Trading Day: ASX positive, Packer moves on Crown, Lendlease CEO to exit

Stocks positive as US futures rise. Zip Co jumps but Crown slips as Packer directors quit. Exxon’s Altona closure disappoints.

David Rogers and Elise Shaw

50 min read

7:54PMFebruary 10, 2021

Global markets took a breather overnight. Picture: AAP

CIMIC back in the black
Iron ore rise lifts MinRes profit
Packer nominees quit Crown board
UK to reconsider Australian-owned coal mine

That’s all from the Trading Day blog for Wednesday, February 10. The S&P/ASX 200 closed up 0.5pc at 6856.9 points - its second-highest close in 11 months. On Wall Street, the Dow ended flat, the S&P 500 lost 0.1 per cent and the Nasdaq rose 1 per cent. Locally, the Commonwealth Bank lifted its dividend, while results were also announced by IAG, CIMIC and NBN. NSW gaming regulators have spoken after the damning Crown casino inquiry report.

Perry Willams 7.50pm: Altona ‘latest blow to the nation’s refinery industry’

Australia could be left with only one operating refinery unless the Morrison government is prepared to boost its industry rescue package after ExxonMobil’s decision to shut down its Altona facility in Melbourne sparked fears of a bigger rout in manufacturing jobs.

Exxon confirmed that Altona would close after nearly 75 years of operation, with up to 300 jobs in peril — the latest blow to the nation’s refinery industry and a decision that has sparked fears Ampol may also shutter its Lytton plant in Brisbane given tough industry conditions.

The government’s fuel subsidy offer may need to be expanded or Lytton may suffer the same fate, MST Marquee analyst Mark Samter said, given the package was not enough for Exxon to keep Altona alive.

“One can only logically assume that, given they rejected the short-term support from the government, what was on the table for the initial support was grossly insufficient to justify them keeping it open,” Mr Samter told The Australian. “In my mind either the government changes its level of support materially, or Lytton is going too.”

Energy Minister Angus Taylor said it was “extremely disappointing” Exxon had made its decision after the government had created a $2bn subsidy package designed to ensure the nation’s three remaining refineries stayed open.

It follows a decision by British energy giant BP in October to close its Kwinana refinery in Western Australia, putting 600 workers out of a job. Viva Energy announced plans in December to take up the interim subsidy to help safeguard the short-term future of its Geelong refinery in Victoria.

Robyn Ironside 7.22pm: CASA warns on wasps

A workaholic wasp is the subject of an update civil aviation safety alert, after evidence the insect poses a greater threat to aircraft than previously thought.

A Civil Aviation Safety Authority airworthiness bulletin about wasp nest infestation has revealed the insects can build a nest capable of blocking a Pitot tube within just 20-minutes.

A previous report suggested it took about two hours for the wasps to plug the narrow tubes with mud.

Pitot tubes are critical components on aircraft, because they measure a range of data including airspeed, altitude and altitude trend.

According to the CASA bulletin, Pitot tubes or static ports that are blocked or even partially blocked in flight “can cause total loss of airspeed or altitude indication”.

“This is classified as hazardous. Misleading and/or malfunction without warning can be catastrophic,” said the bulletin.

7.08pm: Analysts downgrade Crown Resorts

Crown Resorts has been hit with downgrades by analysts following a NSW inquiry finding it is unsuitable to operate its flagship Sydney casino, raising questions of heightened regulatory action by other state governments.

Last November Fitch Ratings placed Crown’s BBB long-term issuer default rating on negative watch as revelations of the inquiry regarding money-laundering and Crown’s links to organised crime made it likely regulators in Victoria and WA would be forced to place the company under further scrutiny.

Fitch primary rating analyst Kelly Amato told The Australian further action now looked certain.

“I think there will be more to come out of this in both of those jurisdictions,” she said.

“We already saw last year on the back of this inquiry was that Victoria brought forward their review of Crown by a couple of years and issued a show-cause notice.”

“The Western Australian regulator has said it will wait for the release of this report and given the nature of the report we think is likely it will create more scrutiny over Crown.”

6.17pm: CEO Comyn says CBA ‘building tomorrow’s bank for today’

Commonwealth Bank’s chief executive, Matt Comyn, said the bank’s strong financial performance amid the current economic environment means it is uniquely placed to respond to the rapidly changing operating context while continuing to support its customers.

“We have refreshed our strategic priorities to build on our strong foundations and position us for the future. This is an evolutionary change to enable the bank to focus on the new challenges and opportunities ahead. We have set an ambitious agenda and are committed to building tomorrow’s bank today for our customers,” Mr Comyn said.

Looking ahead, Mr Comyn said the bank was committed to supporting its customers and helping the economy recover.

“Australia is relatively well positioned having started from a position of fiscal and economic strength. We have a solid pipeline of infrastructure projects, the outlook for mining and agriculture exports is strong, and the community has benefitted from the government’s significant income support measures,” he said.

While the outlook was positive, Mr Comyn sounded a note of caution, stating the coming months may present economic challenges as the government’s stimulus measures start to roll off.

“We continue to monitor our lending portfolios closely for any signs of stress. The low interest environment will continue to put pressure on our revenue which is why we remain focused on performance, operational execution and capital allocation.”

James Kirby 6.10pm: Share trading fires up at CommSec

A sharp slide in the number of Australians active in the sharemarket has been reversed thanks to a legion of new investors rushing in for bargains during the depths of the crisis last March.

These new investors are younger, more likely to be using an app as opposed to full service brokers and they favour Exchange Traded Funds over individual shares.

Commonwealth Bank’s results this week carried the latest numbers for CommSec, the online broker.

In the most recent half year, CommSec managed a stunning 100 per cent increase in trading volumes compared to a year earlier.

CommSec also pulled in 230,000 new accounts in the period of which the majority were trading through an app - the number is extraordinary when put against an estimated total shareholder population in Australia of perhaps 6 million.

The CommSec spike in activity is probably the best evidence to date that younger tech savvy investors are rejuvenating the wider sharemarket.

Jared Lynch 5.32pm: Crown has ‘intensifying regulatory risks’

Ratings agency S&P Global has placed Crown Resorts on CreditWatch Negative, citing intensifying regulatory risks for the gaming giant.

“We consider that the NSW Casino Inquiry’s recommendations to the NSW gaming regulator that Crown Resorts Ltd. and its licensee, Crown Sydney Gaming, are unsuitable to hold a gaming license, heighten the risk of permanent license loss for Crown Sydney and its operations,” the ratings agency said.

“Further, we believe the recommendations present additional risks for the upcoming regulatory reviews of Crown’s established gaming facilities in Melbourne and Perth, which underpin the group’s cash flows and credit quality.”

Despite S&P analysts saying Crown has a “pathway to suitability as a gaming licence holder”, regulatory risks remained.

“We expect Crown to work closely with the NSW gaming regulator in the coming months to implement the necessary changes and prove itself as a suitable license holder. Nonetheless, material risks remain in this process, including potential fines and sanctions from this and other related investigations currently underway.”

S&P has placed its ‘BBB’ long-term issuer credit rating and ‘A-2’ short-term issuer credit rating on Crown, as well as its ‘BBB’ issue credit ratings on Crown’s debt.

Ben Wilmot 5.16pm: Mirvac unveils city tower at Circular Quay

Mirvac Group has appointed SHoP Architects and Woods Bagot as design partners on its proposed landmark tower near Sydney’s Circular Quay.

The developer will build the soaring tower at 55 Pitt Street and tapped the architect after their striking entry won a hotly contested international design excellence competition.

Mirvac chief investment officer Brett Draffen said the design from SHoP Architects and Woods Bagot was chosen because it responded creatively to Mirvac’s brief and vision for the project.

