Market Commentary.

Wesfarmers should maintain stable credit metrics over the next year as free cash flow from the retail subsidiaries should mitigate the deterioration in the industrial segment.   We expect continued earnings momentum at Coles, Bunnings, Officeworks and Kmart as they focus on customer service, product offering, cost savings and productivity gains.   Our recommendations are the following for Wesfarmers: Wesfarmers [...]

PMP Ltd is operating in a challenging industry which is subject to deterioration demand for physical print in favour of digital applications.   After 4 years of tough restructuring the group has exited low margin contracts and disposed of unwanted assets to reach its lowest historical net debt levels. This has resulted in a strong balance sheet and leaves sufficient [...]

The transformation plan continues to drive operational performance but the new financial policy provides clarity around the group's ongoing financial framework and its commitment to a stable balance sheet through the business cycle.   Our reports for Qantas Airways: Qantas 6.50% 2020. Click here. Qantas 7.50% 2021. Click here  Qantas 7.75% 2022. Click here    Want a broker to contact you? Click [...]

Management reiterated its commitment to a stable balance sheet in the 2015 full year results. Reduced capital expenditure, cost cutting measures should help cash flow but this is offset by the increased dividend payout ratio. Caltex repaid its US Private placement early in order to realise interest savings as well as reduce available debt facilities to match its reshaped financial [...]

Standard & Poor's (S&P) released their 2016 outlook on the Australian banking sector on the 21st February 2016.   In summary: S&P views Australia as remaining amongst the lowest-risk banking systems globally; S&P's senior credit rating for the four major Australian banks would come under pressure if the move to establish a framework for the bail-in of banks' senior debt [...]

NEXTDC is in a high growth industry where demand currently exceeds supply. The primary focus of the business is sales momentum and efficient use of capital to build new data centres.   At the half year the company indicated full year results would reach the top end of previous guidance (revenue $85-$90m, EBITDA of $25-$28m) which is reasonable given the [...]

Overall, we view Heritage as a highly capitalised and well-funded issuer. We have some concerns regarding loan book diversification and with the loan expansion plan (likely to be funded via securitisation vehicles), but a large proportion of this risk is mitigated by the RBA’s committed liquidity fund and   Heritages’ experience in this market. As with other regional banks we [...]

Over the past five years, G8 Education have grown from 88 centres to 471 centres through their aggressive acquisition strategy. The group expects to continue on this trend in 2016.   The bigger concern regarding G8's future is the sustainability of their business model. he lack of cost synergies, large amount of intangible assets and reliance on capital markets suggests a [...]

Tatts' half year results are a reflection of the current state of the gaming industry. There is still uncertainty surrounding the case appeal but the group is in a sound financial position to endure a negative outcome and this should not be a large disruption to operations.   From a more long term perspective, we expect Tatts to continue improving its [...]

AMP reported a strong full year 2015 underlying profit of $1.12 billion, up 7.2% on 2014. Four of the six business units experienced strong single or double digit underlying profit growth with the standout being Australian wealth management with $410million, up 9.6% for the year. We expect this pattern to continue over 2016 as assets under management across the retail [...]