The Trader Central

Reserve Bank of Australia Cuts Interest Rates

thetradercentral — Tue, 01 Nov 2011 06:33:08 +0000

Amid concerns over the global economy the RBA announced today that it had cut the benchmark interest rate by one quarter of a percentage point to 4.50%. The reduction in benchmark is the first time in over two years as the Australian economy managed to avoid the global recession. “With overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2-3% inflation over time,” Glenn Stevens, Governor of the Reserve Bank of Australia said in a statement.

Australian Prime Minister Julia Gillard supported the move as some Australian families continue to struggle with the increasing cost of living; “Despite our strong economic fundamentals, and they are strong, parts of the community are doing it very tough, are finding it very hard to make the family accounts add up, to get the bills paid.” Said Prime Minister Gillard. Gillard also claimed the banks had ‘no excuse’ not to pass on the reduction in interest rates as they have been guilty of in the past, Westpac happily obliged and announced the bank would pass on the cut. If passed on in full to consumers, that would cut the monthly mortgage payment by $50 on an average $300,000 loan over 25 years.

Qantas Shares Rise

thetradercentral — Mon, 31 Oct 2011 05:02:40 +0000

Qantas shares defied all odds this morning when they opened higher despite the on-going dispute with workers unions. Saturday morning Qantas CEO Alan Joyce took the drastic measure of grounding all Qantas flights as negotiations continued to stall. Over the last year the parties in question have met over 200 times and have still been unable to come to an agreement. Earlier today Fairwork Australia terminated action between Qantas and the unions giving the parties 3 weeks to come to an agreement with no industrial action taking place during the negotiations.

The Gillard government has come under-fire after it was revealed Qantas had warned the government it would have to ground flights if the dispute with unions was not resolved. ‘We wanted to end all industrial action because we were very concerned about the circumstances that had left Australians stranded,’my expectation now that industrial action has ceased is that they will get around a table and get this sorted,’ she said.

Despite the disruptions Alan Joyce remained confident Qantas would retain its market share; “I have every confidence that we will recover back to 65 per cent market share domestically,” Mr Joyce told reporters. “We will recover back to our international market share and, importantly, we’ll recover our market share of the corporate market.”

Macquarie Cut Earnings Forecast

thetradercentral — Wed, 07 Sep 2011 13:42:24 +0000

Australia’s largest investment bank, Macquarie Bank announced the company expects H1 profit to be down year-on-year. Macquarie has seen earnings in fixed income, currencies and commodities divisions signficantly decrease due to adverse market conditions. Despite the disappointing forecast, Macquarie expects profit to increase marginally for FY12.

Nomura Holdings Inc analyst, Victor German remained caution on Macquarie, but still maintains a “buy” rating on the company; “Unless they really go hard after the cost base, which diminishes their ability to recover when things do pick up, they’re really in the hands of the markets, said German.

Macquarie Group reported a 9% decrease in FY11 profit to $956 million, but a 15% higher operating income of 7.6 billion.

Determinants Of Interest Rates

thetradercentral — Mon, 05 Sep 2011 11:39:58 +0000

We spend most of our lives not being able to go a day without hearing about “interest rates”. We all know what interest rates are. but how are interest rates determined? Why is it that we pay as much as 20% interest rate for a credit card yet under 10% for a home loan? A look into the determinants of interest rates explains how rates are derived:

Real Risk-free Rate: Refers to the interest rate on a “risk-free” security where there is inflationary concerns.

Inflation Premium: The premium added to an interest rate to cover the cost of any inflationary concerns that may affect purchasing power.

Default Risk Premium: Refers to the premium added to an interest rate relative to the likelihood that the financial obligation will not be fulfilled.

Maturity Risk Premium: An opportunity cost arises over the lifetime of loaned funds, thus a maturity risk premium is added to compensate for opportunity costs.

The above factors are utilised in order to derive interest rates, next time you are wondering “Why on earth does X have such a high interest rate?” Remember the company loaning the funds must cover itself from Inflation, Defaults, and opportunity costs.

Incoming search terms:

determinants of interest rates
determinants of interest rate
determinant of interest rate
interest rate determinants
determinant of interest rates
interest rates determinants
determination of interest rates
what are the determinants of interest rates
determinants of interest rates in finance
interest rate determinant
What are the determinants of interest rate
determinants of interest
major determinants of interest rates
Determinants of rate of interest
the major determinants of interest rates

BOW Energy Takeover

thetradercentral — Mon, 22 Aug 2011 15:35:31 +0000

Queensland Coal Seam Gas explorer, Bow energy has become the latest mid-cap gas company to be subject of a takeover offer. Arrow Energy (Owned by Royal Dutch Shell and Petrochina) have offered Bow shareholders $1.48 per share, valuing the company at $540 million. The acquisition of BOW will underpin reserves for Arrow’s planned LNG project in Queensland. The move comes after Santos launched a $730 million takeover of New South Wales coal seam gas explorer Eastern Star Gas last month. Unlike Eastern Star who received an offer that valued the company’s reserves at $0.50 per Gigajoule of 3P, Arrow’s offer uses a valuation of $0.15 per Gigajoule of 3P, some analysts believe the offer is still well below fair value; ” It does significantly undervalue the stock compared with where we think it should be”, said Andrew Williams from RBC Capital Markets.