Artist impression of Mirvac's 55 Pitt Street tower

“55 Pitt Street is an exciting opportunity to create a sustainable and future focused premium grade workplace that respects and celebrates its place within the context of the Sydney CBD,” he said.

With frontages to Pitt, Underwood and Dalley Streets, 55 Pitt Street has the potential to deliver about 60,000sq m of premium office and retail space.

Mirvac reports its first half results on Friday.

4.33pm: ASX ends +0.5% as US futures rise

Australia’s sharemarket rose alongside US futures despite some profit taking on some stocks that reported.

The S&P/ASX 200 closed up 0.5pc at 6856.9 points - its second-highest close in 11 months - after light and choppy trading in a range of 6829-6869.2.

S&P 500 futures rose 0.4pc suggesting Wall Street will hit fresh record highs later Wednesday. China and much of Asia starts Lunar New Year holidays on Thursday.

The Tech, Utilities, Real Estate, Staples, Communications and Health Care sectors outperformed, while Industrials, Energy and Financials lagged.

Zip Co surged 12pc amid hopes that its US roadshow this week will lead to a US listing and Megaport rose almost 8pc after its report, following a 25pc fall since August.

Afterpay rose 4.2pc and hit a fresh record high of $159.50 as the recent IPO of Affirm in the US continues to draw interest to the BNPL sector.

Other drivers included a 1pc rise in BHP amid commodity price gains, a 3pc rise in Macquarie after Tuesday’s strong operational briefing and a 4.6pc jump in IAG after its results.

CIMIC dived 17pc after disappointing earnings and guidance and Crown lost 3.4pc after a damning report from the NSW gaming regulator.

3.55pm: Crown says CPH no longer represented on board

Crown Resorts says it has been informed by non-executive director John Poynton that his consultancy arrangement with Consolidated Press Holdings Pty Limited (CPH) has been terminated and, as a result, he is no longer a nominee of CPH on the Crown Board.

Following the resignation of Guy Jalland and Michael Johnston as directors of Crown earlier today and the termination of the consultancy arrangement between CPH and John Poynton, CPH is no longer separately represented on the Crown Board.

Ben Wilmot 3.45pm: ALE Property pubs deliver through crisis

Pubs may have been shut due to the coronavirus pandemic but the ALE Property Group, owner of Australia’s largest portfolio of freehold pub properties, has unveiled a jump in profit to $68.1m in the first half.

The landlord said its pub portfolio was highly resilient during COVID-19 with all pub rent paid when due despite lockdowns hitting Melbourne and hotels in some other capitals being restricted.

The portfolio was highly resilient during the pandemic with all pub rent was paid when due. All pubs owned by ALE are open, albeit with state-based restrictions, with famed watering holes including Brisbane’s Breakfast Creek Hotel, Melbourne’s Young & Jackson, and the Crows Nest Hotel in Sydney affected.

The pubs are run by ALH, Australia’s largest pub operator, which has been merged with the Woolworths-controlled Endeavour Drinks, forming the country’s largest drinks and hospitality business

The landlord is mired in a rent dispute with ALH, which is controlled by billionaire Bruce Mathieson and supermarket giant Woolworths, but lifted its distributable profit by 14.8 per cent to $17.9m.

ALE considers that rent determinations issued for 19 Victorian pubs were not made in accordance with their leases and took action in the Victorian Supreme Court.

In a sign of the value inherent in its pokies-heavy pubs, the company said its portfolio was assessed by valuers as 33 per cent under-rented, meaning it could be in for a big uplift in 2028 when rents are reviewed against the market.

ALE gave guidance of a 3 per cent lift in full year distribution guidance to 21.5c per unit and expects that distributions after this year will increased by at least the rate of inflation.

The trust’s property valuations were up by 4.4 per cent as its portfolio hit $1.22bn. But it dug slightly into its cash reserves to pay a first half distribution of 10.75c per unit despite the distributable profit, that excludes non-cash items, being 9.07c per unit.

Profit was up due to the 2.2 per cent increase in rental income due to CPI increases, the outcome of the rental determination and lower interest expenses. The trust did not receive any government COVID-19 relief payments as income kept rolling in from its 86 pubs.

The separation of Endeavour Drinks and Woolworths was deferred to this year in view of the impact of COVID-19 and trust expects that if a demerger happens then Endeavour Drinks will target an investment grade rating capital structure.

ALE units added 7c to $4.73.

Bridget Carter 3.32pm: Logos taps Moelis on Milestone Logistics

Logos Property Group is understood to have hired Moelis as part of its efforts to buy Blackstone’s $3 billion-odd industrial property company Milestone Logistics Group.

It comes as the New York buyout fund runs a dual track process for the portfolio, with Morgan Stanley and JPMorgan working on plans for an initial public offering, slated to be between $1.2bn and $1.5bn.

Blackstone plans to retain about 45 per cent of the business that owns a portfolio of 45 Australian assets worth about $3.5bn.

At the same time, JLL and Eastdil Secured are testing appetite of portfolio buyers in a trade sale process that will see bids land some time at the end of March or early April.

The management roadshow for a potential float is expected to get underway after reporting season.

This follows on from initial meetings with equity investors to test interest.

Logos, which is yet to finalise a deal to buy an interest in Qube’s $3bn-odd Moorebank Logistics Park, is believed to be vying for the business along with a long list of other contenders.

One source said that initially, there were 54 parties in the data room for the Milestone Logistics Group at a time that warehouses remain in strong demand due to pandemic-fuelled online shopping and investors chase high yielding opportunities amid a low interest rate environment.

One of the other names that has emerged as an interested buyer is the Warburg Pincus-backed Asian investor ESR, based in Hong Kong.

Major Australian listed commercial property investors such as The GPT Group, Dexus Property Group, Charter Hall, Centuria, Mirvac Group, Stockland and potentially Goodman Group are also expected to be likely contenders along with major local and global pension and sovereign wealth funds.

A challenge for international buyers could be opposition from the Foreign Investment Review Board, although some believe such a risk is low.

While many in the market believe that a float is the most likely exit option for Blackstone, which is keen to retain some exposure to the portfolio and will likely pay down debt, others believe that trade buyers will deliver knock out prices.

This is at a time of surging demand for industrial real estate and analysts believe that Blackstone offload the portfolio for about $4bn on an enterprise value basis, making it out of reach for equity investors.

The equity value for the business should it list is expected to be between $2.7bn and $3.5bn.

Run by former AMP Capital real estate head Chris Judd and chaired by former Australian Morgan Stanley boss Steve Harker, Milestone Logistics has more than 90 tenants, including Woolworths, Lineage Logistics, Toll and WesTrac.

Centuria Industrial REIT trades on 17.5 times its net profit, but some say Milestone Logistics is a far superior portfolio

Lilly Vitorovich 3.29pm: Public snubs Nine tennis coverage

It’s gone from bad to worse for television broadcaster Nine Network as the public snubs its coverage of the delayed Australian Open.

The national average audience for the second night session, featuring women’s world number one Ash Barty, dropped more than 30 per cent to 625,000 from 919,000 last year.

Across the key five metropolitan cities, its audience was down nearly 31 per cent to 464,000 from 672,000.

Barty’s thrashing of Danka Kovinic in 44 minutes boasted a national and metro audience of 889,000 and 646,000, respectively.

However, audiences dropped off as Stefanos Tsitsipas took and Gilles Simon took the court. Nationally, 635,000 viewers watched Greece‘s Tsitsipas beat the Frenchmen comfortably in straight sets. The game was watched by 432,000 across the five major cities.

