ASB Securities Morning Brief for Friday, 26 August 2016
Friday, 26 August 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by Ebos Group, Comvita and Spark New Zealand on optimism the earnings season is heralding a favourable outlook. Exporter F&P Healthcare fell as the kiwi dollar traded above 73 US cents. The S&P/NZX 50 Index gained 16.98 points, or 0.2 percent, to 7427.28. Within the index, 26 stocks fell, 18 rose and seven were unchanged. Turnover was $169 million... Read more

The New Zealand dollar gained after Fonterra Cooperative Group hiked its forecast payout to farmers for the current season as recent dairy auctions delivered bigger-than-expected price increases. The kiwi rose to 73.16 US cents at 5pm in Wellington from 73.05 cents at 8am and 72.79 cents yesterday. The trade-weighted index advanced to 77.50 from 77.16 yesterday... Read more

Auckland Chamber’s August Business Confidence Survey has confirmed that the availability, or rather lack of availability, of people with the right skills and the right talent is affecting our ability to make the most of good economic times. Over 48% of Auckland businesses responding to the survey have confirmed they are having difficulty finding the talent they need... Read more

ASB / Main Report Regional Economic Scoreboard. The Bay of Plenty’s winning streak continues as it keeps a firm grip on its spot as New Zealand’s top-performing region for the fifth straight quarter in the latest ASB/Main Report Regional Economic Scoreboard. ASB Chief Economist Nick Tuffley says the Bay of Plenty economy continues to shine on all fronts... Read more

The Easter trading bill, which would allow regional authorities to decide whether their shops can open on Easter Sunday, has passed its third reading by three votes. The bill, formally called the Shop Trading House Amendment Bill, means local governments will be able to determine whether to allow shop trading on Easter Sunday across their entire district or in limited areas.... Read more

Non-bank finance makes for small development boom. Housing supply shortage and tighter bank lending requirements mean small-scale property developers are flocking to non-bank alternatives to secure finance for their projects... Read more

New LVR restrictions seem to be affecting mortgage demand already, with the Reserve Bank’s latest residential lending data showing a big dip in mortgage lending. Driven by its concerns about the risk the housing market poses broader financial stability, the Reserve Bank announced it would be introducing a new round of LVR restrictions back in July... Read more

Reserve Bank tells insurers data not good enough. Insurers have been given a warning that they need to start offering the Reserve Bank better data – or face sanctions. The Reserve Bank is responsible for monitoring the sector under the Insurance (Prudential Supervision Act)... Read more

New Zealand's insolvency practitioners look likely to face a new licensing regime after a report to Commerce Minister Paul Goldsmith found that gaps in existing rules enable dishonesty and incompetence. The public has until Oct. 7 to make submissions on a review of insolvency law, which Goldsmith says is primarily to find what the minimum level of entry should be for the specialists tasked with winding down companies... Read more

Adviser-distributed Generate KiwiSaver grew its funds under management by just over a quarter in the three months to the end of June, a new survey shows. Aon has released its KiwiSaver survey for the June quarter, which shows overall FUM increased by 4%, to $32.9 billion. But Generate was a standout performer, with a 28.4% increase in FUM over the period. That takes it to 0.7% of the total KiwiSaver market – still the second-smallest provider... Read more

Farmers need not take out an expensive bank overdraft when faced with a provisional tax payment says a tax adviser. Tax Management NZ chief executive Chris Cunniffe said his company had pioneered the tax pooling system in partnership with Inland Revenue as a way of "removing the friction" from the tax system. "We never reduce the amount of tax people have to pay but we help manage the timing of when people pay their provisional tax," Cunniffe said... Read more

Fonterra has lifted its farmgate milk price forecast for 2016/17 by 50c to $4.75 per kg of milk solids. Chairman John Wilson says global milk prices remain at unrealistically low levels but have started to improve as global demand and supply continue to rebalance... Read more

