ASX sheds 30b in 13 fall Altium drops 105 Oil Search CEO leaves
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Furniture retailer Nick Scali has confirmed reports it is in discussions to acquire couch and recliner seller Plush Sofas from South African-owned retail group Greenlit Brands.
After entering a trading halt this morning, Nick Scali issued a statement confirming it was in non-exclusive discussions with Greenlit to acquire Plush, but played down the chance of a deal being finalised. Nick Scali shares are up 2.5 per cent to a two-week high of $11.31.
Nick Scali confirmed it was in talks to acquire Plush, but warned the deal might not proceed.
Media reports from earlier today claimed the retailer was prepping to purchase the sofa seller, with a price of $80 million to $100 million floated.
“As previously communicated to the market, the company actively considers acquisitive growth opportunities from time-to-time having regard to the strategic rationale, available synergies, financial impact and the long-term value created for Nick Scali shareholders,†the company said.
“There is no certainty that the current discussions, which are ongoing and incomplete, will result in a binding transaction for Plush or that any agreement will be reached with Greenlit Brands.“
Plush is a longstanding member of Australia’s furniture selling landscape, starting out in 2000 in Nunawading, Victoria. It now has 46 showroom locations around the country.
Nick Scali noted that any transaction that did arise from the discussions would be able to be funded through a combination of cash and debt. At the half year, the retailer reported $87.6 million in cash on hand.
Investment firm Djerriwarrh - part of the AFIC family - says full-year profit has slipped, but it has nonetheless lifted its final dividend to a fully-franked 5.75¢.
Djerriwarrh said profit fell 7.3 per cent to $30.5 million for the year to June 30 as a decline in investment income outweighed a jump in income from option activity.
Djerriwarrh invests in blue-chip stocks. Credit:Louise Kennerley
The $731 million listed investment company said its higher dividend - up from 5.25¢ a year ago - was the result of the economy performing better than projected at the start of the year.
The final dividend will be paid on 27 August. Total dividends for the year are 11¢ per share, down from 14¢ per share last year.
Djerriwarrh’s equity instruments increased from $690 million to $849 million during the year, while the company’s return for the 12 months including franking was 29.6 per cent, outperforming the S&P/ASX 200 accumulation index return.
“The ongoing strength of the market, despite a number of uncertainties, has been a feature over the year as very low interest rates have combined with better investor sentiment from improved economic conditions. This has driven up valuations and share prices, in some instances, to record highs,†the company said.
CSL, BHP, Westpac, Transurban, and Woolworths are the company’s biggest holdings.
Major sales for the 12-month period were predominantly as a result of the exercise of call options. This included positions in BHP, Macquarie Group and holdings in each of the four major banks.
“The bank sector performed extremely well during the year, mostly as a result of a vastly better bad debt outcome compared to what was anticipated at the start of the pandemic,†the company said.
“The better economic outlook has also contributed to each of the major banks having very strong capital positions.“
During the year the company also exited a number of holdings as a result of option exercises and active selling, including South32, QBE, Qube Holdings, Suncorp, Reliance Worldwide Corporation and Scentre Group.
Major purchases for the 12-month period included ASX Ltd, CSL, Westpac, Woolworths, EQT, and Carsales.com.
Djerriwarrh said the outlook for dividends across the Australian share market was mostly positive. It expects the rebound in bank dividends to largely continue, supported by a recovering economy and more sustainable dividend payout ratios.
“There is also the potential for capital returns as a result of their strong balance sheets. High iron ore prices may also provide ongoing strong dividend income from BHP and Rio Tinto.“
However, some companies are unlikely to resume dividend payments in the near term, including Sydney Airport and Auckland Airport.
The other key factor in determining income for the year is option activity which is influenced by market volatility and the level of interest rates.
“Based on current conditions, our expectation for option income as compared to that achieved in financial year 2021 is currently more subdued.â€
SEEK shares have dropped 3.2 per cent to a five-week low of $30.60 this morning following a rating downgrade from Goldman Sachs analysts.
While the team increased earnings per share estimates and increased forecast 2020-21 earnings to $498 million, compared to company guidance of $480 million, they believe consensus estimates are too optimistic.
Specifically, the advertisement volume forecasts are too optimistic between now and 2022-23. While SEEK has seen a very strong recovery with record volumes in the March to June quarter, the Goldman Sachs team believes this is a side-effect of labour shortages and job vacancies, which are leading to ads being re-posted after an automatic 3-day expiry.
“Despite out strong forecast earnings growth, SEEK valuation screens unfavourably in our view versus domestic peers, when adjusting for asset ownership and capitalised research and development, global classified peers, and historical PER multiples,†the analysts wrote in a note to clients.
“We also remain cognizant (sic) of the ongoing growth versus value trade (with our strategists overweight value). As a result and relative to other growth names, we downgrade SEEK to Sell (from Neutral) with our revised 12 month target price of $30.80….â€
Altium has tanked and then went into a trading halt this morning on speculation that Autodesk has walked away from its $5 billion takeover bid.
ASX-listed Altium knocked back the offer last month from US design technology heavyweight Autodesk, but left the door open to a higher offer.
Autodesk has confirmed that talks with Altium ceased last week. Altium shares are currently halted after falling 10.5 per cent in the first minutes of trade.
“We are not commenting on matters with Altium but can confirm that acquisition discussions have ceased at this time,†said a spokesman for Autodesk.
Without the support of Autodesk’s $38.50 per share cash offer, analysts have said Altium’s share price could fall significantly.
Recent reports claim Autodesk lifted its offer to around $40 a share to allow due diligence but this was apparently knocked back by the Altium board.
Altium is one of the five heavyweight technology stocks on the ASX that trade on incredibly high earnings and revenue multiples. The Autodesk offer for Altium is at 75 times the ASX-listed company’s 2022 earnings, according to analysts.