Last year’s Australian Open second night session kicked-off with Nick Kyrgios taking on Italy’s Lorenzo Sonego, which attracted a big national and metro audience of more than 1m and 736,00, respectively.

Nine said at the time that its audience was up 31.9 per cent on Kyrgios first round match of 2019, which was also the 7pm match on its main channel.

Nine‘s TV audience for the first night of the Australian Open, which was delayed by three weeks because of the coronavirus crisis, was down by nearly a quarter from last year.

The first night session was kicked off with tennis bad boy Kyrgios with a national audience of 653,000, down 24 per cent from 864,000 last year.

The poor start will be a worry for Nine executives after the tournament‘s delay hit its first-quarter TV program schedule, which is critical for free-to-air TV broadcasters as they compete against streaming players, including Netflix, Binge and Stan.

Perry Williams 3.14pm: Oil Search steps closer to LNG development

A slimmed down LNG expansion in Papua New Guinea involving Oil Search has moved a step closer after the Pacific nation’s political leaders agreed a fiscal framework that smooths a path for development.

A fiscal stability agreement for Papua LNG was signed between Total and venture partners ExxonMobil and Oil Search which could see capacity nearly doubled from the existing PNG LNG plant.

The PNG government had previously abandoned talks over the ExxonMobil-led P’nyang component which was to provide the third LNG train. It’s expected gas from P’nyang may now be used as backfill supply for the Papua project.

“Worth noting that a substantial amount of work remains to be undertaken on this project,” RBC noted in reference to Papua LNG. “Total needs to re-engage with PNG LNG operator ExxonMobil on the redesign of the 2 train PNG LNG expansion at PNG LNG to accommodate the Papua LNG project. Once this is complete, the Papua LNG project should progress to FEED, and then it has to make an application for a Project Development License after the successful completion of what is usually a multi-year FEED process.”

Oil Search has for several years been focused on pushing ahead with the expansion in order to meet an expected demand spike around 2024. However, that scenario has now changed due to the crude crash which had damaged demand and seen major LNG investment curtailed by many suppliers in the industry.

Perry Williams 2.41pm: CIMIC ‘in talks’ for Middle East business

Australia’s biggest construction company, CIMIC, has given zero value to its Middle East business but says it still remains in talks with potential acquirers interested in buying out its stake.

The Australian has revealed a string of major problems at its Qatar joint venture including more than $US1bn of unpaid debts, jail time for executives and an offer to its partner to sell the Qatar business for 36c.

Still, CIMIC said it would persist trying to sell its 45 per cent stake in the Dubai-based BIC Contracting joint venture.

“The confidential M&A process previously initiated in respect of the Group’s investment in BICC has continued in the period. Discussions are ongoing with potential acquirers for all or part of BICC,” CIMIC said in its annual report lodged on Wednesday. The BICC “investment has nil book value”.

CIMIC paid off $1.48bn in debts for its Middle East business in the 2020 financial year which is thought to have included outstanding loans with banks including HSBC and Standard Chartered.

It still owes $151m as of December 31, 2020.

CIMIC’s underlying net profit after tax plummeted 25 per cent to $601m for the 2020 financial year, well below an analyst consensus estimate of $658m.

Profit guidance for the 2021 financial year in the range of $400m-$430m is 30 per cent below market consensus based at the midpoint, Macquarie said, leading to a big sell-off during Wednesday trading.

CIMIC last off 17 per cent to $21.57 at 3pm AEDT.

2.41pm: ASX rises 0.7% to intraday high

Australia’s sharemarket continues to track a rise in US futures.

The S&P/ASX 200 index rose 0.7pc to an intraday high of 6869.2 in light and choppy trading.

That followed an intraday dip to 6828 as banks were hit by profit taking after recent gains.

Renewed strength came as S&P 500 futures rose 0.4pc, pointing to fresh record highs on Wall Street later Wednesday.

Chinese markets are pretty strong after reassuring money supply and credit data yesterday.

The S&P/ASX 200 was last up 0.6pc at 6863.2.

2.17pm: Short sell idea out tomorrow: JCap Research

J Capital Research warns via Twitter it will publish a bearish report on an Australian company tomorrow.

This is clearly aimed at building interest in the report to trigger a share price selloff.

That way their hedge fund clients will be able to profit on their pre-existing short positions.

Shorting has become more risky since the central banks and governments opened the monetary and fiscal floodgates last year.

That was certainly evident in recent months with the social media driven squeeze of hedge fund shorts in US companies like GameStop.

At this stage there are few signs in the share market of what the new short recommendation from JCap might be.

It tends to go for high-PE stocks with China exposure and questionable management.

Some possibilities suggested by traders include Technology One, Corporate Travel and Treasury Wine.

Bingo fell as much as 5.4pc this week after a short selling recommendation from SnowCap Research this week.

Perry Williams 1.57pm: Customers review options as Altona to close

Australia’s largest plastics producer Qenos, which relies on ExxonMobil’s Altona refinery for fuel supplies, said it is studying the implications of the energy major’s decision to shut the plant, describing the move as disappointing.

Exxon’s decision could lead to further job cuts among manufacturers that rely on the plant for fuel supplies, Credit Suisse said. Some 350 workers are employed at Altona but plastics producers including Qenos may also have issues from its closure even as it converts to an import facility.

“The announced closure of ExxonMobil’s Altona Refinery is very disappointing,” Qenos chief executive Stephen Bell said in a statement.

“It’s still very early days in terms of what the decision means more broadly to Qenos. We plan to work closely with ExxonMobil and government to understand the implications of this announcement and ensure continued access to feedstock and exchange of co-products.”

Qenos, owned by chemical giant ChemChina, relies on sourcing large supplies of competitively priced gas and ethane for its Altona plant and sources liquefied petroleum gas feedstock from the Exxon refinery in addition to ethane gas from the Bass Strait.

The producer has been pressuring the Morrison government to broker cheaper gas for big manufacturers on the east coast.

“Today’s announcement is not just about energy production. As manufacturers and unions have identified, this is also about jobs, the economy, and the future of energy intensive, value-adding manufacturing in this country,” Qenos said.

Ben Wilmot 1.23pm: MIRA’s Vitalharvest play deemed ‘fair’

The takeover play by Macquarie Infrastructure and Real Assets for the Vitalharvest Freehold Trust has been dubbed “fair and reasonable” by the independent expert and will go to a meeting on March 4.

The trust is run by Primewest, which holds a 19.9 per cent stake, and it has granted an option to MIRA over the bulk of this interest. It is supporting the deal, as is the independent board.

Vitalharvest owns a portfolio of berry and citrus farms in New South Wales, South Australia and Tasmania, which are leased to Costa Group.

Independent expert, Grant Thornton Corporate Finance, has concluded the scheme is in unitholders’ best interests and is fair and reasonable.

It said if the scheme was not implemented, a planned $300m asset sale to MIRA would also be fair and reasonable. It valued the Vitalharvest Freehold Trust units at between 97c and $1.11.

1.19pm: ASX rebounds as US futures rise

Australia’s sharemarket rebounded from intraday lows in choppy, low-volume trading as US futures rose.

The S&P/ASX 200 index was up 0.6pc at 6868.9on volume 9pc below the 20-day average.

Stocks initially rose to 6861.4 amid gains in financials and resources, then dipped to 6821.2 amid profit taking on banks after CBA’s results, with Tech, Utilities, Consumer Staples, Real Estate and Materials underperforming.

S&P 500 futures rose 0.3pc and NASDAQ futures gained 0.4pc, giving the Australian market some positive offshore leads after a flat night on Wall Street.

Elsewhere in the APAC region, the Hang Seng index has jumped 1.8pc despite recent jitters about the loss of mainland flows during the week-long Lunar New Year holidays starting Thursday.