Fonterra's infant formula sales in China are running ahead of its expectations, despite its Chinese joint venture partner running into a rough patch, chairman John Wilson said... Read more

The fledgling sheep milk industry has been given a $12.6 million boost with government funding for a Primary Growth Partnership project with Spring Sheep Milk Co. The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement... Read more

New Zealand Wool Services International Ltd’s C.E.O Mr John Dawson reports that the South Island selection comprising a wide range of wool types with Merino, Mid Micron and Crossbreds saw varied support determined by targeted buying with an all over firm result.... Read more

Scales Corp lifted first-half profit 3 per cent and raised guidance for annual earnings as its Mr Apple unit delivered a record crop and met its 2020 export volume target four years early. Net profit rose to $33.8 million, or 24c per share, in the six months ended June 30 from $32.8m, or 23.5c, a year earlier, the Christchurch-based company said. The shares closed down 22c yesterday at $3.28.... Read more

ECan's ploy against non-compliant water users pays off - or has it? Environment Canterbury says a threat to publicly call out farmers illegally taking millions of litres of Canterbury water has paid off, with everyone adhering to the rules, for now. But Forest & Bird says ECan is wrong and has produced an email from the regional council admitting to still having 26 "live" abatement notices on its books. The council had planned to publish non-compliant water users on its website on Monday. However, in the interim everyone had complied, said an ECan spokesperson... Read more

Hellaby Holdings, the diversified investment group, posted a 30 percent fall as restructuring under new chief executive Alan Clarke continues. Net profit dropped to $19.6 million, or 20.4 cents per share, in the 12 months ended June 30, from $28.4 million, or 28.6 cents per share, a year earlier, the company said in a statement. Revenue rose 2 percent to $795.5 million. The board declared a final dividend of 12.5 cents per share, with a Sept. 23 record date, payable on Sept. 30. That takes the annual payout to 21.5 cents. The shares last traded at $2.90 and have fallen 1.4 percent this year.... Read more

Infratil chief executive Marko Bogoievski is happy with the 80 percent gain the value of the infrastructure investor's stake in retirement village operator Metlifecare, but doesn't expect the minority interest will be a long-term hold. Wellington-based Infratil has branched out into new sectors such as retirement villages as it looks to fill its portfolio with a mix of solid cash-generating investments to help fund riskier ventures that may need capital to pursue development opportunities. The investment firm's shares recent traded at $3.36, up 2.6 percent so far this year.... Read more

E-commerce software seller SLI Systems narrowed its annual loss, reflecting cost containment during a restructuring following the loss of three major customers. The Christchurch-based company posted a $162,000 loss for the year to June 30, from a $7.55 million loss in the previous year, it said in a statement. Revenue increased to $35 million from $28.1 million, but the key metric for the company's future success - annualised recurring revenues - fell to $31.2 million from $34.6 million after two major customers became insolvent and another took its e-commerce functions in-house... Read more

Ebos Group posted a 20% gain in full-year profit and lifted its dividends as revenue topped $7 billion, expecting further 2016 earnings growth. Profit rose to $127 million, or 84c a share, in the 12 months ended June 30, from $105.9 million, or 70.8c, a year earlier, Christchurch-based Ebos said in a statement... Read more

Listed shower and tapware maker Methven booked a $2.7 million gain in its full-year net profit adjustments after cancelling an earnout agreement with the owner of the Chinese manufacturing facility it bought in 2014. A partially imputed final dividend of 4.5c per share is payable on September 30, taking total dividends for the year to 9.5c.... Read more

After an extensive international and New Zealand wide search, Milford Asset Management has today announced the appointment of Troy Swann as its new chief executive.... Read more

