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BHP BillitonLtd
New agreements: BHP Billiton Ltd(ASX: BHP)stock fell over 4.5% on March 09, 2017, as the stock traded ex-dividend and some bit of slump came in owing to commodity price volatility. BHP recently announced the final pricing of the Maximum Tender Offers as part of the US$2.5 billion bond repurchase plan. The amount to be spent on the repurchasing debt under the Offers has been increased to US$893,918,713.32. The group had indicated for early results of the previously announced tender offers for the aggregate purchase price of up to $863.92 million of $1.25 billion 3.250% senior notes due 2021, $1 billion 2.875% senior notes due 2022 and $1.5 billion 3.850% senior notes due 2023. On the other hand, BHP advanced its exploration and production interests in the Gulf of Mexico by executing a contract with PEMEX Exploration & Production Mexico (Pemex) to complete work on the significant Trion discovery in Mexico. For the December 2016 half year, BHP’s attributable profit of US$3.2 billion, underlying EBITDA of US$9.9 billion and an Underlying EBITDA margin of 54% was reported. We rate the stock a “Buy” at the current share price of - $ 23.96
Westpac Banking Corp
Facing allegations: Recently, Australian Securities and Investments Commission launched civil action in the Federal Court alleging Westpac Banking Corp (ASX: WBC), the country's second-largest mortgage lender, breaching responsible lending practices. The allegation claims that the bank approved mortgages that borrowers are unable to afford because the bank failed to properly factor in home loan customers' actual living expenses. In the past one month trading session, WBC has recorded a 7.66% gain in its stock price in the last six months (as of March 08, 2017) and currently it is trading near its 52-week high levels. We rate the stock "Expensive" at the current share price of - $ 35.04
Rio TintoLtd
Moody's rating upgrade and higher reserves: Rio Tinto Ltd (ASX: RIO) recently appointed Philip Richards as Group executive, Legal. The group reported that during 2016, estimated Argyle Mineral Resources exclusive of Ore Reserves decreased by 29Mt from 44Mt to 15Mt. However, this does not impact reported Ore Reserves and has no bearing on the current mine plan. On the other hand, Jadar Mineral Resources have increased by 16% or 19Mt from 117Mt to 136Mt. Given the ongoing resource development work, Rio also increased ore reserves and mineral resources at the flagship Pilbara iron ore operation in Western Australia. Overall, ore reserve at the Pilbara as of the end of 2016 was 3.51 billion tonnes of ore, which is up from 3.45 billion tonnes of ore against the end of 2015. It has been noted that the senior unsecured ratings of all rated entities within the group were recently upgraded by Moody's Investors Service to A3 from Baa1. The P-2 short-term rating was affirmed for all subsidiaries with short term ratings with an overall stable outlook. Moody's upgrade comes at the back of the company's cost reduction achievements, debt reduction through its liability management program, divestitures of non-core assets, and focus on cash generation. We give a “BUY” on the stock at the current share price of - $ 60.14
National Australia Bank Ltd
Mixed quarterly result: National Australia Bank Ltd.’s (ASX: NAB) first quarter 2017 trading update included a 23% drop in charge for bad and doubtful debts while there was a 1% drop in the unaudited cash earnings than the quarterly average of the September 2016 half year. Revenue rose by 1% while unaudited net profit attributable to the owners was $1.6 billion. There was a 5% rise in expenses owing to higher personal costs and project related costs. The common equity tier 1 ratio was 9.5% at December 31, 2016 compared with 9.8% at September 2016. It has been reported that NAB recently wrote to many Australian small business borrowers advising them that NAB has changed its lending agreements to comply with the unfair contracts act. Also, with strong expectations of Fed rate hike from U.S. Federal Reserve, NAB expects forecasts for the Fed funds rate to be altered in 2017.The stock generated an 11.5% gain in the last three months (as of March 08, 2017) and we give a “HOLD” rating on the stock at the current share price of - $ 32.87
Australia and New Zealand Banking Group Ltd
Stable quarterly results: Australia and New Zealand Banking Group Ltd (ASX: ANZ) inked an agreement with CMC Markets to provide a market leading share trading solution to customers under the ANZ Share Investing brand. Under this agreement, customers will transfer to the new platform by September 2018 while ANZ will decommission the current trading platform following customer migration. ANZ reported a quarterly cash profit of $2 billion ending December 31, 2016, which is up 31% from year ago period. Statutory net profit was up 8%. Meanwhile, APRA common equity tier 1 (cet1) ratio as of December 31 stood at 9.5% whilenet interest margin (NIM) declined several basis points (bps) reflecting lower earnings on capital and higher funding costs. Meanwhile, quarterly markets income stood at $706 million. Looking ahead, provision charge in 2017 is to remain broadly same as a percentage of gross lending assets. ANZ stock generated a 16.69% gain in the last six months (as of March 08, 2017) while we give a “Hold” rating on the stock at the current share price of - $ 31.63
