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  • Value Investor: What is NAB worth? | Business Spectator
    Personal Banking But despite 1 per cent revenue growth experience losses and provision top ups in Wealth detracted and pre provision earnings were flat for the seventh quarter in a row This forced reliance on lower BDD for bottom line profit growth again as BDD expense and provisioning have fallen for several consecutive years from GFC peaks This has supported profits during weak revenue growth but the downtrend in provisioning is probably over or nearly over meaning banking income must accelerate for shareholder expectations of rising dividends to be met The main downside risk to earnings in FY14 is renewed weakness in UK CRE prices which would increase losses on the non core portfolio in runoff The key upside risk is a better economic outlook for the UK which would improve earnings at the core UK businesses and support CRE values reducing the risk of further losses Our base case is the worst is over for NAB in the UK Assuming steady provisioning stable interest margins and low to mid single digit loan book growth NAB can grow profits in FY14 This will require the absence of the large UK provisioning of 1H13 and a lower average cost of funding to offset drag from the end of out of cycle mortgage repricing The maturity in FY14 of relatively expensive government guaranteed funding will assist Price competition in wholesale and institutional banking is a risk Business confidence is off its post election peak but still higher than pre election General business conditions remain patchy without consistency in forward orders Confidence was scarred by the GFC and persistent Aussie dollar strength is causing uncertainty about structural change in the economy NAB s 2H13 domestic business lending volumes were flat and it remains to be seen whether the post election improvement in confidence translates to higher lending volumes System business lending growth has improved marginally but remains near historic lows Another year of slow system credit growth would increase pressure for further restructuring and cost savings In a bearish scenario for example higher losses on the UK CRE portfolio and another year of slow system lending growth in Australia we think NROE could fall to 17 5 per cent In this case our valuation would be 30 69 13 per cent below our 35 37 FY14 valuation In a bullish scenario for example faster lending growth in Australia and less price competition in domestic lending NROE could rise to 20 5 per cent for a valuation of 38 11 8 per cent above our FY14 valuation NAB shares have slipped 9 per cent from their late October high of 37 07 and are now trading at a 5 per cent discount to our valuation The stock has become more interesting but is not yet trading at enough of a margin of safety to justify investment at current prices Banks are leveraged cyclical plays on the economy and should be purchased at meaningful discounts to valuation wysiwyg field contenteditable false wf deltas 1 wf

    Original URL path: http://www.businessspectator.com.au/article/2013/11/22/markets/value-investor-what-nab-worth (2014-01-12)
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  • Value Investor: QBE is still at a premium | Business Spectator
    Resources and Energy Professional Services Property Retail Small Business SME Telecommunications The Ashes Tourism Transport and Logistics Video KGB TV China Spectator CEO Hub Leadership Lab Management Insights Young Leaders Knowledge Centre Adapt or Die Knowledge Hub Business Accelerators Webinars eBooks Menu Value Investor QBE is still at a premium Stocks In Value 10 Jan 12 30 PM 2 Industries Insurance Markets There is potentially more fallout to come from QBE s ill fated expansion into the US Given its history of disappointment a clean set of financial numbers is needed to restore confidence You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password QBE Insurance Group Ltd has marginally recovered since the December profit downgrade that wiped over 30 per cent off the stock Despite the substantial share price fall an investment at these levels would be speculative We are reluctant to call the bottom in the North American division s performance given its recent history of disappointment We hope the market update last month reflects a thorough and final clearing of the decks but only time will tell if this is the case We need a clean set of numbers and evidence the reserving issues have been addressed to regain confidence in the stock The latest revision was the third downgrade from Chief Executive John Neal due to the underperforming North American business Following its recent strategic and operational review of that business QBE increased its North American claims provision and will write down North American goodwill identifiable intangibles and other assets The update albeit disappointing suggests management is dealing more decisively with legacy issues from its US expansion in 2007 2011 QBE continues to be haunted by former Chief Executive Frank O Halloran s aggressive acquisition strategy Since O Halloran stepped up in 1998 QBE made 125 acquisitions globally spreading its operations across 48 countries and providing insurance to policyholders in more than 140 By acquiring other insurers QBE was able to reduce its risk exposure by diversifying across products and geographic regions The increased scale allowed reinsurance cost efficiencies when measured against gross written premiums However the ill fated expansion into the US from 2007 resulted in large fiscal 2013 reserve top ups lenders placed insurance LPI restricting costs and intangible write downs There is potentially more to come An overpriced acquisition can be devastating to future profitability Before the US acquisitions QBE maintained return on equity ROE at reasonable levels which suggested in aggregate its acquisitions had been fairly priced However since 2009 ROE has deteriorated Figure Return on equity Source QBE StocksInValue QBE is trading close to our fiscal 2014 valuation of 11 48 but given

