuble said on Sunday it was important that Germany sticks to its fiscal policy of taking on no new debt after next year's federal election as it was necessary to reduce public debt.... Read more

Europe's biggest insurer Allianz has positioned its business to weather rock-bottom interest rates that could last a "very long time", the head of the German group's life insurance division told German media. While returns on life products offered a 4 percent guaranteed interest rate 15 years ago, ultra-low central bank rates have put pressure on the insurer to restructure its portfolio, Markus Faulhaber, Chief Executive at Allianz Leben, told German newspaper Welt am Sonntag... Read more

Russian ‘NASDAQ’ eyes Asian venture capitalists. In the near future, Russia’s Far East will have its own stock exchange, which is designed, among other things, to attract venture capital from Asian countries. In an interview with RBTH, Alexei Chekunkov, the head of the state-initiated Far East Development Fund, spoke about the prospects for potential investors in the region. Facebook... Read more

South Africa Finance Minister Pravin Gordhan may be charged this week for graft, the City Press newspaper reported on Sunday, citing senior sources in the police, the National Prosecuting Authority, and the tax service. Thirty witnesses had been lined up to testify against Gordhan and three former officials from the South African Revenue Service (SARS), the paper said... Read more

A parliamentary fact-finding commission's report into corruption in Egypt's wheat industry finds that the government played a key role in "wasting public funds" in its costly food subsidy programme... Read more

Some prominent investors are worried about China’s debt. George Soros sees an “eerie resemblance” between conditions in China now and those in the U.S. leading up to the financial crisis in 2008. “It’s similarly fueled by credit growth and an eventually unsustainable extension of credit,” Soros told the Asia Society in New York in April... Read more

China has set up a state-owned aircraft engine maker with registered capital of 50 billion yuan ($7.50 billion), state television said on Sunday, in the latest bid to develop home-grown, high-tech capacities to compete in international markets. The government has been overhauling its state-owned sector to push Chinese products and services up the value chain. Under that drive, it has prioritised aircraft engines, high-speed rail and nuclear power as areas it wants China to excel... Read more

Mitsubishi Regional Jet Heads to U.S. After Failed Test... Read more

Japan's consumer prices dropped for the fifth consecutive month in July, adding to pressure on the government to expand its already massive stimulus programme. The data was worse than estimates had suggested and marked the biggest annual drop in more than three years... Read more

The world’s biggest pension fund has room for a Japan stock shopping spree after the value of its investments tumbled last quarter. The $1.3 trillion Government Pension Investment Fund would need to spend $53 billion on domestic shares to meet its target for the asset, according to Bloomberg News calculations, after the fund said Friday that holdings fell to 21 percent of investments at the end of June... Read more

Foreign exchange losses after Britain's decision to leave the European Union and higher expenses offset strong sales growth at India's Tata Motors, more than halving its net profit in the April-June quarter. Tata Motors' profit was hit by forex losses of 22.96 billion rupees ($342.43 million) mainly due to pound depreciation post-Brexit vote and adverse commodity derivatives impact of 1.67 billion rupees in the quarter, it said in a statement on Friday... Read more

What RBI’s Raghuram Rajan Says About His Successor, Urjit Patel. The appointment of the Yale-trained economist followed weeks of intense speculation... Read more

Qatar National Bank gets go-ahead to open branch in India... Read more

Major international seed companies in India formed an alliance on Friday, seeking the support of their peers after a flurry of regulatory steps in recent months by Prime Minister Narendra Modi's government. Executives from companies including the local businesses of Monsanto, Bayer, Dow, Dupont Pioneer and Syngenta announced the alliance in a crowded Press Club of India conference room... Read more

Opinion - Gerard Lyons: British sovereignty depends on leaving the EU and the Single Market... Read more

Analysis - Hiroko Tabuchi: A Cheaper Airbag, and Takata’s Road to a Deadly Crisis Automakers embraced Takata’s cheaper technology almost 20 years ago despite signs that it was unsafe. The airbags are now at the center of the auto industry’s biggest recall... Read more

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