China’s Shanghai Composite is up 0.7pc and the CSI 300 is up 1pc after China’s strong money supply and credit data calmed recent worries about the PBoC’s liquidity drains.

Bridget Carter 1.04pm: Vinomofo taps Jarden for IPO

Australian wine e-retailer Vinomofo is understood to have hired Jarden Australia for its efforts to launch an initial public offering, while sources say Bell Potter is also in the frame to land a mandate to court retail investors.

Earlier, investment bank Macquarie Capital was believed to be on the ticket.

However, the understanding is that after initially working with the group, Macquarie passed up the opportunity to take the company to market, opting to focus on its larger and more lucrative mandates.

It is apparently a similar situation with AirTasker, which had initially been working with Macquarie for its initial public offering – revealed by DataRoom last year – before switching to broker Morgans.

AirTasker, which is an online marketplace platform backed by the Kerry Stokes-chaired Seven West Media, firmed up plans at the start of the month to raise $83.7m at 65c per share, taking the company’s market value to $255.1m.

This was equivalent to 9.3 times its forecasted revenue to enterprise value for the 2021 financial year and 10 times gross profit.

Shares will start trading on a normal settlement basis on March 22.

Macquarie, which reaped a windfall last year through the $1.8bn listing of its part-owned forensic software company Nuix that is now worth $3bn, had earlier been working with non-bank lender Pepper Money on an anticipated IPO this year.

However, owner Kohlberg Kravis Roberts has opted to reward lenders to the company, say sources, hiring Goldman Sachs, RBC Capital Markets and Credit Suisse, which sources say at least one of which have had a refinancing involvement with the group.

Vinomofo, meanwhile, is believed to have a value of at least $300m, but it is understood to be keeping the raise for its IPO to a minimum, with owners hoping to retain skin in the game.

The platform now has about 70,000 customers, most of whom are repeat buyers and it is understood that the company is booming amid the global pandemic.

New customer numbers have averaged growth of more than 100 per cent year-on-year from March through to the end of September, while revenue over the same period has averaged over 50 per cent growth year-on-year, with consumers opting for more expensive wine brands.

It comes as investment bank UBS courts Australian buyers and those across the Tasman for the New Zealand wine business Villa Maria, thought to be worth more than $200m.

Vinomofo CEO Justin Dry.

12.54pm: Cushman & Wakefield in real estate agent coup

Real estate agency Cushman & Wakefield has swooped on two top commercial real estate agents from the JLL stable, in a move that will shake up office deals nationally.

The company has hired JLL’s Nick Rathgeber and Leigh Melbourne, the Melbourne market’s dominant institutional team.

The pair joined JLL in 2018 after a long stint at Colliers International where they built up a record as the top duo in the city’s major office sales.

Cushman & Wakefield already has Sydney-based Josh Cullen as head of capital markets with a team including Rick Butler, Simon Fenn, Steven Kearney and Claire Zouroudis. Director Mark Hansen is also shifting to Singapore to work on bringing international capital into Australia.

The Melbourne pair will join Cushman & Wakefield as executive directors, having most recently held the same positions at JLL. They have facilitated the sale of more than $15bn of institutional grade office towers over their careers, most notably the $1.5bn sale of 80 Collins Street in 2019.

Going back: Nick Rathgeber (left) and Leigh Melbourne in 2011.

The appointment is part of the continued expansion of Cushman & Wakefield’s capital markets presence in Australia, having also secured other top agents in Sydney, Melbourne and Brisbane after buying the Inc RE business in 2018. Over the past 24 months, Cushman & Wakefield’s team has negotiated deals in excess of $30bn in value.

Jared Lynch 12.22pm: Crown shares slump in inquiry fallout

Crown shares have slumped more than 3.5 per cent to $9.79 after a NSW inquiry found the gaming giant was not suitable to hold a casino licence.

This compares with a 0.3 per cent gain across the broader sharemarket.

At one stage they were down as much as 8 per cent, before recovering some ground.

The damning report from the NSW Independent Liquor and Gaming Authority inquiry has put Crown’s $2.2bn casino complex at Barangaroo in jeopardy and the company may be forced to sell it if it can’t transform itself suitable to hold a casino licence.

The report from Patricia Bergin SC also could ignite further regulatory action at Crown’s flagship casino complex in Melbourne and at its Perth operations.

Fitch Ratings has placed Crown Resorts Limited’s ‘BBB’ Long-Term Issuer Default Rating and senior unsecured rating on Rating Watch Negative, citing the potential for further regulatory action.

12.10pm: ASX stays positive but banks retreat

Australia’s share market has remained in positive territory despite some loss of intraday strength, as banks were hit by profit-taking after CBA’s results.

The S&P/ASX 200 was up 0.3pc at 6340 in choppy trading after unexpectedly rising to 6861.4 amid strength in the heavyweight financials and resources stocks, then retreating to 6821.1 as the major banks came off.

Zip Co led with a 9.4pc rise amid hopes that it will announce a US listing after its roadshow this week, while Viva Energy and IAG rose more than 5pc and Challenger bounced 4.2pc after plunging 14pc on its results on Tuesday.

Macquarie was the biggest contributor to strength in the index with a 2.6pc gain after a solid operational briefing on Tuesday, while IAG and Northern Star were the 6th and 10th biggest points contributors respectively.

CIMIC was down 15pc on a disappointing earnings outlook and Crown Resorts was off 3.5pc after the NSW gaming regulator said it was unfit to hold a casino licence in Sydney.

Perry Williams 11.38am: Altona closure ‘endangers more jobs’

ExxonMobil’s decision to shut Melbourne’s Altona refinery could lead to further job cuts among manufacturers that rely on the plant for fuel supplies, Credit Suisse said.

Some 350 workers are employed at Altona but plastics producers including Qenos may also have issues from its closure.

“There are many manufacturing jobs linked the Altona beyond the Altona workforce themselves, such as Qenos, presenting a difficult position for the state and federal Government to see more manufacturing close in the wake of COVID,” Credit Suisse analyst Saul Kavonic said.

It also reflects the Morrison government’s rescue package for the refining industry may have been ineffective.

“The government’s refinery rescue package is looking ineffective given half of the country’s refineries have announced closure since the policy was put forward.”

11.30am: ASX fades, banks hit by profit-taking

The Australian share market faded significantly after a surprisingly-strong rise in early trading.

The S&P/ASX 200 was up 0.2pc at 6832 in late morning trade after initially rising 0.6pc to 6861.4 despite flat leads from Wall Street.

While strong gains in the heavyweight Financials and Materials sectors drove the early rise, the market was subsequently weighed down by falls in the major banks.

Banks appear to have been hit by profit-taking despite a better-than-expected profit and dividend from CBA.

CBA fell 1.1pc after rising 1.2pc immediately after reporting its first half results before the open.

Other banks have followed, with NAB down 0.5pc, ANZ down 0.3pc and Westpac flat after early gains.

Perry Williams 10.58am: ‘No plan for energy’ blamed for Altona closure

The lack of a clear federal government plan for the future of energy supply and manufacturing in Australia was partly to blame for ExxonMobil’s decision to close its Altona refinery in Melbourne, the United Workers Union said.

Exxon confirmed on Wednesday the plant will be shut after nearly 75 years of operation with up to 300 jobs in peril, marking the latest blow to the nation’s refinery industry.

“Australia has witnessed several significant closures in advanced manufacturing over the past twelve months across construction, pharmaceuticals and energy. This comes at a time when global supply chains have been put under pressure by the Covid-19 pandemic, signalling a strong need for Australia to strengthen its domestic advanced manufacturing capabilities,” UWU National Secretary Tim Kennedy said.

