Happy Friday all.
Hope you've enjoyed today's updates from the business team.
Have a lovely and relaxing weekend.
Happy Friday all.
Hope you've enjoyed today's updates from the business team.
Have a lovely and relaxing weekend.
Prices current around 4.24pm AEST.
Live updates on the major ASX indices:
ABC Embed
https://www.abc.net.au/news/business/embed/quote-list?abcnewsembedheight=1000
Australian shares closed higher on Friday.
The S&P/ASX200 closed up 0.3 per cent or 26.6 points to 7796 points for its second session of gains over a week.
On Wall Street, the S&P 500 fell 0.3 per cent to 5473.17.
Overnight on Thursday, the Bank of England and Norway's central bank held interest rates steady. In contrast, the Swiss National Bank cut its key rate by 25 basis points.
On Wednesday the May CPI Indicator will be released.
NAB economists are predicting it will come in at 3.6 per cent year on year, unchanged from April.
"Slower food and takeaway inflation help the underlying measure, while smaller falls in fuel prices than a year ago supports headline and travel adds volatility," NAB said in a report.
It said the RBA had "the luxury of waiting" for the full Q2 CPI on July 31 before their next meeting in August.
"Watch for speeches in between that may give a hint to the RBA's interpretation of the May indicator, with Deputy Governor Hauser speaking on June 27," the report saod.
"The RBA's comfort tolerating the upside risk inherent in their chosen policy approach is frayed.
"Our base case remains that slow growth will give them enough confidence in the outlook for further progress on inflation to stay on hold, but near-term risk sits with a hike."
NAB has penciled in a first rate cut in November, but says "an absence of genuine progress across the domestically sensitive prices this quarter would further skew the risk to on hold for longer".
Cash Converters is winding down its Green Light Auto finance business, the group told investors on Friday, which sent it share price tumbling.
"Capital currently utilised in the auto finance segment can be more effectively deployed to support executing other opportunities," the group said in a statement to the ASX.
"Specifically, Cash Converters wants to focus on expanding its footprint through franchise stores and accelerate growth of its personal finance products."
In 2013, Cash Converters bought an 80 per cent stake in Green Light Auto finance, then trading as Carboodle, after converting its $4 million loan into equity.
It bought the remaining 20 per cent in 2014 for $450,000.
While the group considered a market sale of the auto finance portfolio, it said in a statement that the company decided that "a better result" could be achieved by "running down the book using its in-house collections team and advanced technology".
"This strategic shift allows us to concentrate on areas where we see strategic advantage and the greatest potential for growth and profitability against our business segments," managing director Sam Budiselik said.
The company's share price was trading 2.5 per cent lower on Friday afternoon at 20 cents.
Plus-sized women's clothing retailer City Chic is tapping institutional and retail investors for $23 million at just 15 cents per share – a 50 per cent discount to its last traded price.
The company, which entered a trading halt on Tuesday, made the announcement to the ASX on Friday.
The news comes as the company offloads its Avenue arm to US-based FullBeauty for $18 million, allowing City Chic to focus on the core customers in Australia, New Zealand and the United States, where it has grown to over 500,000 customers since 2019.
About 153.3 million new shares will be issued under the equity raising, representing 64.1 per cent of City Chic's current shares on issue.
New shares under the equity raising will be priced at $0.15 per share, representing a 50 per cent discount to its last close of 30 cents.
"We have aligned our cost base to the current economic environment and with our revised debt arrangements, equity raising and return to more normalised inventory patterns," chief executive Phil Ryan said.
"I am confident we have the right platform in place to return to profitable and sustainable trading."
Forecast group sales for FY24 were down 30 per cent to $187 million compared to FY23.
But City Chic said it was experiencing positive trends in its average selling price supported by its new seasonal product and marketing initiatives, resulting in overall Q4 gross margins rising 15 per cent compared to the prior corresponding period.
Following on from data I've covered earlier (see blog post below) about the number and value of residential property purchases by foreign buyers, the Foreign Investment Review Board (FIRB) has also released updated data on which countries these buyers originate from.
China was once again the largest source for approved residential real estate investment proposals by number and value ($0.8 billion) in the last three months of 2023.
This is followed by Hong Kong ($0.1 billion), India ($0.1 billion), Vietnam, ($0.1 billion), and Taiwan ($0.1 billion), according to the FIRB report on investment applications.
There's a bidding war underway in the cotton industry.
The setting is northern NSW, where ASX-listed Namoi Cotton has been ginning cotton since the 1960s.
Since that first gin at Wee Waa, Namoi's footprint has expanded to 10 gins across nine sites across NSW and QLD, as well as a stake in a gin located in the Gwydir Valley, and a stake in a gin in WA's Kimberley.
Two companies, Louis Dreyfus (LDC) (which already owns around 17pc of Namoi) and Olam have takeover bids on the table for Namoi cotton. There aren't a huge number of large players in the Australian cotton industry, so any takeover activity is bound to catch the attention of the competition regulator, the ACCC.
Olam's $0.70 cent a share offer is higher than the bid from LDC (0.67c/share).