Wellington-based power company Meridian Energy's net profit for the year to June 30, dropped by a quarter to $185 million from a year ago. Meridian is 51 per cent state owned and generates about a third of New Zealand's electricity, mostly from South Island hydroelectricity schemes. Electricity sales in New Zealand were up $39m to $939m. Sales in international markets, mostly Australia were up $16m to $70m Shareholders will be paid a final dividend of 8.4 cents a share on October 15, imputed to 90 per cent.... Read more

The Countdown supermarket chain posted a 3.7 percent drop in annual earnings due to a combination of food price deflation, competitive pressures and increased team-based performance payments as part of a customer service improvement programme. Earnings before interest and tax fell to $313.9 million in the 52 weeks to June 26, from $326 million the previous year, its ASX-listed parent company Woolworths announced. When normalised for team performance-based bonuses, Countdown's ebit for the year was flat compared with the previous year, the company said... Read more

Countdown opens more supermarkets in NZ than it closes, plans to expand... Read more

2016 Hawke’s Bay Tourism Industry Award Shortlist Announced... Read more

Spark announced today it will credit its customers for the cost of landline and mobile calls and texts to Italy following the devastating earthquakes on Wednesday morning local time... Read more

Grey backlash to proposed Westpac closure in Waikanae where median age is 62. A town with a median age of 62 faces losing one of its few remaining bank branches, prompting a grey backlash from the community. Waikanae, north of Wellington on the Kapiti Coast, is one of 19 locations around New Zealand where Westpac is mulling closing its physical branch.... Read more

Former Barfoot & Thompson agent Aaron Hughes has been stripped of his licence, by the Real Estate Agents Disciplinary Tribunal, for on-selling two properties in 2014. The Real Estate Agents Authority (REAA) took Hughes, fellow agent Kim Hape and the branch manager, Avind Lal, to the Tribunal over misconduct in relation to the sales of the two Papatoetoe properties... Read more

SkyCity worker given home detention after stealing $45,000 worth of chips... Read more

Ngatata Love's lawyer in his fraud case wound up the defence by accusing a key witness of being a "bare-faced" liar and saying the high-profile Maori elder was "used" by his "partner" Lorraine Skiffington... Read more

Former Treaty of Waitangi negotiator Sir Ngatata Love was fully aware of and approved a $1.5 million payment from a land developer into a trust controlled by his partner, Lorraine Skiffington, which is at the heart of his fraud trial, the Crown says. In the High Court in Wellington prosecutor Grant Burston today delivered his closing submissions of the Crown's case against Sir Ngatata, who is charged with obtaining significant sums by deception, or alternately obtaining a secret commission... Read more

Liquidators are taking legal action against the director of a construction company who was previously tied up in a $10 million leaky building claim in Napier. Rhys Cain and Rees Logan of Ernst & Young, have filed court proceedings to claim money owed by Herbert Construction director Malcolm Herbert.... Read more

Opinion - Brian Fallow: Who'll pay the price of growth? Targeted rates and user-pays among ideas for urban planning... Read more

Opinion - John Milford: Wellington region enters crucial economic development phase... Read more

Australian Headlines

Australian Market Report: Resource heavyweights, including Rio Tinto and BHP Billiton weighed on the Australian share market on Thursday amid another wave of mixed company earnings results. The benchmark S&P ASX/200 index fell 0.36 per cent, with the materials index the biggest drag, finishing 1.37 per cent lower.... Read more

Treasurer Scott Morrison has warned of a new divide between "the taxed and taxed-nots", saying Australia has a generation growing up expecting Government handouts. In an address to a Bloomberg function in Sydney, Mr Morrison also cautioned against "renewed protectionism", citing the more than $3 trillion worth of foreign investment currently in Australia.... Read more

The Australian Bureau of Statistics (ABS) has released trend (annual average) data on regional labour markets. Unemployment rates remain high across regional Queensland and remain low across many Sydney regions. Unemployment has averaged just 2.7 per cent in the Eastern Suburbs of Sydney over the past year... Read more