“However in the absence of a clear plan for the future of energy supply and manufacturing in Australia, many multinational corporations are pulling out of Australia.”

The refinery will be converted to an import terminal with the decision likely to hike concerns about Australia’s fuel security with the plant producing half of Victoria’s refined fuel needs.

“If we want to be a country that can ensure a secure and decent job for everyone who wants one, the Federal Government needs to invest in just transition and quality jobs of the future,” Mr Kennedy said.

Employees at the Exxon Mobil refinery at Altona. Picture: Andrew Henshaw

10.51am: MSCI starts Australia domestic index series

MSCI has launched an Australian share index series to help investors to efficiently evaluate domestic equities, further hone portfolio construction, and manage investment risk and performance.

The MSCI Australian Domestic Index Series - the index provider’s first single country index series outside of the US offers broad daily constituent and index-level coverage across market cap segments and sectors, as well as factor and theme-based indexes, including an ESG component.

“The investment industry is undergoing a significant transformation, particularly in the area of ESG as asset owners and institutions around the world look to further understand ESG-driven risks and opportunities – particularly regarding climate change and decarbonisation,” says MSC’s Head of Index, APAC.

“This series was built in response to demand from those investors who are adopting ESG principles and seeking to integrate these considerations across the investment process.”

10.38am: Consumer confidence up in February

The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.9pc to 109.1 points in February, recouping about half of a fall from a decade high in December.

Westpac chief economist, Bill Evans, says the consumer remains “extraordinarily confident” and that’s “critically important” for the economy, with the federal government due to phase out the JobKeeper program at the end of March.

“It is vital that households, which have built up a very large financial buffer through the pandemic - recently estimated by the Reserve Bank at $200 billion or 15 per cent of pre-pandemic annual income - are prepared to now use that buffer to partially offset the impact on the economy of the withdrawal of support programs,” Mr Evans said.

“No doubt the management of the pandemic locally has had a constructive effect on confidence. The success of contact tracing and ‘light-handed’ lockdowns has been important in containing a worrying cluster of cases since the last survey in January.”

He notes that the Reserve Bank’s surprise extension of its quantitative easing program signals ongoing commitment from the monetary authorities to supporting the Australian economy and consistent positive news on the recovery of the job market boosted confidence.

10.27am: ASX jumps amid earnings reports

Australia’s share market has unexpectedly surged amid earnings reports despite flat leads from Wall Street.

The S&P/ASX 200 rose 0.6pc to 6861.4 in early trading after falling 0.9pc to 6812.23 on Tuesday.

The Energy, Utilities, Financials, Technology and Materials sectors outperformed with Oil Search up 2.6pc, AGL up 1.3pc, IAG up 5.5pc after reporting, Afterpay up 1.8pc and BHP up 0.9pc.

Macquarie rose 2.4pc after Jefferies upgraded to Buy, CBA rose 0.3pc after reporting and Northern Start gained 3.1pc after its report.

CIMIC dived 12pc after disappointing earnings guidance and Crown Resorts was down 3.5pc after diving 9pc after a damning report from the gaming regulator.

David Ross 10.21am: Ainsworth hit by Covid’s South America spread

Ainsworth game Technology (AGT) has benefited from Australia’s continued resilience in the face of COVID-19 and America’s reopening despite the virus.

But the out-of-control spread of COVID-19 across South America has delivered a hammer blow to the gaming group’s operations in the continent.

The conditions in the South American market are so bad the group has flagged it would look to review the recoverable amount of the Latin American Cash Generating Unit.

In a market update the business, which provides technology to the gaming industry, said it expected to report a loss before tax of approximately $14m.

This loss is magnified by an additional $14m currency translation loss that’s hit the business due to a rapidly strengthening Australian dollar.

The gaming group said it expected to report an underlying EBITDA, excluding the currency loss and one-off hits for the first half to the tune of $6m.

The unaudited results report revenue across the gaming company of $72m.

This was up 71 per cent on the previous half of $42m.

Ainsworth’s North American operations continue to be the beating heart of the business, with the gradual reopening of gaming venues across the country despite the pandemic contributing $41m to the businesses’ bottom line. That’s compared to the only $21m that came from North America in the previous half.

Australia was the best recovered market for Ainsworth, where revenue recovered 118 per cent on the previous half to $19m.

Perry Williams 10.19am: Power grid operator has new boss

The operator of Australia’s electricity grid has appointed a new chief executive after the departure of high-profile boss Audrey Zibelman in December.

Daniel Westerman, an executive with London utility National Grid has been named Australian Energy Market Operator chief executive and will start in the new role on May 17.

Mr Westerman currently serves at National Grid’s Chief Transformation Officer and President of Renewable Energy where he helped transform the UK’s grid into rooftop solar and storage alongside growing a large-scale renewable energy business.

He worked as an engineer and project manager for six years with carmaker Ford and also spent seven years with consulting giant McKinsey before joining National Grid as head of group strategy in February 2014.

“As our economy recovers from the impacts of the pandemic, the gas markets operated by AEMO will continue to play an important role in both the export and domestic energy sectors,” the Melbourne-raised Mr Westerman said.

“AEMO must continue to operate our energy systems today while planning for the challenges of tomorrow, and that will be my focus,” he said.

Ms Zibelman quit AEMO for a leadership role at X, the “moonshot” factory at Google’s parent company Alphabet.

Audrey Zibelman is leaving AEMO. Picture: John Feder.

Lachlan Moffet Gray 10.15am: Hope for Crown gaming start

Chair of the NSW Independent Liquor & Gaming Authority, Philip Crawford says the idea that Crown Resorts “needs to blow itself up to save itself” is “probably pretty close to the mark” but indicated the gaming floor could open as soon as April.

Speaking in Sydney on Wednesday, the chair of the regulator that oversaw the inquiry into Crown said he would not be going into detail on the report’s findings before his board convened on Friday.

But he did say that he has reached out to Crown chairman Helen Coonan to begin the regulatory required process of consultation with the company.

“There’s also a quite complex set of contractual arrangements between the state and Crown entered into seven years ago,” he said.

“One of those...is to consult with Crown in circumstances such as we have at the moment.”

ILGA denied Crown’s bid to open the gaming floor at Barangaroo last December, saying it would wait for the Bergin report to be released due to concerns over money laundering.

Mr Crawford today said he was “quietly confident” Ms Coonan could satisfy ILGA that Crown committed to reform by April, paving the way for a full opening of the casino.

The Bergin report called for the creation of a new casino regulator in the state.

Mr Crawford said this was a matter for the government.

Ben Wilmot 10.10am: Centuria lifts guidance as empire goes past $10bn

Listed real estate funds manager Centuria Capital Group has upgraded fiscal 2021 distribution per security guidance as its property empire tops $10bn.

The company, riding the boom in industrial property and long-leased assets, lifted its guidance to 10c per share as it reaffirmed operating earnings guidance of 11.5-12.5c.

In the first half it had a $41.4m profit and operating earnings per share of 6.2cps which came as it expanded its real estate platform with the acquisition of 24 assets worth $1.5bn.

Centuria joint CEO John McBain said the company had a strong start to the year, delivering on its corporate dual strategy of direct real estate and corporate acquisitions.

Operating businesses it has picked up in the past three years - the 360 Capital industrial portfolio, Heathley Limited and Augusta Capital - were now contributing strongly to our assets under management growth.

Wednesday’s guidance upgrade was the second this financial year and Mr McBain said as the effects of COVID-19 unwind and greater certainty emerges, the company had also reaffirmed fiscal 2021 earnings guidance.

