RBNZ Delivers Rate Hike 📈

February 27, 2023

Good Morning,

The RBNZ lifted the OCR by 50 basis points to 4.75%, a magnitude 6.3 aftershock struck southern Turkey Monday, killing at least three people and injuring hundreds more, ANZ has joined banks donating money to cyclone relief charities, the US is likely to impose a limit on the chip production capabilities of Samsung Electronics Co. and SK Hynix Inc, Australian Prime Minister calls on Australia's biggest banks to apply rate hikes to deposits.

Before The Bell

Markets

  • The RBNZ lifted the OCR by 50 basis points to 4.75% (RBNZ)

  • Traders should prepare for a 20 per cent surge in iron ore prices in the second quarter of 2023, according to Goldman Sachs, as the physical market swings into a "significant" deficit which will lift prices to a projected $218 AUD per tonne (AFR)

  • Asian shares edged up from their lowest levels in about one month but trading was slow ahead of minutes of the last Federal Reserve meeting and a reading on core inflation, with rising interest rates still seen as a risk for markets (RT)

  • The Stoxx Europe 600 Index advanced, trading near a one-year high, as expectations for Chinese demand propped up in commodity stocks (BBG)

Earnings

This weeks earnings:

  • Monday: Michael Hill (NZ), Genesis Energy (NZ), 1st Group Ltd (AU), 1414 Degrees Ltd (AU), 4DMedical Ltd (AU), Target Corporation (US)

  • Tuesday: Geo Ltd (NZ), Heartland Group Holdings Ltd (NZ), Silk Laser Australia Ltd (AU), Adbri Ltd (AU), Salesforce Inc (US), Lowe's Companies Inc (US)

  • Wednesday: Meridian Energy Ltd (NZ), Vista Group Ltd (NZ), New Zealand Rural Land Company Ltd (NZ), Ardiden Ltd (AU), Aeon Metals Ltd (AU), Broadcom Inc (US), Costco Wholesale Corporation (US)

  • Thursday: Buxton Resources Ltd (AU), Boadicea Resources Ltd (AU), National Western Life Group Inc (US), Hibbet Inc (US)

  • Friday: Motio Ltd (AU)

Last weeks earnings:

  • Power company Mercury NZ has declared an increased interim dividend after a half-year of record Lake Taupo inflows. Net profit for the half was $230 million from revenue of $1.3 billion. Earnings before interest, tax, depreciation, amortisation and financial instruments were $451m, up from $242m in the same period a year earlier (NBR)

  • BHP Group, trading at $1.273, announced a revenue of $25.71B (-15.8% Y/Y), a net operating cash flow of US$6.8 billion and free cash flow of US$3.5 billion (SA)

  • Australia's No. 2 grocer Coles Group Ltd said first-half profit beat analysts' forecasts as reduced pandemic-related spending offset inflation, but it warned rising wages and energy bills continue to push up costs, sending its shares lower. Profit from continuing operations jumped 11.4% to A$616 million in the six months to end-December, just ahead of analyst forecasts (RT)

  • Auckland International Airport returned to profit as it benefits from pent-up demand for travel after the Covid-19 pandemic. The country’s biggest international gateway reported an underlying first-half profit of $68 million in the six months to December 31, from a loss of $11.5m last year (Stuff)

  • Kiwibank’s chief executive said the company’s $98 million net profit – reported today – would not be deemed as excessive and supported a proactive discussion on the issue with industry counterparts (NBR)

  • Campervan company Tourism Holdings returned to profit as strong demand coming out of the pandemic underpinned prices. The company reported a $25.2 million first-half profit in the six months to December 31, compared with a $4.4m loss last year. First-half revenue lifted 49% to $261m (Stuff)

  • Fonterra cuts milk price forecast as demand from China slackens. Fonterra has reduced and narrowed its 2022/23 season forecast to $8.20 - $8.80 per kg of milk solids, with a midpoint of $8.50, due to softer demand out of China (Herald)

  • TVNZ profit slumps by two-thirds, CEO looks beyond abandoned merger. TVNZ has reported a net profit of $4.8 million for the six months to December 31 (Herald)

News Summary

Monday

  • At the Cabinet meeting on Monday ministers established a $50 million fund to provide immediate assistance to businesses and farmers hurt by the impact of Cyclone Gabrielle, and agreed to give Waka Kotahi - the New Zealand Land Transport Agency - and local councils an extra $250m to help assess and fix roads (NBR)

  • Meta Platforms on Sunday announced that it is testing a monthly subscription service, called Meta Verified, which will let users verify their accounts using a government ID and get a blue badge, as it looks to help content creators grow and build communities (RT)

