MARKET TALK-AU-EQ: Salomon Impressed By Telstra
Tuesday, March 6 9:37 AM SGT
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1235 [Dow Jones] STOCK CALL: Salomon Smith Barney says Telstra (TLS) has strong balance sheet, with only SingTel and Worldcom outside Australia having lower leverage levels. Broker says nation's biggest telco has "room to move both in terms of the ability to make value-enhancing acquisitions and the adoption of new products and technology. Assuming a target debt/debt-plus-equity ratio of 40%, we estimate that Telstra has some A$33 billion of potential debt capacity in its balance sheet over the next 4 years." (IGP)
1221 [Dow Jones] All Ords despite in negative territory holds support across yesterday's low of 3274.8. Gains in diversified resources and Telstra (TLS) minimize impact of News Corp (NCP) weakness and profit-taking among banks and financials. Market overall remains range-bound as investors await RBA announcement tomorrow, with good chance official rates will be cut by 25 bps. Provided support holds, investors can look to higher levels in the short term toward 3300, followed by 3312; under support and downside will be looked for toward 3250.(GXT)
1217 [Dow Jones] MIM (MIM) rises 1.7% or 2 cents to A$1.17 following 1.6% jump in LME copper prices overnight to A$1,822 a ton following comment from ECB's Duisenberg that economic growth in 2001 and 2002 will be close to 3% and US slowdown is having minimal impact on the Euro zone. Maintains outlook that demand for commodities won't weaken as much as first thought. MIM approaching 6-month highs of A$1.21, with a break of that targeting 13-month highs of A$1.30. (GXT)
1150 [Dow Jones] STOCK CALL: Salomon Smith Barney analyst Hamish Macalister says strategic outlook for Australian equities market remains attractive, with domestic growth pick-up accompanied by low inflation and low rates supported by mid-year US growth turnaround. "We maintain a year-end All Ordinaries target of 3500," he says. All Ords latest 3281.8, down 6.6 points or 0.2%. (IGP)
1155 [Dow Jones] OneTel (ONE) climbs 3.6% or 1.5 cents to 43.5 cents on volume of 1.1 million shares following media reports that Telecom NZ (TEL) is interested in acquiring its mobile phone network; no proposal yet put to board. NZ Telecom, which is at long odds to acquire Optus (CWO), could look for a smaller carrier to expand its current network if Optus bid fails. Any bid for One.Tel would require the sell-out of Murdoch and Packer, who both have large holdings. (GXT)
1153 [Dow Jones] STOCK CALL: Deutsche Bank downgrades Orbital Engine (OEC) to Marketperform from Strong Buy after 1H loss was A$13 million wider than expected at A$16 million. "While we remain positive on the long-term prospects for the stock to gain from legislated global reductions in engine emissions, the lack of transparency in short-term earnings and further uncertainty about the ownership structure of Synerject will likely impact on sentiment in the short term," it says. Orbital now up 3 cents or 2.0% at A$1.55. (HGU)
1146 [Dow Jones] STOCK CALL: Salomon Smith Barney says Air NZ's (AIZ) 1H result was the worst in a decade, with net profit down 70% and bleak 2H outlook; recommends lightening holdings; says low AUD, NZD are key concerns, as are high fuel prices, while further yield pressure expected in Australia. "Ansett's ill-conceived strategy to pursue frequency over capacity has enabled Virgin and Impulse to gain a material foothold in the Australian domestic market. Ansett's capacity share has fallen and the need for immediate action to address this imbalance will only further deteriorate yields." (IGP)
1130 [Dow Jones] STOCK CALL: Salomon Smith Barney says investors will benefit from switching out of Melbourne-based Tabcorp (TAH) and into Sydney's TAB (TAB). "Following the Victorian government's shock statement...concerning further taxing of gaming machines, we see Tabcorp's earnings growth out of Victoria gaming as increasingly at risk from a government who is seeking to reduce the monopoly rents earned from gaming and return those rents to the public purse through increased taxes and charges over time," broker says. Tabcorp up 2 cents to A$9.60 while TAB steady at A$3.35.(IGP)
1137 [Dow Jones] Orica (ORI) sees high institutional volume today, with a total 5.6 million changing hands in lines of 1 million up to 1.5 million. D&D Tolhurst and Merrill Lynch both crossed 1 million, followed by UBS Warburg with 3.6 million shares, all at A$4.85. BT Financial Group ceases to be substantial shareholder and is likely to be behind some of the selling as its exposure drops. Shares rise 5 cents or 1.0% to A$4.90 and are 3rd-highest on ASX actives list. (GXT)
1130 [Dow Jones] Japanese investors buying WMC (WMC) today, says institutional dealer Tony Bonello at Lodge Partners, adding that no specific reason for unusual support in stock. But notes that WMC has lagged BHP (BHP) and Rio (RIO) recently, along with recent talk of WMC takeover by either BHP or UK's Billiton. "Usually, where there is smoke there is fire," he says. (IGP) -0- 06/03/01 01-36G
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