Same-day home loans could become a reality in Australia with moves underway to drastically speed up the processing of mortgages. Global company DocuSign is working with some of the nation’s largest banks to help fast track the time-consuming home loan process which can take many applicants three to four weeks before they are stamped with approval... Read more

Eden Energy Ltd has been granted a trading halt by the ASX, pending an update in relation to the EdenCreteTM project... Read more

CIMIC claims Gorgon is $US20b over budget... Read more

Santana Minerals Ltd has been granted a trading halt by the ASX, pending details of a capital raising... Read more

Mineral sands miner Iluka Resources has suffered a $20.9 million half-year loss as a fall in iron ore royalty income and the cost of trialling new mining techniques drag it into the red... Read more

South32 is building cash to ride out an extended slump in commodities prices and fund possible investments after suffering a $US1.62 billion ($A2.13 billion) loss in its first full year as a listed company. Heavy writedowns in manganese, coal and alumina operations during the first half of the year hit the diversified miner's full year results, revealed on Thursday... Read more

Tasman Resources Ltd (ASX:TAS) has followed Eden Energy Ltd into a trading halt this morning, pending an update in relation to the EdenCreteTM project... Read more

Greenland Minerals and Energy Ltd has exited an ASX trading halt this morning after replying to a Price and Volume Query. In a reply to the ASX, GGG noted: "the company is relying on Listing Rule 3.1A, as the information concerns incomplete negotiations and the information is insufficiently definite to warrant disclosure... Read more

The higher US dollar and tax expenses have wiped out Billabong's profit, with the company posting a $23.7 million full-year net loss despite growing worldwide sales. The surfwear manufacturer, which lifted profit to $4.15 million in 2014/15, says its bottom line has also been hit by reducing excess inventory in the Americas... Read more

Shares in Ausdrill soared today after the mining services company last night posted a $58 million annual profit, boosted by asset sales. The contractor earned a $20 million profit from continuing operations, compared with an impairment-fuelled $160 million loss the year before... Read more

Retailer RCG delivers sharp profit rise. The retailer behind The Athlete's Foot and Dr Martens has seen its annual net profit more than double to $29.9 million, thanks its $200 million acquisition of footwear chain Accent Group... Read more

Flight Centre's new year has got off to a tough start, with the travel company facing airfare price wars, worries over Zika, the fallout from Brexit and American worries about terrorism in Europe. Flight Centre on Thursday reported a 3.8 per cent fall in annual underlying profit and said soft trading conditions in the fourth quarter continued into the start of the 2016/17 financial year and were only just now picking up... Read more

Altech Chemicals Ltd has received a Speculative Buy from Perth-based stockbroking firm DJ Carmichael. The broker applied a valuation of $0.355 from $0.41 per share. The following is an extract from the report... Read more

Woolworths results 2016: Full-year loss of $1.235b for Australian food and petrol business... Read more

Woolworths has offered hope to staff in its failed Masters hardware stores, to close before the end of the year, saying most of them can be redeployed across its other businesses. Woolworths' soon to be defunct hardware businesses employed around 7,700 people — about 6,300 in Masters and the rest in Home Timber and Hardware (HTH)... Read more

Why Target is the thorn in Wesfarmers’ side... Read more

Retail Food Group's profits has risen 79.1 per cent to $61.3 million as the company purchases a Victorian based food manufacturer and distributor... Read more

Deputy Prime Minister Barnaby Joyce says cut price $1 a litre supermarket milk must end. The days of $1 milk must come to an end for the sake of Australia’s dairy industry, Deputy Prime Minister Barnaby Joyce has declared. Speaking after a meeting with key dairy industry stakeholders, the Agriculture Minister said he wanted big supermarkets to increase their milk prices.... Read more

Fund manager Perpetual's full-year profit is up eight per cent, helped in part by a fall in expenses amid continued market volatility... Read more