  • North Korea launched two more ballistic missiles off its east coast on Monday, with the powerful sister of leader Kim Jong Un saying Pyongyang's use of the Pacific as its "firing range" would depend on the behaviour of U.S. forces (RT)

Tuesday

  • Prime Minister Chris Hipkins has announced the lead ministers to coordinate recovery efforts at the local level following Cyclone Gabrielle (Stuff)

  • Economists say the Reserve Bank is likely to increase the official cash rate on Wednesday, even though many households and businesses are struggling with the impact of Cyclone Gabrielle (Stuff)

  • A magnitude 6.3 aftershock struck southern Turkey Monday, killing at least three people and injuring hundreds more, according to Turkish and Syrian officials, two weeks after a massive earthquake killed tens of thousands of people in both countries (CNN)

Wednesday

  • Adrian Orr the Reserve Bank governor of New Zealand has called for more just in case thinking (Stuff)

  • ANZ has joined banks donating money to cyclone relief charities (Stuff)

  • The only change the Australian labour government has hinted at for superannuation is a $3m cap (AFR)

Thursday

  • Air New Zealand looks to pay a dividend this year. The airline had previously said a distribution to shareholders would not be considered until FY26 (NBR)

  • The New Zealand Shareholders’ Association will vote any shares for which it holds a proxy against Pushpay’s $1.34 a share takeover (NBR)

  • An Auckland home with a swimming pool has sold at auction for almost $1 million less than it did just over a year ago (Stuff)

Friday

  • A plane has been struck by lightning on the tarmac at Auckland Airport as wild weather hits the city (1 News)

  • The US is likely to impose a limit on the chip production capabilities of Samsung Electronics Co. and SK Hynix Inc. in China, a senior American official said, as Washington works with allies to curb Beijing’s access to cutting-edge technologies (BBG)

  • After a year of death and destruction, Ukraine braces itself for a major escalation in the war (CNBC)

Weekend

  • Protest in Berlin over supplying Ukraine with weapons for war against Russia draws thousands (RT)

  • Thousands protest in Portugal to demand better living conditions as inflation makes it extremely tough to make ends meet (RT)

  • Australian Prime Minister calls on Australia's biggest banks to apply rate hikes to deposits (BBG)

Deal Flow

Investments / M&A

  • Listed property group Mirvac has taken a stake in online discount fashion retailer The DOM as a part of a strategic partnership. The DOM, which pitches itself as an Australian version of The Outnet, inked the partnership earlier in the year (AFR)

  • Electric vehicles giant Tesla has swooped on promised output from another Australian battery materials play, this time taking its big appetite to Magnis Energy Technologies. Magnis Energy, listed on the ASX with a $390 million AUD market cap, is understood to have a deal to supply Tesla with active anode material from a proposed new plant in the U.S. (AFR)

  • BGH Capital and Sixth Street’s $NZ1.34 bid for dual listed Church payments business Pushpay has won support from two proxy advisers ahead of the March 3 scheme vote, but it should be a tough fight as the target’s second-largest shareholder preps a no bid (AFR)

  • KKR’s Alludo and Potential Capital are shaping up for a final fight at ASX-listed Nitro Software, with a six-month battle due to come to a head in coming days. Alludo went unconditional on its $2.15 a share takeover offer on Tuesday morning, effectively locking in its 13 per cent stake (AFR)

  • Microsoft President Brad Smith will on Tuesday seek to convince EU antitrust regulators at a closed hearing that the U.S. software giant's $69 billion bid for "Call of Duty" maker Activision Blizzard will boost competition (RT)

  • The German Government is discussing paying more than €20B for the local unit of power grid operator TenneT holdings (BBG)

  • Japan Post is considering selling its stake in Japan Post Bank for nearly $9B (USD) (RT)

  • Coca-cola is trying to sell its Queensland coal royalties they are believed to be worth $56m (AUD) (AFR)

  • Investor sources said Pengana had made several recent offers to roll up the four Cordish Dixon funds in a series of scrip mergers into its Pengana Private Equity Trust, via deals that would create a $1 billion ASX-listed private equity champion (AFR)

  • Downer EDI Ltd has chipped off another business unit, agreeing to sell its construction services arm Australian Transport Projects (ATP) to Malaysia’s Gamuda Berhad for $220 million (AFR)

  • Chris Ellison’s Mineral Resources will stump up close to $1 billion for a share in lithium hydroxide plants in China in a rebuff to Prime Minister Anthony Albanese’s push for onshore processing of battery minerals into finished products (AFR)

  • Exchange operator Euronext (ENX.PA) has submitted a preliminary offer to buy fund distribution firm Allfunds (ALLFG.AS) for 5.5 billion euros ($5.85 billion) in a deal that would help the Paris Stock Exchange operator advance diversification (RT)