The technology sector is down 0.8 per cent this morning, with Nearmap down 2.8 per cent, Megaport down 2.5 per cent, and Computershare down 2 per cent. EML Payments, Xero, and Afterpay are currently trading higher.
Courtesy of Bloomberg
Oil Search managing director Dr Keiran Wulff has resigned after less than 18 months in the role, with the PNG-focussed company citing a long-term health issue as well as complaints over his behaviour and management style.
Dr Wulff took the reins from long-term boss Peter Botten in February last year and has led the $8 billion company during a time of extreme upheaval in the industry, including global lockdowns associated with the COVID-19 pandemic, and a plunge in oil prices.
The Oil Search board received complaints about Dr Wulff’s behaviour. Credit:Dom Lorrimer
Oil Search chairman Rick Lee this morning said the board entered into discussions with Dr Wulff following the receipt of recent concerns and complaints about his behaviour.
Mr Lee said the board considered that Dr Wulff had behaved in a manner inconsistent with the standards expected by the Board in relation to his management style.
Chief financial officer Peter Fredricson has been named acting chief executive effective immediately. No further information was given about the nature of the complaints. Oil Search will be holding a conference call at midday.
Shares in the firm fell 2.3 per cent to $3.78 on the surprise news, outpacing a wider energy sector decline.
Shares in software design firm Altium were paused this morning after taking a 10 per cent tumble, with analysts pointing to speculation that US giant Autodesk has walked away from its takeover bid.
Altium shares surged last month after it knocked back a $5 billion takeover offer from Autodesk - valued at $38.50 per share.
Altium chief executive Aram Mirkazemi is the third largest shareholder with 7.3% of stock. Credit:Ben Rushton
The Australian and the Australian Financial Review this morning reported that Autodesk came back with an improved $40 per share bid, which was also rejected by the Altium board.
Shares in Altium closed at $36.55 on Friday but fell 10.5 per cent to $32.73 at Monday’s open before pausing.
RBC analyst Garry Sherriff said the company was likely to trade closer towards $30 per share without the merger and acquisition support.
“The possibility of competing bids from firms including Cadence, Dassault and PTC may emerge, but in our view is likely to encounter similar issues to Autodesk’s ALU’s value expectations.“
“We believe the share price is now likely to trade more on fundamentals than M&A.“
With Autodesk apparently out of the picture, Mr Sherriff said the focus will likely shift onto the company’s ecosystem strategy and M&A plans as it works towards its 2025 goals for US$500 million revenue and 100k subs.
“Altium still has some work to do to rebuild market confidence in the growth outlook following 7 downgrades in about 18 months,†Mr Sherriff said.
The three largest shareholders include BlackRock with 9.1 per cent, Pinnacle Investment with 7.3 per cent, and founder Aram Mirkazemi with 7.3 per cent.
About $30 billion was wiped off the Australian sharemarket in early trade as the heavyweight banks, miners, and retail stocks took a tumble.
The ASX 200 opened 1.3 per cent lower, falling to 7253.2, its lowest since July 9.
The market was last 1 per cent down at 7271.5. Altium has gone into a trading halt after falling 10.5 per cent to $32.73 on rumours Autodesk is walking away from its offer.
BHP, Rio Tinto, and Fortescue Metals all tumbled, while the Big Four banks were down.
Health giants CSL was offering some resistance, up 1.5 per cent to $282, while ResMed, Sonic, Fisher and Paykel, and Cochlear were also higher.
A subsidiary of mining services company Perenti has jointly won a contract to provide services for AngloGold Ashanti’s gold mine in western Ghana.
Perenti’s African Mining Services (AMS) and MAXMASS, a Ghanian company, have won a contract worth about $470 million, with AMS’s share estimated to be about $280 million.
“We have provided surface mining services at Iduapriem gold mine since 2012, establishing a successful partnership with AngloGold Ashanti,″⣠Perenti’s mining chief executive, Paul Muller, said.
“We look forward to continuing to strengthen this partnership and also welcome the opportunity to work our newest joint venture partner, MAXMASS.â€
He added the joint venture would employ about 475 Ganaians, with about 40 per cent of the workforce coming from local communities and rest from around Ghana.
Perenti shares are up 0.6 per cent to 87¢ this morning, the highest the stock price has been since 12 May.
Buy-now-pay-later outfit hummgroup says cash profit for the year should more than double to $68.4 million after a jump in users and a record fourth quarter for transaction volumes.
The company formerly known as Flexigroup this morning also reported total customer numbers have jumped, rising 20 per cent to 2.7 million at June 30.
There were 1,362 new humm merchants integrated across Australia and New Zealand during the fourth quarter, with chief executive Rebecca James reporting strong growth in key verticals of health, luxury retail, home improvement, and automotive.
Humm Group CEO Rebecca James. Credit:Peter Rae
Quarterly volume growth of 57 per cent to $775 million and said it was confident in carrying this volume momentum into FY22.
Based on unaudited accounts, this should see a cash profit of $68.4m, up 121 per cent on FY20.
“Hummgroup’s sustainable profit is a key differentiator against many of our competitors, and importantly will be the fuel to fund the Company’s growth strategy,†Ms James said.
The BNPL segment, comprising humm and bundll, had volumes of $304.9 million in the fourth quarter. This was up 68.7 per cent with continuing growth across humm in Australia, New Zealand and Ireland.
Shares in the $490 million company closed at 98 cents on Friday.
Humm also announced that Adrian Fisk would be joining as Chief Financial Officer from data technology firm Willow.
Mr Fisk will replace current CFO Jason Murray, who will remain with the Company until September 2021 to assist with a smooth transition.
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