Commonwealth Bank of Australia
Strong result: Commonwealth Bank of Australia’s (ASX: CBA) 1H17 result indicated for 6.2% rise in statutory net profit after tax (NPAT) of $4,895 million, with cash NPAT of $4,907 million, up 2%. The interim dividend of $1.99 per share, was up 1 cent while the earnings per share (cash) of $2.86 was flat over prior corresponding period. CBA’s chief executive officer recently expressed his opinion that the banking industry should be responsible for determining the security and privacy guidelines around opening up the application programming interfaces (API) to external parties. Besides this, a separate news revealed that CBA invested more than $3 billion in fossil fuels while $846 million was invested in clean energy. On the other side, we believe that CBA stock is currently trading at relatively high levels and already generated over 15.5% in the last six months (as of March 08, 2017). We maintain our "Expensive" rating on the stock at the currents share price of - $ 83.53
CSL Ltd
Concerns over rising R&D: For the first half 2017, CSL Ltd (ASX: CSL) recorded 17.2% higher revenue to $3.7 billion from year ago period, while net profit after tax stood at $806 million, higher by 36%. The company recorded a strong half and better than expected results mainly due to its newly acquired influenza vaccines business – Novartis AG Seqirus – and strong sales in its core immunoglobulin division. In the past three months, CSL has recorded a significant price surge of 28.4% in the last three months (as of March 08, 2017) mainly driven by strong first half financial year results. On the other hand, the group’s R&D expenses have been rising in the last few years. Rising competition coupled with supply constraints remain few concerns to the group’s target industry.Moreover, the stock is trading at a high level and we believe the same is "Expensive" at the current share price of - $ 122.66
TelstraCorporation Ltd
Strategic partnership: Telstra Corporation Ltd (ASX: TLS) has divested the remaining 6.5% interest in Chinese online business, Autohome to Ping An Insurance Group for US$217 million (A$282 million based on current exchange rates). As per the 1H 17 result, the group’s total income was 0.7 per cent and was lower than last year, while EBITDA was 1.7 per cent higher against the guidance. Reported EBITDA decreased 1.6% to $5.2 billion, and net profit after tax reduced by 4.4% to $1.8 billion. TLS recently announced a strategic partnership with US-based VeloCloud Networks, the Cloud-Delivered SD-WAN (software defined wide area networks) company, which simplifies and automates enterprise branch networking. The partnership includes an investment by Telstra Ventures in VeloCloud as part of their latest funding round. We rate the stock "Expensive" at the current share price of - $ 4.63
Wesfarmers Ltd
Interested in asset float: Wesfarmers Ltd (ASX: WES) reported for a 13.2% rise in net profit after tax (NPAT) of $1,577 million for the half-year ended December 31, 2016 over the prior corresponding period. Earnings per share increased 12.8% to $1.40 per share. WES seems to be pursuing the setting up of an IPO for Officeworks, which was acquired as part of the Coles Group acquisition in 2007. The company has recorded 18 consecutive periods of sales growth and doubled their earnings since it was acquired. On the other hand, WES is likely to float its east coast coal assets as the group failed to attract strong offers for the Curragh and Bengalla mines. The two assets are expected to attract a $2 billion price driven by rising coal prices. Moreover, the stock is trading at an unreasonable P/E, while we rate the stock "Expensive" at the current share price of - $ 43.66
Woolworths Ltd
Fresh product approach and new geography: Woolworths Ltd (ASX: WOW) reported for HY17 sales growth in Australian Food of 2.8% (comparable sales: 1.9%) while NPAT from continuing operations of $785.7 million was down 16.7%. Further, strong performance from Endeavour Drinks in a competitive market was another highlight of the result. In the second half, WOW aims to invest in improving the shopping experience and expects higher depreciation and team incentive payments. WOW had also launched South Africa's first retail branded Marine Stewardship Council (MSC) certified tuna. Canned tuna has been a particular challenge as only 16% of the entire world’s tuna catch has met the certification requirements of the MSC.We maintain our “Buy” rating on the stock at the current share price of - $ 26.07
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