Macquarie Telecom will insource its network operations centre from Nokia, re-establishing the capability adjacent to its ‘HUB’ customer service centre in Sydney. The carrier used its full-year results today to briefly reveal the plans to take back the NOC function for its telecoms business, and to “invest in new data networking technology”... Read more

Vitamins and health food magnate Marcus Blackmore will earn a motza $18.1 million pay packet this year thanks to Blackmores more than doubling its dividend. Mr Blackmore, who is chairman of the company and owns almost 25 per cent of the stock, has increased the full year dividend payout for shareholders by 102 per cent to $4.10... Read more Ltd has entered into a partnering agreement with Airbnb to encourage renters to ‘try before they buy’ and test drive a new neighbourhood, before signing a rental lease. is a website dedicated to rental property and includes listings from both property agents and non‐agent private landlords... Read more

Nine Entertainment has negotiated its way out of a costly contract to broadcast US TV shows and is refocusing on local content in response to disappointing ratings. The broadcaster, which on Thursday reported a seven per cent decline in underlying full-year profit, has set aside $86 million to pay its way out of the unprofitable deal with Warner Bros... Read more

NSW’s auditor-general has canned the government’s claims that it saved the state economy nearly $900 million through red tape reduction initiatives, complaining that in many cases the dollar values attached to programs appear to have been plucked from thin air... Read more

Opinion - Michael Pascoe: Little reason to trust Woolworths board or management. If Woolworths wasn't capable of turning around its hardware investment, why should shareholders have confidence in its ability to get the other various arms of the business up to speed? Or, specifically, how long before the shrinking retailer walks away from Big W as well?... Read more

Opinion - Harold Mitchell: Australia needs to be more like Asia: a 24/7 economy... Read more

International Headlines

U.S. Market Report: U.S. stocks edged lower on Thursday, weighed down by a drop in consumer and healthcare names, while financials rose modestly after two more Federal Reserve officials pushed towards the case for a rate hike... Read more

North/South Americas Market Report: North and South American markets are mixed. The Bovespa is higher by 0.27%, while the S&P 500 is leading the IPC lower. They are down 0.17% and 0.06% respectively... Read more

European Market Report: European markets finished lower today with shares in Germany leading the region. The DAX is down 0.88% while France's CAC 40 is off 0.65% and London's FTSE 100 is lower by 0.28%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.03%, while the Shanghai Composite led the Nikkei 225 lower. They fell 0.57% and 0.25% respectively... Read more

As central bankers gather, some at Fed make rate-hike case... Read more

Venezuela's oil imports slump on payment woes, economic meltdown. Venezuela has not been able to import all the crude and fuel it needs this year to cover shortfalls at oilfields and refineries as state-run PDVSA struggles to pay suppliers on time, according to trade sources and internal company data seen exclusively by Reuters... Read more

Upbeat U.S. factory data suggests business spending stabilizing. New orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, offering a tentative sign that a business spending downturn was starting to ease... Read more

Tesla’s Model S was already the fastest four-door sedan in the world. In “Ludicrous Mode,” it had the speediest zero-to 60 jump of any car under $200,000. But this, apparently, wasn’t ludicrous enough. On Tuesday, Tesla Chief Executive Officer Elon Musk released a new, 100-kilowatt-hour battery pack for the dual-motor versions of the Model S and Model X. ... Read more

Sales at Tiffany have plunged, and the luxury jeweler is blaming tourists' drop in spending. Tiffany & Co. reported that sales at its stores open at least a year tumbled 8% in the second quarter. Sales at its American stores were down slightly more, and it pointed to lower spending by Chinese and other foreign tourists as a key reason for the decline... Read more

Investors are drooling over Jimmy Choo shares after the company said sales of men's shoes are spiking and its business in China is booming. The luxury shoe brand is hugely popular among female fashionistas, and a pair of stilettos can easily sell for over $1,000... Read more

The ride-hailing giant Uber Technologies Inc. is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta. On Friday, Gupta told investors that Uber's losses mounted in the second quarter. Even in the U.S., where Uber had turned a profit during its first quarter, the company was once again losing money... Read more