    Original URL path: http://www.businessspectator.com.au/article/2014/1/10/markets/value-investor-qbe-still-premium?destination=node/765321 (2014-01-12)
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  • Scoreboard: French dip
    Didier Migaud head of the French public audit office said French national debt had reached a danger zone France s CAC was the worst performing market falling 0 8 per cent Italy s FTSE MIB outperformed with a rise of 0 3 per cent The FTSEurofirst 300 index fell by 0 4 per cent with the UK FTSE lower by 0 5 per cent and the German Dax fell by 0 8 per cent Mining shares were weaker with BHP Billiton shares down 2 2 per cent in London trade while Rio Tinto fell by 2 4 per cent US share markets declined on Thursday as investors waited for the key non farm payrolls figures released on Friday The upbeat jobless claims figures added to uncertainty on how aggressively the US Federal Reserve may taper stimulus With an hour of trade left the Dow Jones was down 18 points or 0 1 per cent while the S P 500 was flat and the Nasdaq fell by 9 points or 0 2 per cent US long dated treasury prices rose on Thursday yields lower following a solid 13 billion auction of 30 year bonds US 2 year fell 1 point to 0 43 per cent while US 10 year yields fell by 3 points to 2 96 per cent The euro rebounded after an initial sell off against the US dollar on Thursday following cautious comments from ECB President Draghi The euro hit early highs around US1 3630 before falling sharply to lows near US1 3550 and was trading around US1 3590 in afternoon US trade The Aussie dollar rose from lows near US88 65c to highs near US88 95c and held near US88 90c in late US trade And the Japanese yen traded between 105 05 yen per US dollar

    Original URL path: http://www.businessspectator.com.au/print/765621 (2014-01-12)
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  • SCOREBOARD: QE rift | Business Spectator
    Economy Markets Resources and Energy Industries Wall Street turned down after the release of Fed minutes showing a divide over the resolution of QE3 You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password Minutes of the December 11 12 Federal Reserve meeting indicated some disagreement on the appropriate pace of asset purchases with several members saying it would probably be appropriate to slow or to stop purchases well before the end of 2013 Meanwhile in economic data the ADP national employment index showed US private sector jobs grew by 215 000 in December ahead of forecasts for a gain of 133 000 The New York ISM index rose from 561 1 to 563 2 in December But claims for unemployment insurance rose by 10 000 to 372 000 in the latest week And Challenger report that there were 32 556 job layoffs in December down from 57 100 in November European shares were mixed on Thursday with profit taking being tempered by solid US economic data The benchmark FTSEurofirst 300 index rose by 0 5 per cent to fresh 20 month highs But while the UK FTSE rose by 0 3 per cent the German Dax eased by 0 3 per cent And share prices of mining stocks eased in line with base metal prices with Rio Tinto down by 0 9 per cent in London trade while BHP Billiton lost 0 4 per cent US sharemarkets fell at the open of trade rallied ahead of the release of Federal Reserve minutes then eased again With just over a hour of trade to go the Dow Jones was down by 13 points or 0 1 per cent after trading in a tight 68 point range The S P 500 was down 0 2 per cent and the Nasdaq was down by 8 points or 0 3 per cent US long term treasuries fell again on Thursday yields higher in response to strong economic data and suggestions of an end to the Federal Reserve policy of asset purchases US 2 year yields were steady at 0 26 per cent and US 10 year yields rose by 5 points to 1 89 per cent The US dollar gained against major currencies after the release of Fed minutes The euro had eased from highs near US1 3170 to US1 3110 over the European and US sessions before the minutes were released but slid to US1 3060 in afternoon US trade The Aussie dollar had lifted from 104 75 cents to 105 25 cents but was back near 104 75 cents in late US trade And the Japanese yen had lifted from 87 30 per