10.05am: CBA result to prompt upgrades: UBS

CBA reported a “solid, clean” 1H21 result 2pc above consensus with better net interest margins and regulator capital, plus a much stronger second quarter, according to UBS.

“A solid revenue recovery in the December quarter - up 2.4pc quarter on quarter - looks to be driven by better net interest margins,” says UBS analyst Jon Mott.

“This should give CBA good momentum into 2H21. Expect Consensus upgrades from better revenue, lower credit impairment charges and potentially buy-backs with the Full Year result in August.”

UBS sees a $8bn share buy-back in FY22.

CBA shares were up 0.3pc at $87.68.

Damon Kitney 10.07am: Packer nominees to quit Crown board

Billionaire James Packer has gone on the front foot in the wake of the damning findings of the NSW ILGA inquiry against Crown Resorts, announcing plans for two of his three nominee directors to resign from the board of the gaming company.

Mr Packer’s private company Consolidated Press Holdings, which owns 37 per cent of Crown, announced on Wednesday morning that CPH’s nominee directors on the board Guy Jalland and Michael Johnston would be stepping down.

“CPH is considering the report by the Hon PA Bergin SC that was made public yesterday. CPH welcomes the finding that the Melco transaction did not constitute a breach of the Barangaroo restricted gaming licence or any other regulatory agreement,’’ CPH said in a statement.

“CPH & Mr Packer now believe it is crucial that Crown Chairman Helen Coonan and the Crown Board have the opportunity to meet with ILGA to progress Crown’s announced reform agenda.”

CPH said Guy Jalland and Mr Michael Johnston had today given the Crown chair a notice of resignation from the Crown board which is to take immediate effect.

CPH’s other nominee on the Crown board is Perth businessman John Poynton.

“CPH proposes to end the consultancy with Mr Poynton. Once that consultancy has been ended Mr Poynton will no longer be a CPH nominee on the Crown board. Mr Poynton will request from the Crown board the opportunity to be considered an independent director of Crown once the CPH consultancy has ended,” CPH said.

“With the resignation of the two CPH nominees on the Crown board and the ending of the consultancy with Mr Poynton, CPH will have no involvement on the Crown board. The issue of CPH’s representation on the Crown board, and future communications between those representatives and CPH, were potentially complex matters for ILGA and Crown to resolve. The steps announced today take them off the table, giving Crown’s board clear air to work with ILGA in the execution of its announced reform agenda, and become a model casino operator. CPH supports these efforts.”

Perry Williams 10.00am: Exxon to close Altona refinery

ExxonMobil has confirmed The Australian’s report that Melbourne’s Altona refinery will be shut after nearly 75 years of operation with up to 300 jobs in peril, marking the latest blow to the nation’s refinery industry.

The refinery will be converted to an import terminal with the decision likely to hike concerns about Australia’s fuel security with the plant producing half of Victoria’s refined fuel needs.

“ExxonMobil said today that the Altona refinery is no longer considered economically viable and will be converted to an import terminal, which will ensure ongoing, reliable fuel supply for Victoria,” Exxon said in a statement.

An extensive review of its viability was carried out focusing on the competitive supply of products into Australia, declining domestic crude oil production, future capital investments and the impacts of these factors on operating earnings.

“We are grateful for the tremendous efforts by our employees to improve the viability of the operation,” said Nathan Fay, chairman of ExxonMobil Australia. “We extend our thanks to the federal government for the significant support offered to Altona and other refineries. Our decision to convert our facility to a terminal is not a reflection of those efforts.”

Energy Minister Angus Taylor said he was extremely disappointed at ExxonMobil’s decision after the Morrison government had created a $2bn subsidy package designed to ensure the nation’s three remaining refineries stayed open.

“ExxonMobil’s decision to close its Altona refinery in Victoria is extremely disappointing,” Mr Taylor said.

“The Australian government expects ExxonMobil will provide whatever support is required to assist workers and the community during this difficult time. We will work with the Victorian Government to ensure this occurs. ExxonMobil has made clear that the impacts of COVID-19, declining crude production and other commercial factors have significantly impacted their earnings, leading to today’s decision.”

Exxon said the refinery will remain operating while transition work to an import terminal is carried out.

BP announced in October it would close its Kwinana refinery in Western Australia while Ampol is still weighing a decision on its Lytton refinery in Brisbane.

Viva Energy announced plans to take up the interim subsidy to help safeguard its Geelong unit in Victoria.

Employees at the Exxon Mobil refinery at Altona. Picture: Andrew Henshaw

Ben Wilmot 9.50am: Lendlease replaces CEO

Veteran Lendlease chief executive Steve McCann will retire, with Asia head Tony Lombardo to take over in June.

Mr McCann will retire from Lendlease at the end of May following a 16-year career with the company, including 12 as chief executive.

Mr Lombardo won the internal race to succeed Mr McCann against local head Kylie Rampa and US boss Denis Hickey.

He is likely to accelerate the development of the company’s $113bn pipeline and seek to bring in major funds as partners.

Lendlease’s outgoing CEO Steve McCann. Picture: Britta Campion

9.46am: Nasdaq sues SEC over data overhaul

Nasdaq sued the Securities and Exchange Commission to block the regulator’s plan to overhaul the public data feeds that broadcast stock prices to investors.

The plan, which the SEC approved in December, threatens the exchange operator’s data revenue, a major part of its business.

In a court filing, Nasdaq asked the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC’s plan. Nasdaq’s filing was dated Friday but only released on the court’s website Tuesday. The New York-based exchange operator had earlier said that the plan was an overreach by the regulator and that it would amount to an unconstitutional seizure of its property.

“The SEC exceeded its authority with this ill-conceived remake of market structure,” said Joe Christinat, head of communications at Nasdaq. “This will make markets more complex and costly.”

The Nasdaq digital billboard in Times Square. Picture: AFP

Dow Jones

9.20am: Computershare results neutral for shares: MS

Morgan Stanley’s Andrew Stadnik expects a neutral share price reaction to Computershare’s results released after the close on Tuesday.

While the 1H21 result was “solid” with management EPS inline with consensus and upgraded FY21E guidance is “supportive”, a lower FY22 margin income outlook will offset some of the US mortgage servicing tailwinds, according to Mr Stadnik.

Still, he keeps his Overweight rating and $16.50 target price. CPU last $14.34.

9.02am: ASX leads flat; results in focus

Offshore leads for Australian shares were mostly flat apart from further strength in commodities and reassuringly strong money supply and credit data in China.

The major US shares indexes hit fresh record highs intraday but finished little changed, while BHP ADR’s equivalent close at $45.01 was 1pc above BHP’s local close.

But Energy and Materials were the weakest sectors on the US share market despite commodity price gains.

Spot iron ore rose 2.2pc to $US164.10, Brent crude oil rose 0.9pc to $US61.08, and LME copper gained 1.4pc to $US8156.8 a tonne.

Domestically the focus is on earnings reports from CBA, IAG, CIMIC, Megaport, Mineral Resources and Northern Star, while ResMed is ex-dividend.

Crown Resorts resumes trading after the Bergin Report found it was unfit to operate its Sydney casino, with Macquarie cutting its rating to Neutral.

Westpac’s Consumer Sentiment Index for February is due at 1030 am AEDT.

The S&P/ASX 200 fell 0.9pc to 6812.2 on Tuesday.

David Swan 9.00am: NBN revenue up 25pc

NBN Co has posted total revenue of $2.26bn for the six months to December 31, 2020, up 25 per cent year-on-year, as the infrastructure company moves from its “build” phase to a major $4.5bn fibre upgrade of the network.