BOW reserves currently stand at:

Source: http://www.bowenergy.com.au/

The Coal Seam Gas sector has grown into a multi-billion dollar industry over the last decade, the sector has undergone considerable consolidation with a number of large acquisitions taking place. From 2014 onwards, Gladstone QLD will be home to numerous Coal seam gas- Liquefied Natural Gas projects.

Incoming search terms:

bow energy
bow takeover
arrow energy takeover
arrow energy bow energy
bow energy take over
bow enerji
bow energy takeover ato
csg industry takeover valuations per gj
royal dutch shell & petrochina takeover BOW
SANTOS ENERGY TAKEOVERS
take over by arrow energy
takeover arrow energy ltd
bow energyqld
bow energy undervalued
bow energy takeover proceeds royal dutch shell

Newcrest Record Impressive Profit

thetradercentral — Mon, 15 Aug 2011 15:49:18 +0000

Australia’s largest Gold miner, Newscrest Mining yesterday delivered a full year profit of $903 million, which is a 63% increase from the corresponding period last year. Newcrest said the successful $10 billion acquisition and integration of Lihir Gold and rising gold prices were key determinants behind the result. Newcrest CEO, Greg Robinson believes the bullish outlook on gold will continue; The world economic and political issues are supporting a very strong gold price … in the medium term”, he said.

Newcrest plan to ramp up production 2.925 Moz this financial year, for the period 2010-11 the company produced 2.527 Moz. In line with growth strategies, Newcrest will spend an estimated $9 billion on project development by 2015-2016.

Newcrest declared a final unfranked dividend of 20 cents per share and a special unfranked dividend of 20 cents per share.

JB Hi-Fi’s Net Profit Falls

thetradercentral — Mon, 08 Aug 2011 16:12:01 +0000

Electronics retailer JB HI-Fi has reported a loss in Net profit for the 12 months to June 30, 2011. JB saw profit fall almost $9 million to $109.7 million due to poor retailing conditions and increasing migration by consumers to online shopping. Despite the fall in profit, revenue was 8.5% stronger than the corresponding period last year, totalling $2.6 billion. JB Hi-Fi’s result is impressive given the poor performance of the retail sector, Myer and David Jones have seen their revenue plummet under “difficult” trading conditions. “We are pleased with our results in what was a challenging period for retail,” said JB-Hi Fi Chief Executive Officer Terry Smart.

JB plans to further growth by opening 16 new stores across Australia in 2012. JB expects 2011/2012 sales to grow by 8% to 3.2 billion.”When combined with the opening of 16 stores, the maturing of recently opened stores and our continued online focus, we are well positioned to maximise growth through the next 12 months,” said Smart. In a move to reduce risk associated with the growth of online retailers and increasing labour costs, JB will heavily invest in online features for its business. JB will launch an online music subscription service which will initially serve as many as 8 million tracks from 100,00 artists, “It’s hard to predict what will happen in this environment,this (the subscription music service) will enable us to engage with customers however they choose to consume music,” said Smart.

JB Hi-Fi declared a fully franked final dividend of 29c per share.

Incoming search terms:

JB Hi Fi performance
jb hi fi financial performance
financial analysis of jb hi fi
JB HIFI profit and loss analysis
JB HI-FI financial risk
JB Hi-Fi’s profit performance in 2012
jb hifi financial position
jb hifi net progit 2012
2011 and 2012 net sales of jbhifi
JB HIFI performance
jb hifi report 2012
jbhifi perfromance
report on jb hi performance
jb hi net
jb hi fi Reporting capabilities

Rio Tinto First-Half Profit

thetradercentral — Thu, 04 Aug 2011 18:01:14 +0000

Mining giant Rio Tinto has posted strong first half results recording a $US 7.8 billion profit, Rio have issued an interim dividend of 49.81 c . The result is a 35% improvement on the corresponding period last year. While many applauded Rio’s first half performance, some analysts were disappointed; “a mild disappointment, missing consensus” noted Liberum Capital Ltd.Rio announced the company would increase its share buyback from $US5 billion to $US7 billionn to make up for a shortfall in planned capital expenditure, the buyback is expected to be completed in the first quarter of 2012. “The most pleasing aspect was a commitment to increase the buyback to $US7bn and (for that) to be complete by the first quarter of 2012,” said Credit Suisse analyst Paul McTaggart.