    Original URL path: http://www.businessspectator.com.au/article/2013/1/4/resources-and-energy/scoreboard-qe-rift (2014-01-12)
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  • SCOREBOARD: Cliff celebrations | Business Spectator
    US and European markets rose strongly overnight as investors cheered yesterday s successful budget vote in the US House You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password US and European sharemarkets rose overnight following the passage of legislation by the Republican controlled House of Representatives intended to stave off America s fiscal cliff US sharemarkets rose sharply after Congress passed legislation preventing the simultaneous lifting of taxes and cuts to government spending that could have led to a downturn of the economy With just over an hour of trade to go the Dow Jones was up by 220 points or 1 7 per cent with the S P 500 higher by 1 8 per cent and the Nasdaq up 70 points or 2 3 per cent US long term treasuries fell yields higher as investors shifted away from safe haven assets like government bonds in favour of equities and commodities US 2 year yields were steady near 0 26 per cent and US 10 year yields rose by 8 points to 1 837 per cent European shares posted solid gains as investors celebrated the passing of the US budget legislation The benchmark FTSEurofirst 300 index rose by 2 1 per cent to 20 month highs The UK FTSE and German Dax were both higher by 2 2 per cent And share prices of mining stocks soared as base metal prices miners lifted Rio Tinto rose 5 1 per cent in London trade and BHP Billiton gained 3 7 per cent Major currencies were mixed against the US dollar in European and US trade as traders and investors digested news of the successful passing of US budget legislation The euro eased from highs near US1 3295 in early European trade to US1 3155 and was around US1 3170 in afternoon US trade The Aussie dollar rallied over the Asian session reaching US104 60c before rising further to US105 20c in the US session but was softer near US104 85 cents in afternoon US trade And the Japanese yen lifted from 87 30 yen per US dollar at the end of Asian trade to 86 94 and was around 87 12 in afternoon US trade Meanwhile the US ISM manufacturing index rose from 49 5 to 50 7 in December consensus 50 3 per cent US construction spending fell by 0 3 per cent in November consensus 0 6 per cent And weekly chain store sales in the US rose 0 1 per cent according to Redbook Research to stand 2 9 per cent higher than a year ago In European data the French Purchasing Managers index rose from 44 5 to

    Original URL path: http://www.businessspectator.com.au/article/2013/1/3/resources-and-energy/scoreboard-cliff-celebrations (2014-01-12)
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  • Scoreboard: French dip | Business Spectator
    efficiency solar and wind all providing tangible proof of their future potential A fifth year of declining power consumption Power consumption fell again in 2013 dipping 2 8 per cent across the National Electricity Market as scheduled renewables rose to 12 per cent of the market Industries Advertising and Marketing Agribusiness Automotive Aviation Construction and Engineering Education Family Business Financial Services Food and Beverages Gaming and Racing Health and Pharmaceuticals HR Industrial relations Information Technology Infrastructure Insurance Manufacturing Media and Digital Resources and Energy Professional Services Property Retail Small Business SME Telecommunications The Ashes Tourism Transport and Logistics Video KGB TV China Spectator CEO Hub Leadership Lab Management Insights Young Leaders Knowledge Centre Adapt or Die Knowledge Hub Business Accelerators Webinars eBooks Menu Scoreboard French dip Craig James 10 Jan 7 46 AM Markets France s head of public audit said the country s debt had reached a danger zone adding to a generally weak day for European markets You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password In US economic news monthly chain store sales rose 3 7 per cent in December after increasing by 2 1 per cent in November US jobless claims fell by 15 000 to 330 000 in the past week The European Central Bank left its main interest rate unchanged at a record low of 0 25 per cent on Thursday ECB President Mario Draghi was cautious about the European economic recovery and hinted that there may be down revisions in inflation forecasts However he did say the risks surrounding the economic outlook for the euro area continue to be on the downside and that eurozone economic activity should benefit from a gradual strengthening of demand for exports European shares were weaker on Thursday hit by a warning over France s debt level Didier Migaud head of the French public audit office said French national debt had reached a danger zone France s CAC was the worst performing market falling 0 8 per cent Italy s FTSE MIB outperformed with a rise of 0 3 per cent The FTSEurofirst 300 index fell by 0 4 per cent with the UK FTSE lower by 0 5 per cent and the German Dax fell by 0 8 per cent Mining shares were weaker with BHP Billiton shares down 2 2 per cent in London trade while Rio Tinto fell by 2 4 per cent US share markets declined on Thursday as investors waited for the key non farm payrolls figures released on Friday The upbeat jobless claims figures added to uncertainty on how aggressively the US Federal Reserve may taper stimulus With an hour of trade left