But the ACCC is concerned about how that would impact the competitive landscape in Namoi's heartland, saying in a statement of issues:
The ACCC is concerned about a loss in competition for the supply of ginning services in the Namoi Valley region, and particularly the Lower Namoi Valley region, as Olam would operate four of the five gins in this region post-acquisition.
The ACCC is also concerned about a loss of competition for the supply of cotton lint marketing via an increased risk of coordination in circumstances where, post acquisition, Olam and LDC would both have a shareholding in Namoi (given that LDC holds a ~18.02% per cent interest in Namoi already).
The ACCC is concerned that the proposed acquisition may also result in Olam having the ability to foreclose third-party access to warehousing services for the export of cotton at the ports of Brisbane and Sydney.
Foreign buyers made 5,360 residential real estate purchases in Australia over the past financial year, spending $4.9 billion, according to new data from the ATO.
Their average price was $914,000, according to the register of foreign ownership of residential land.
Of the 5,360 purchase transactions in 2022–23, 164 registrants became a permanent resident or gained Australian citizenship during the year and are included in these statistics.
The count of transactions purchased by foreign buyers has increased to 5,360 in 2022-23 from 4,228 in 2021-22 and 5,310 in 2020-21.
The value of transactions purchased has lifted to $4.9 billion in 2022-23, up from $3.9 billion in 2021-22 and $4.2 billion in 2020-21.
Residential properties with values under $1 million dollars formed the majority of residential property purchase transactions. They accounted for 78.2 per cent of property transactions in 2022-23. This is an increase compared to 75.4 per cent in 2021-22.
The top states for foreign buyers were Victoria (Melbourne), Queensland (Brisbane and the Gold Coast), New South Wales (Sydney), and South Australia (Adelaide).
"The 27 per cent increase in buying last year shows that overseas buyers were bouncing back after the travel slowdown during the pandemic," according to Juwai IQI co-founder and group managing director Daniel Ho.
"The number of offshore buyers in New South Wales was flat, and actually decreased by 1 per cent from 664 to 656.
"Meanwhile, the number of buyers in Queensland and Victoria jumped. The number of buyers in Queensland climbed 17 per cent, while the number of buyers in Victoria jumped 32 per cent, by about a third."
"This is the second consecutive year that more foreign buyers purchased in Queensland than in New South Wales."
While Queensland attracted more buyers over all, New South Wales attracted more millionaire buyers.
"Foreign buyers purchased 284 homes in New South Wales during the year that were worth at least $1 million, compared to only 200 in Queensland," he said.
"Victoria got by far the most millionaire buyers, with 569 foreign buyer transactions worth over $1 million each."
If a buyer does not have Australian permanent residency or citizenship at the time of purchase they pay under 10 per cent of the purchase price on stamp duty and tens of thousands of dollars on foreign buyer application fees.
The increase in foreign buyers comes after a fall during the pandemic, which I wrote about in this feature:
My ABC News colleague David Taylor writes:
On the first day of trading yesterday the Guzman y Gomez (GYG) stock jumped 36 per cent from $22-$30.
Veteran share market commentator Marcus Padley’s following the stock and he’s not sold on what he describes as a “love in”.
“Everybody is talking about what a fantastic stock it is and how they are going to grow from 185 to 1000 outlets but let me explain why it’s gone up so much after the float,” he noted.
“It’s a tiny float ($335 million) of a now much larger company ($3.3 billion) and the stock has gone to a small number of institutions and it is in their interest for the share price to go up not get smashed.
“Plus some of the major shareholders (TDM Growth Partners with 26.2%) have escrowed themselves (they are not allowed to sell) until the results are announced in 2025 (just over a year).
“With such a small float so tightly held any institution that’s got half a brain does not jump in on day one and smash the stock, instead they know that their best interests are met by buying (not selling) in a tight market and in so doing achieving extraordinary gains with relatively little buying.
“That’s the game.
“Everybody wants it up and no institution gifted an allocation in a tight IPO, wants or needs to smash up the price or they’ll never get offered anything ever again by the issuing brokers Morgan Stanley and Barrenjoey (who own 9.6%) or any other broker that those brokers talk to,” Marcus Padley said.
“So it’s a love in.”
How about that? Who’d of thought everyone agreeing to get rich and stay that way would work?
The current valuation puts GYG on a PE of 500x this year’s prospectus earnings forecasts of 6 cents per share, and on 145x next year’s forecast of 21 cents per share.
“You can talk about the plans to expand to 1000 outlets and you could price in some of that potential growth, but it’s only going to happen if the Mexican wave continues, and if it doesn’t the current share price is valuing each outlet at $17.8 million.”
“Anyone who runs a franchised fast food joint will tell you, that’s ridiculous.
“So you are paying a lot for a future that is uncertain.”
“If they had 1000 outlets in Australia that’s one outlet per 25,000 people.”
“That means there would be 203 GYG outlets in Melbourne, 212 in Sydney, 52 in Adelaide.
“Need I go on.
“You get the idea.
“It’s a liquidity squeeze not an undervalued stock. I’m not going to buy it,” Padley wrote.