Today’s retail sales numbers were disappointing. The figures, combined with Metcash profit disaster confirm that retailers are still doing it tough.
Budget economic forecasts show Govt is hoping market forces will do ‘heavy lifting’: Pitcher Partners
The economic forecasts contained within tonight’s Federal Budget appear to be measured, with a GDP forecast of 2.75% for 2015-16.
After a torrid week for bank investors, the market should be satisfied with the result that NAB has announced today. Statutory net profit rose 20.4% to $3.44 billion, with the cash profit up a healthy 5.4% to $3.32 billion.
Outrigger Acquisition by Mantra Group (MTR), Thursday, 19 March 2015
Mantra Group (MTR) today announced the acquisition of Outrigger, together with an equity raising.
The timing of the acquisition is right, as there are signs of an improvement in domestic tourism as a result of the softer AUD. Although trends are improving, property prices on the Gold and Sunshine Coasts are still relatively depressed compared to the recent hype in Sydney, Melbourne and Brisbane apartments.
The Outrigger properties are well located, and will complement Mantra’s existing portfolio of 113 properties. It is likely that Mantra will be able achieve long-term cost savings through economies of scale and marketing opportunities with Outrigger becoming part of the larger group.
Encouragingly, Mantra management have chosen to fund the deal with an equity raising. Although debt funding is cheap with low interest rates, it seems that REIT managers have learnt the lessons from the GFC of carrying too high debt levels. Mantra group currently has net gearing of 30.6%, which is manageable. Assuming the equity raising is successful, the balance sheet for the group will remain prudent.
Comment from David Lane, director of Wealth Management at Pitcher Partners
RBA may stay the course with interest rates following release of FOMC notes in the US: Pitcher Partners’ David Lane
FOMC announcement, Thursday, 19 March 2015
The notes of the FOMC were released in the USA, with the key word “patient” being removed from their stance on interest rates. As market participants had anticipated, this leaves the door open for a possible rise in US official rates in June.
As we had expected, the RBA has decided to leave the official cash rate unchanged at 2.25%. We believe that the RBA Board has decided to allow last month’s change sufficient time to work through the economy.
While the food and liquor core of Woolworths’ business continued to record strong revenue and profit growth, it was once again the discretionary parts of the business that have struggled. Masters recorded a $103 million loss for the half, while General Merchandise (Big W) profit fell 9% and Hotels declined 11.8%.
Telstra’s result this morning (Thursday, 12 February 2015) was an excellent result, with David Thodey and his management team proving that the transformation of Telstra is providing strong returns for shareholders.
RBA retail figures 9 Jan 2015: comment from David Lane, director of Wealth Management at Pitcher Partners
The ABS this morning released Retail Trade figures for November, showing a subdued rise of 0.1% in November, with an annual trend rise of 4.5%.
While the potential of macroprudential controls, or more closer scrutiny of lending practices, would have an impact on the profit margins of the major banks, we are unconvinced that the RBA is likely to introduce such measures. Rather, Glenn Stevens is sounding the warning to the banks that as property prices rise, so do the risks. These risks are well known to Australia’s senior bankers. Tighter controls and a robust banking system are the real reason that Australia fared better during the GFC than most northern hemisphere countries. Read More