Apple Inc issued a patch on Thursday to fix a dangerous security hole in iPhones and iPads after researchers discovered that a prominent United Arab Emirates dissident's phone had been targeted with a previously unknown method of hacking. The attack on the dissident, Ahmed Mansoor, used a text message that invited him to click on a web link. Instead of clicking, he forwarded the message to researchers at the University of Toronto's Citizen Lab... Read more

The Securities and Exchange Commission on Thursday announced it had levied penalties against 13 investment advisory firms for advertising false performance claims about their flagship products. The claims had come from F-Squared Investments, a marketer of index products using exchange-traded funds, which previously settled its own charges related to defrauding investors through false performance claims. The SEC said the 13 firms were negligent when they accepted and relied upon F-Squared’s claims without confirming them first... Read more

Warmer weather and an influx of tourists helped retailers recover from their post-Brexit blues, but there are clear signs that sales are expected to slow in the autumn. The CBI distributive trades survey, a monthly health check of retailers and wholesalers, found that they enjoyed their best month in August for six months as shoppers bagged summer clothing bargains. The retail sales volume index rose to +9, its highest since February and a strong recovery from -14 in July... Read more

Business confidence in Europe's biggest economy, Germany, has fallen unexpectedly after the UK Brexit vote, according to a closely watched survey. The Ifo business confidence index, based on about 7,000 company responses, fell to 106.2 points for August from 108.3 in July. It was the steepest monthly fall in more than four years and took the index to its lowest since December 2014... Read more

Volkswagen AG has agreed to spend more than $1.2 billion to compensate its 650 U.S. dealers for their losses from the German automaker's diesel emissions scandal, two sources briefed on the matter said on Thursday. The company and a lawyer for the VW brand dealers announced a tentative settlement at a court hearing in San Francisco on Thursday, but declined to disclose the amount. The settlement, which followed talks that began in May, came as a judge ordered VW to move quickly to decide whether to fix or buy back 85,000 luxury vehicles with polluting engines... Read more

The head of Germany’s largest bank says negative rates are ‘fatal’... Read more

Brexit vote pushes up price of bacon as China hoovers up British pork. Fall in value of sterling and loss of livestock in Chinese floods fuel export boom – and dearer bacon in UK... Read more

Personal investors took a safety-first approach with their portfolios after the UK's vote to leave the EU, new figures show. Investors withdrew £1bn from investment funds in July, with some moving their money into fixed-income products, the Investment Association said... Read more

England housebuilding figures 'show country is falling short'. Shelter says government data revealing dip in completed builds shows new homes not being provided in required numbers... Read more

The landscape may be changing for China's smartphone giant Xiaomi, and based on some of the estimates, it isn't looking good. First, earlier this year Richard Wilson, an analyst at Radio Free Mobile in a note titled "Xiaomi: Reality Check PT V" claimed the firm's valuation had gone from US$45bn (£34bn) to less than US$4bn in just two years... Read more

Self-driving cars and taxis are the buzz of the industry. Everyone seems to be doing it, trying grab headlines with every step forward or new trial phase. But the real deal always seemed to be still years in the future. Now, here in Singapore, you can in fact hop into a driverless taxi and go for a ride. And it's even free.... Read more

Indian Company Earnings are at Last Showing Some Signs of Recovery. India’s biggest companies have been stuck in a rut for the last two years... Read more

India wants to ban wannabe parents paying surrogate mothers. New legislation would lock foreigners out of the country's thriving but mostly unregulated fertility clinics, and limit surrogacy to Indian couples who have been married for more than five years and are unable to have children... Read more

Ford Bets on India Car-Rental Startup Zoomcar. Leads $24 million investment in Bangalore-based operation that allows users to rent its vehicles for as little as an hour... Read more

Latest reports

Latest reports