The company said it acquired more than 660,000 new customers in the half, and now has more than 7.9m premises on its network nationally. 11.9m premises are now deemed “ready to connect”.

Earnings before interest, tax, depreciation and amortisation (EBITDA), including subscriber costs, was $424 million, up $1.1bn from a year earlier, which NBN said was due to revenue growth and declining subscriber payments to Telstra and Optus.

Residential average revenue per user (ARPU) remained steady at $45.

NBN Co has raised $10bn in private debt over the last 12 months, and boss Stephen Ceo said the organisation was on track to meet its 2021 forecasts despite the additional free capacity provided during COVID-19, and issues plaguing the HFC portion of the network.

“Our results in the first half of FY21 are very strong and underscore the strength of the business in what has been a challenging time for all Australians,” Mr Rue said.

Lachlan Moffet Gray 8.53am: Crown report ‘opens door to M&A’

Industry analysts have taken a mixed view on the impact of the Bergin report on James Packer’s Crown Resorts but broadly agree that the finding that Crown is “unsuitable” to operate its Sydney Casino opens the door to M&A activity

Analysts at Macquarie have downgraded Crown to neutral, noting that the Bergin report could delay the opening of Crown Sydney’s gaming floor for two years.

They also said the report places a “question mark” over the company’s operations in WA and Victoria and forecast flat EBITDA in FY2022 and a three per cent decline in FY2023.

Goldman Sachs analysts reiterated the risk of delay to the opening of the gaming floor, but did not estimate any time frame.

They said the Bergin report reaffirms their belief that Crown is the least attractive listed casino operator on the ASX and said the impact of the report meant Crown is “facing heightened M&A probability,” which may support its share price in the face of regulatory challenges from AUSTRAC and the Victorian gaming regulator.

UBS analysts maintained a buy rating on the company despite noting the regulatory burden of expanded money laundering regulation alongside Bergin’s recommended ban on junkets, with revenue from the gambling promoters comprising two-thirds of all foreign VIP spend in Australia.

E&P analysts also maintained a positive rating on Crown, noting that there is a clear path towards becoming “suitable” in NSW, that the impacts of COVID on gambling will soon dissipate, and that there is now a heightened chance of a merger between Star Entertainment and Crown.

Crown’s casino operation is in doubt. Picture: Jeremy Piper

8.50am: IAG cuts dividend, posts $460m loss

Insurance Australia Group posted a half-year net loss, driven in part by expenses for potential business interruption pandemic-related claims.

The general insurance company recorded a net loss of $460 million for the six months through December, compared to a $283 million profit a year earlier.

“While our business has been relatively stable, our profitability was affected by the pre-tax $1.15 billion expense we announced in November for potential business interruption claims relating to Covid-19,” said IAG.

Cash earnings at IAG, a measure tracked by analysts that excludes certain costs and one-time items, rose to $462 million from $380 million a year earlier.

Directors of the company declared an interim dividend of $0.07 cents a share, down from a payout of $0.10 a year earlier.

Dow Jones Newswires

Nick Evans 8.48am: Iron ore’s rise lifts MinRes result

Last year’s surging iron ore price boosted Mineral Resources to a $519m net profit for the half year, with the company declaring a $1 a share interim dividend on the back of the strong result.

The miner and mining services provider said revenue for the period rose 55 per cent to $1.5bn as it exported a record 7.9 million tonnes of iron ore in the period, up 17 per cent on the back half of 2019, with the company also lifting lithium production at its Mt Marion operations despite low prices for its lithium concentrate.

MinRes received an average $459 a tonne for its lithium concentrate in the period, down $230 a tonne from the previous comparable period.

Managing director Chris Ellison said MinRes booked underlying net profits of $430m, up 233 per cent on the first half of the previous financial year on the back of the strong iron ore price, with underlying earnings before interest, tax, depreciation and amortisation up 131 per cent to $763m.

Its iron ore division delivered the bulk of the earnings, with EBITDA of $582m, with the company receiving an average $154 a tonne for its shipments.

MinRes shares closed Monday at $37.

Nick Evans 8.32am: Northern Star bows out with bigger profit

Northern Star Resources has declared a $184.5m net profit for the first half of the year, up 46 per cent on the back of the strong gold price, with the company declaring a 9.5c a share interim dividend.

The half-year report is Northern Star’s last before it closes its merger with Saracen Mineral Holdings, executive chairman Bill Beament said the record $472m earnings before interest, tax, depreciation and amortisation showed the gold miner’s growth strategy was working.

“The record EBITDA of $472m demonstrates that our growth plan is delivering superior results. This result came despite investing $108m in exploration and expansionary capital and directing 39 per cent of our gold sales into hedges, which meant revenue was over $100m lower than at spot prices,” he said.

Northern Star booked $1.1bn in revenue for the half, up 34 per cent, on the sale of 480,431 ounces of gold at an average $2386 an ounce.

Northern Star closed December with $372m worth of cash, bullion and investments, and bank debt of $375m.

The company closed Monday at $11.90 a share.

Northern Star boss Bill Beament, left, with Saracen CEO Raleigh Finlayson. Picture: Colin Murty

Lachlan Moffet Gray 8.29am: CIMIC back in the black

CIMIC returned to profit in 2020 and said it expects to record an increased profit on a proforma basis this year despite ongoing headwinds from the Covid-19 pandemic.

The construction group reported a net profit of $620.1 million for the year to December 31. That compared to a loss of $1.04 billion in the same period a year earlier.

Directors declared a final dividend of 60 cents a share.

CIMIC recorded an underlying net profit--adjusted for the sale of a stake in its Thiess business, among other one-offs--of $601 million and a proforma underlying profit of $372 million.

The company said it expects a profit of $400 million-$430 million in 2021, an 8-16pc increase on proforma underlying profit.

Cimic said revenue fell in big part because the pandemic led to a temporary delay in the award of new projects.

CIMIC chairman and CEO Juan Santamaria said the company had a two year work pipeline worth $30.1bn and said the company is due to benefit from post-COVID government stimulus.

“The significant role of infrastructure in the economic recovery from the pandemic supports a positive outlook for our activities,” he said.

“Governments are pursuing stimulus packages in construction and services, including PPP projects, while the mining market is proving resilient.”

With Dow Jones

8.30am: Twitter adds users through Trump ban

Twitter added users through the holiday quarter and said it continued to add more in January, a month when it booted one of its most prominent users: former President Donald Trump.

The company said that user growth might slow this year compared with the early months of the coronavirus pandemic -- when many people started to spend more time online and on social media -- and that Apple Inc.’s pending privacy changes could have a modest impact on its advertising business.

Twitter said it gained more daily users in January than the average number gained over the past four years in that same month, but the company declined to share more details. Twitter doesn’t normally provide guidance on user growth for the current quarter but said it made an exception due to unusual circumstances, referring to Mr. Trump’s suspension from the platform and the January 6 attack on the U.S. Capitol by a mob of his supporters.

The company didn’t discuss the specific impact of Mr. Trump’s absence on advertising, its main source of revenue. But in an interview Ned Segal, Twitter’s finance chief, indicated the company’s decision was well-received by advertisers.

“When we lay out our principles and our policies, and we’ve enforced them transparently and consistently, we find that advertisers feel better, not worse about partnering advertising on Twitter,” he said.

Twitter banned Mr. Trump shortly after the assault on the Capitol, citing a risk of further violence and repeated violations of its rules. Several other social-media companies, including Facebook Inc. and Alphabet Inc.’s YouTube, also removed the former president from their platforms around the same time for similar reasons.

Dow Jones

8.24am: What’s impressing analysts today?

