The chairman said growth would slow and investors have all run for the
Given Commonwealth Bank's profit downgrade, it was no surprise that most
analysts have shaved their rosier forecasts and recommended investors look at
Macquarie Equities, for instance, moved its short-term recommendation to
``under-perform". Apart from CBA's obvious problems in its wealth management
operations which will restrict the full-year profit to only ``modest growth",
chairman John Ralph made relatively unenthusiastic comments about the retail
banking operations (``sound growth") and said profitability of the business
banking division was ``satisfactory".
Combined with the mixed response to Westpac's full-year results last week,
it's no wonder traders are looking to Thursday's National Australia Bank result
for salvation. Macquarie is expecting a net profit of $4.06 billion.
While this implies growth of just 5 per cent once adjusted, NAB has lowered
risk by dumping HomeSide, is quite strong across the board in the banking
segment and has a big buyback going that will run into 2003.
NAB regained some ground yesterday, rising 51c to $34.30. CBA fell 7c to
Cut good for News
Speculation the US Federal Reserve could cut interest rates by as much as 50
basis points this week provided another boost to News Corp shares yesterday.
The media group has already had a bit of a run-up over the past month helped
along by a bullish research note from Merrill Lynch last week and indications
the advertising climate is improving. If the Fed does cut rates by 50 basis
points, the ad industry should enjoy a much-needed lift.
Rory Roberston of Macquarie Bank says the US economy clearly needs some help,
so a 50-point cut isn't out of the question. Gerard Minack of ABN Amro thinks a
50-point cut hasn't been fully priced into the market but looks ``a
If it happens, Wall Street will continue to rebound over the short term,
providing another lift to News Corp, which is listed in the US.
JP Morgan expects the media group to report a 27 per cent increase in
first-quarter earnings before interest and tax next week.
News Corp ordinary shares rose 62c to $11.24.
Talent in Billabong
JB Were believes Matthew Perrin's replacement as chief exec of Billabong
International is going to be internal. Perrin finally resigned last week as
pressure from institutional clients mounted following his sale of $66
million-worth of shares.
Top of the broker's hit list is Derek O'Neill, general manager of Billabong
Europe. According to Were, O'Neill has overseen an increase in European earnings
before interest, tax, depreciation and amortisation from $2 million to $23
million in the past five years.
Paul Naude, general manager of the US division, is also a possibility, having
turned that region's earnings from a $1 million loss in 1999 to a profit of $40
million three years later.
Dougal Walker, general manager of Australia, is another having lifted
earnings before interest and tax by $25 million in the past three years.
Were does not expect Mr Perrin to sell his outstanding 2.5 per cent stake in
the surfwear retailer in the current four-week director divestment period
following the annual meeting. And while the Billabong share price spirals lower
it was down another 24c to $6.24 yesterday the broker is sticking with its
current earnings forecasts.
Credit Suisse First Boston is a little less confident management can meet its
own fiscal 2003 profit guidance, despite remarks made at the annual meeting.
CSFB has cut forecasts by 6 per cent for the current year and recommends
investors sell on fears of a major downturn in the US.
Big job at Bankstown
Andrew Scott at Centro Properties has a job ahead of him after spending an
effective $334 million to buy Bankstown Square shopping centre from General
The sale has piqued analysts' attention, with some debating why GPT sold.
One said either GPT could not extract the value out of the centre and got fed up
or there was little value to be had whoever is the owner.
Either way, Centro's management will be out to prove they have not bought a
dud but rather an underperforming centre which, with the right management, can
Under the deal Centro will pay $167.1 million to the Government
Superannuation Office for one half and about $176 million to GPT for the
remaining 50 per cent.
It is assumed Centro will place at least 50 per cent of the property into a
syndicate in the coming months.
While the deal does not put Centro into the Westfield realm, it will allow
the centre manager to compete strongly with the likes of AMP, Stockland and
Although retail remains flat, particularly in apparel, there are signs of an
improvement in discretionary spending as female consumers look to treat
themselves to lingerie, jewellery or a new evening bag in the pre-Christmas
This can only help the retail managers who have not seen much change in
rents for the past couple of years. Deutsche Bank says Bankstown Square will
present Centro's management with challenges and the deal should be accretive to
distributions and net tangible assets. The broker upgraded its rating to
``hold" from ``sell".