    Original URL path: http://www.businessspectator.com.au/article/2014/1/10/markets/scoreboard-french-dip?destination=node/765621 (2014-01-12)
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  • Minimum wage prevents working poor: Labor | Business Spectator
    Shorten makes comments in response to calls for minimum wage increase to be deferred You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password AAP Federal Labor leader Bill Shorten says he won t support the creation of a US style working poor in Australia after business groups called for any minimum wage increase to be deferred this year The Fair Work Commission sets minimum wage increases in Australia with workers granted a rise of 15 80 a week last June Industry bodies such as the Australian Chamber of Commerce and the Australian Industry Group AiGroup say any 2014 increase should be minimised or deferred because business has already been hit with higher penalty rates apprentice wages and superannuation levies With employment growth very slow for most of last year and not looking all that healthy as we head into 2014 we need to avoid adding to costs AiGroup chief executive Innes Willox told Fairfax Media But Mr Shorten said 1 5 million Australians relied on the minimum wage which was part of the strong safety net to prevent an underclass of working poor There was a process to set the minimum wage and all parties were welcome to put their position Labor does not support a working poor as we see in the United States he told reporters in Melbourne on Thursday Print this page Related articles 13 Jan Iran nuke deal to take effect 13 Jan Govt interest bills surging report 13 Jan Abbott to pursue red tape cuts 13 Jan Palmer wants to repeal Newman laws 12 Jan Israel s Sharon dead at 85 More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy M C M Thu 2014 01 09 16 22 dear mr shorten you may not be aware that America is not the only country in the world with a lower minimum wage than Australia in fact every other major country in the world has a lower minimum wage than Australia may I present exhibit A http www businessinsider com au a look at minimum wages around the world 2013 8 the level of debate in this country has pretty much sunk to new lows it s almost like they have a whole press corp that sits around trying to think up emotive terms to try and scare people today it is working poor who knows what tomorrow will bring M C M Thu 2014 01 09 16 35 just to add to what I said before not only

    Original URL path: http://www.businessspectator.com.au/news/2014/1/9/politics/minimum-wage-prevents-working-poor-labor (2014-01-12)
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  • SPC fight highlights Lib division: Shorten | Business Spectator
    of declining power consumption Power consumption fell again in 2013 dipping 2 8 per cent across the National Electricity Market as scheduled renewables rose to 12 per cent of the market Industries Advertising and Marketing Agribusiness Automotive Aviation Construction and Engineering Education Family Business Financial Services Food and Beverages Gaming and Racing Health and Pharmaceuticals HR Industrial relations Information Technology Infrastructure Insurance Manufacturing Media and Digital Resources and Energy Professional Services Property Retail Small Business SME Telecommunications The Ashes Tourism Transport and Logistics Video KGB TV China Spectator CEO Hub Leadership Lab Management Insights Young Leaders Knowledge Centre Adapt or Die Knowledge Hub Business Accelerators Webinars eBooks Menu SPC fight highlights Lib division Shorten 9 Jan 3 06 PM 2 Politics Oppn Leader says government is unsure of what it wants to do You must be logged in to read this article Not a member yet Register today Business Spectator is available on all of your devices so you can access the latest news and commentary where and how you like Register now Already a member Sign in here Email Address Enter your Email Address Password Enter the password that accompanies your Email Address Remember me Log in Request new password AAP Sharman Stone s fight with senior government colleagues resisting calls to support food processor SPC Ardmona highlights the division in Liberal ranks Opposition Leader Bill Shorten says The Coca Cola Amatil subsidiary has asked for 25 million from the federal government and an equal amount from the Victorian government to help upgrade its product development facilities Dr Stone is concerned that Australia s last fruit processor could close by the middle of 2014 with the loss of 3000 jobs in the Goulburn Valley region of her northern Victorian electorate There continue to be some in the cabinet who simply believe that any support for manufacturing somehow interferes with so called free market forces she told the Australian Financial Review on Thursday Mr Shorten said the comments highlight the divisions in Liberal ranks We have seen Sharman Stone a Liberal senior member of parliament say that SPC should be protected we will have to hear if Joe Hockey is going to give in to her or not Mr Shorten said He said Senator Cory Bernardi had been disowned by the government over comments about abortion So they have got a few challenges of division within their ranks about where to go on policy Mr Shorten said Mr Shorten said the government is not sure what it wants to do The government has asked a group including former Labor industry minister Greg Combet to examine SPC s operations before making a decision Dr Stone said if the free market operated in Australia then companies such as SPC would be able to bring in cheap labour from wherever I m hoping that the interests of the economy will be considered not just dogma she said Prime Minister Tony Abbott has already indicated his reluctance to provide government support to companies that

    Original URL path: http://www.businessspectator.com.au/news/2014/1/9/politics/spc-fight-highlights-lib-division-shorten (2014-01-12)
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