Challenger raised to Add: Morgans Financial

Challenger raised to Buy: Morningstar

Dexus raised to Buy: Morningstar

Evolution raised to Neutral: GS

Galaxy Resources cut to Underperform: CS

Liberty Financial Group started at Outperform: Credit Suisse

Macquarie Group raised to Buy: Jefferies

Openpay Group started at Speculatively Buy: Canaccord

SCA Property raised to Buy: Jefferies

Suncorp cut to Neutral: JPM

Think Childcare Group cut to Hold: Canaccord

Challenger cut to Neutral: Macquarie

Crown Resorts cut to Neutral: Macquarie

Deterra Royalties raised to Neutral: Citi

8.00am: ASX to open higher as global markets pause

Australian stocks are set for a positive start after a quiet night on global markets, but as Wall Street turned a little higher in afternoon trade.

At about 8am (AEDT) the SPI futures index was up eight points, or 0.1 per cent.

The Australian dollar is higher at US77.26.

Brent oil is up 0.9 per cent to $US61.09 a barrel. Spot iron ore is 2.3 per cent higher at $US163.45 a tonne.

8.09am: US stocks waver after record close

US stocks were mixed, suggesting that the major indexes may pause after closing at record highs.

The S&P 500 was down about 0.1pc as of the close of trading in New York, a day after the benchmark gauge posted its eighth all-time closing high of 2021 on Monday. The Dow Jones Industrial Average was about flat. The technology-focused Nasdaq Composite Index rose 0.1pc.

Investors said markets are taking a breather following a broad advance in stocks and commodities. The recent rally has been fueled by expectations of a new dose of stimulus spending in the U.S., which could add impetus to the economic revival. That has helped pare expectations for turbulence in U.S. stocks, sending the Cboe Volatility Index down this week to less than 22, after the gauge surged to over 37 at the end of January.

“Very small downsized moves are a symptom of low volatility,” said Trevor Greetham, head of multiasset at U.K. investment firm Royal London Asset Management. “Low and falling volatility is a bull market phenomenon. You do get quiet days.”

Expectations that the economy will revive this year have prompted money managers to bet stocks will continue to power higher, driven by sectors such as energy, banks and consumer companies that are sensitive to growth.

“There is a big reflation trade on,” Mr. Greetham added, saying stocks stand to benefit from the distribution of vaccines and the prospect of $US1.9 trillion in additional stimulus.

He sees two main risks: New variants of coronavirus that push back the reopening of beaten-down sectors; and a burst of inflation that prompts a big rise in government-bond yields.

House Democrats released the biggest piece of their coronavirus relief bill late Monday, offering a measure that would extend a $US400-a-week unemployment insurance payment through Aug. 29 and send $US1,400 per-person payments to most households. It will be combined with pieces advancing through other House committees with the aim of getting through the full House later this month.

The second impeachment trial of former President Donald Trump is beginning Tuesday with House Democratic impeachment managers alleging Mr. Trump incited an insurrection at the Capitol. Investors say the trial doesn’t weigh heavily on their outlook.

Twitter, ride-hailing firm Lyft and Cisco Systems are scheduled to publish earnings reports after markets close. Of the roughly 300 companies on the S&P 500 that had reported for the holiday quarter by early Tuesday, about 81pc had beaten analysts’ earnings expectations, according to FactSet.

Oil prices paused after their recent advance, which had been powered by shrinking supplies of crude and wagers by investors that vaccines and fiscal stimulus will boost demand. Brent-crude futures were down 0.5pc at $US60.89 a barrel.

Dow Jones Newswires

Joyce Moullakis 7.50am: CBA profit falls 11pc, dividend lifts

Commonwealth Bank has delivered investors a bumper rise in its interim dividend, as profit dropped to $3.89bn and the bank increased expected loan losses to navigate the COVID-19 fallout.

The nation’s largest home lender posted a 10.8 per cent fall in cash profit to $3.89bn for the six months ended December 31, compared to the year earlier period, it said in an ASX statement on Wednesday. That reflected profit from continuing operations.

CBA declared a 53 per cent jump in its first-half dividend to $1.50, compared to the last payment made in September.

CBA chief executive Matt Comyn said the economic outlook “was positive” but health and economic risks could still dampen the pace of Australia’s COVID-19 recovery.

Loan impairment expenses - related to the pandemic - were further increased to $882m.

CBA last paid a 98 cent final dividend in September, the lowest second-half dividend since 2006 due to a regulatory cap on distributions imposed as the pandemic gripped markets. A year ago, before the fully-fledged onset of COVID-19 CBA declared a $2 interim payment.

Analysts were expecting CBA to hand down a first-half cash profit of almost $4bn, and a dividend in the order of $1.45. They are also looking out for any comments flagging capital management - including any share buybacks and special dividends - to return proceeds to shareholders from a string of CBA divestments.

CBA is the first major lender to report since the prudential regulator scrapped its dividend restrictions late last year.

CBA’s cash profit was in line with expectations.

7.40am: Exxon set to close refinery

Energy giant ExxonMobil is set to announce the closure of its Altona refinery in Victoria on Wednesday, the latest hammer blow to the nation’s dwindling refining industry.

The Andrews government is expecting an official notification from Exxon about shutting the facility which has been operating since 1949 and employs 350 people, sources told The Australian.

Exxon warned in September the future of the plant was perilous given it was trading at a loss after being hit from falling demand due to the Covid-19 pandemic, Victoria’s prolonged shutdown last year and tough conditions hitting much of the global industry.

5.15am: S&P 500, Dow turn higher

US stocks turned slightly higher in a day of low volatility as major indexes paused after closing at record highs yesterday.

The S&P 500 edged less than 0.1pc higher, after the benchmark gauge posted its eighth all-time closing high of 2021 on Monday. The Dow Jones Industrial Average rose 0.1pc, or 36 points. The technology-focused Nasdaq Composite Index rose 0.3pc.

If the S&P 500 and the Dow close lower on Tuesday, it will mark their first down day in more than a week.

Investors said markets are taking a breather following a broad advance in stocks and commodities. The recent rally has been fuelled by expectations of a new dose of stimulus spending in the US, which could add impetus to the economic revival. That has helped pare expectations for turbulence in US stocks, sending the Cboe Volatility Index down this week to less than 22, after the gauge surged to over 37 at the end of January.

The second impeachment trial of former President Donald Trump is beginning, with House Democratic impeachment managers alleging Mr. Trump incited an insurrection at the Capitol. Investors say the trial doesn’t weigh heavy on their outlook.

Stocks also paused in Europe, where the pan-continental Stoxx Europe 500 slipped 0.1pc.

In Asia, the Shanghai Composite Index ended the day 2pc higher and Japan’s Nikkei 225 rose 0.4pc by the close.

Dow Jones Newswires

5.00am: All bets off for Crown’s jewel

Crown Resorts has been found unsuitable to hold a gaming licence, forcing the company and its largest shareholder — billionaire James Packer — to prove it should be allowed to operate its flagship $2.2bn Sydney casino.

In a scathing report, former NSW Supreme Court judge Patricia Bergin found serious corporate failings and made adverse findings against key directors.

The long-running independent Liquor & Gaming Authority review said evidence presented by Crown director Andrew Demetriou, a former AFL executive, was “quite bizarre” and “(reflected) very badly on his judgment”.

Former Crown chairman John Alexander’s loyalty to the Packer family left him “either blind to the reality or lacking in candour” in confronting serious problems including the “infiltration of criminal elements”, Ms Bergin found.

“Mr Alexander’s stewardship led Crown to disastrous consequences,” she wrote.

Crown chief executive Ken Barton was “unimpressive” and the ILGA “would be justified in concluding that it cannot have any confidence in dealing” with him, the 800-page report found.