While resource prices increased, in particular iron ore, increased production and inflation costs jumped out to $US 1.3 billion. “We are facing, I think, a series of higher-than-inflation sector pressures in the mining sector that are following apace with the high commodity prices,” said Rio CEO Tom Albanese.

Rio have come along way from 2008 when the company was crippled by debt and facing the prospect of a takeover from rival BHP Billiton. “Rio Tinto is a much-changed company from two years ago, not only is the balance sheet in a far better condition, but management is able, for the first time in two years, to focus on the business rather than worry about hostile takeovers and a perilous financial position,” said RBC Capital Markets analyst Des Kilalea.

Earnings Breakdown By Resource:

Iron ore: $US 5.9 billion

Copper: $US 1.23 billion

Aluminium: $US 379 million

Energy: $US 375 million

Diamonds and Minerals: $US 98 million

Myer & David Jones Turn To Online Shopping

thetradercentral — Wed, 03 Aug 2011 17:00:56 +0000

After continuous poor retail sales and a resilient Australian dollar, retail giant Myer has set plans to grown their online business to stay competitive under poor trading conditions. Under Myer’s new initiative, customers will receive free shipping on products they order online. Currently, online sales make up a small portion of Myer’s income, “We do about $5 million a year online.The plan is to increase that closer to $50 million a year very quickly”, said Myer CEO Bernie Brookes. Myer will sell up to 4,000 products free of shipping charges, including the latest in new summer fashion for him and her, youth fashion, homewares and electrical. By re-structuring their business towards online shopping, Myer will significantly reduce the costs of labour, transportation, storage and overheads.

The retail sector has significantly declined over the last few months causing panic for retail investors. Last month David Jones announced the company could suffer a profit down-grade of up to 20%, “The dramatic and rapid deterioration in trading conditions in 4QFY2011 has been unprecedented” said David Jones CEO Paul Zahra. While David Jones have also directed their attention to improving their online functionality, the company believes 24 hour shopping may also boost sales, “It’s something we have looked at and if the customers start demanding it, it’s certainly something we can provide them”, said Zara.

While Myer and David Jones may believe they will be able to successfully turn around their respective businesses, the reality is both companies’ mark-ups on products is still too high to compete with online niche retailers. The economy is likely to be hit hard by retail re-structuring, large retailers hire thousands of employees, a large percent of which may find themselves without jobs as retailers continue to move their businesses online. Retail analyst Brian Walker believes smaller retailers will have to follow Myer and David Jones moves to stay competitive, “This does make it challenging for smaller retailers, but ultimately they will have to follow if they are going to compete”, he said.

Incoming search terms:

myer online shopping
myer online ordering
david jones online shopping
myer online
online shopping david jones
myer competitors
david jones competitors
myers online shopping
myer online store
myer turn to online stores
myers competitors
myers markups on products
online dvid jones for hire
online retail competition of david jones
online shopping myer

Nintendo Stock Plummets

thetradercentral — Sun, 31 Jul 2011 10:22:03 +0000

Japanese gaming giant Nintendo has seen its’ stock price tumble after announcing drastic price cuts for the Nintendo 3DS. The 3DS has only been on market for 5 months but has failed to meet sales predictions. In the first quarter Nintendo moved 3.61 million 3DS units, however sales significantly declined last quarter with a total of 710,000 units being sold. As of August 11, the 3DS will be priced at 15,000 yen in Japan, a significant discount from the original price of 25,000 yen. In the US, the price of the 3DS will drop from $249.99 to $169.99, we asked an avid gamer if he believed sales would significantly boost from the price cut, “Well, I think Nintendo simply got it wrong with the 3DS. The 3DS is good in concept but I think gamers are more interested in game-play and online features rather than a 3D experience”, he said.

Analyst Hiroshi Kamide of JP Morgan moved quickly to downgrade Nintendo to underweight.”The launch of the new 3DS has stalled and the hardware price cut so early into release is an unprecedented act, highlighting that management’s confidence in their contents is not enough to push through into Christmas 2011″, he said. For the Period April to June, Nintendo recorded a loss Y25.5 billion.

Earlier this year, Nintendo showcased their new Wii U console which is set to be released around may next year. The Wii U is expected to be priced fairly high as inputs for the revolutionary controller are expensive. Nintendo can’t afford to get the pricing of the Wii U incorrect and risk a 3DS like situation occurring again. So far analysts have been reserved in their predictions for the Wii U, one thing is for sure if the Wii U does not win over core gamers it will fail.