  • Newmont Corp.’s $17 billion USD push to buy Newcrest Mining Ltd. comes as miners wrestle with the reality that gold deposits are small, costly and short in life — while making the case for more diversification (BBG)

  • Exchange operator Euronext has submitted a preliminary offer to buy fund distribution firm Allfunds for 5.5 billion euros ($5.85 billion USD) in a deal that would help the Paris Stock Exchange operator advance diversification (RT)

  • British biotech firm Redx Pharma plc and U.S.-based Jounce Therapeutics Inc will merge to create a $425 million USD entity specialised in treating cancer and fibrotic disease (RT)

VC & Fundraising

  • NZX-listed retirement village operator Ryman Healthcare has completed the institutional part of its $902 million capital raise, announced last week. The capital raise was launched to help the company reset its balance sheet and pay down mounting debt, which had exceeded $3 billion (NBR)

  • Bill Qian, who oversaw venture capital investments and acquisitions at Binance Holdings Ltd., is seeking more than $100 million for a crypto VC fund (BBG)

  • Southern Innovation a Melbourne-based material testing company is trying to raise $30m (AUD) (AFR)

  • Apollo Global Management Inc. is in talks to inject $750 million to support the leveraged-finance business of Credit Suisse Group AG’s investment-banking spinoff First Boston, potentially making it one of the biggest backers of the Swiss lender’s revamp (BBG)

  • The electric-vehicle battery unit of Sunwoda Electronic Co. is considering raising as much as 4 billion yuan ($580 million) of fresh funds ahead of an initial public offering on Shanghai’s Star board market, according to people familiar with the matter (BBG)

Equity Raises

  • Star Entertainment are expected to raise capital this week and Bruce Mathieson has emerged as a backer (AFR)

  • Investors snapped up all available shares within hours of the start of AdnocGas’s $2 billion initial public offering, showing that demand for Middle Eastern stock sales remains strong (BBG)

  • Credit Suisse Group AG and Mizuho Financial Group Inc. have joined the lineup of banks working on the listing of Olam Group’s agricultural business in Singapore and Saudi Arabia, according to people with knowledge of the matter (BBG)

  • SM Prime Holdings Inc. is considering reviving an initial public offering of a real estate investment trust that could raise as much as $1 billion, according to people familiar with the matter, in what would be the largest such listing in the Philippines (BBG)

  • World’s Third-Largest IPO This Year Ends Flat in Jakarta Debut. PT Pertamina Geothermal Energy ended flat in its Jakarta trading debut after a 9.06 trillion rupiah ($596 million USD) initial public offering, Indonesia’s largest over the past year (BBG)

  • Philippines’ GIC-Backed Metro Pacific Hospital Reviving $1 Billion IPO, Sources Say. Metro Pacific Hospital Holdings Inc. is considering reviving an initial public offering in Manila, according to people with knowledge of the matter, after shelving its original plan in 2019 (BBG)

Debt Raises

  • Melbourne's EastLink tollroad is flush with $705 million in new debt funding, setting in place the capital structure that's due to be shopped to potential new shareholders in coming months (AFR)

  • Egypt started the sale of its first Islamic debt as the North African nation wrestles with a foreign-currency crunch. The three-year dollar sukuk is expected to price on Tuesday, according to a term sheet seen by Bloomberg. It was offered at an initial yield of around 11.625% (BBG)

  • Distressed Funds Blocked From Buying Debt No One Else Wants (BBG)

  • An Indian appeals court halted the insolvency proceedings against Zee Entertainment Enterprises Ltd. in a major respite for the media after a local bankruptcy court initiated the process two days back (BBG)

Job Board

New Zealand

  • Craigs Investment Partners Investment Banking Intern

    • To apply, please send an email including a cover letter, your CV and your academic transcript as attachments to [email protected] by 12pm on Friday, 3rd March 2023

  • Forsyth Barr Investment Banking Summer Internship. To apply, please email a cover letter, your CV and your university transcript by 12pm, Friday 3rd March 2023, to: [email protected](please ensure that the subject line reads ‘Investment Banking Internship’)

  • Goldman Sachs Investment Banking Intern

    • Apply here by 4th March

  • Jarden Investment Banking Intern and Grad Role

  • Macquarie Intern role

  • Murray & Co Investment Banking Intern and Grad Roles

    • Apply here for internships

    • Apply here for graduate roles

  • UBS Investment Banking Intern

Australia

  • Goldman Sachs Investment Banking Intern

    • Apply here by 18th July for Melbourne and Perth and August 1 for Sydney

  • Macquaire gradate roles

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