Investment Matters

What matters this week: Cyclone Debbie, Myer, Fairfax and more

Cyclone Debbie has been the main news of the week.  From a listed investment perspective, the main impact is on the mines of the Bowen Basin.  Much of their associated infrastructure (e.g. ports and rail) is shut down as we go to print.  The Bowen is a large met coal (used for making steel) area.  BHP Billiton, New Hope Coal, Stanmore Coal, and to a lesser extent Rio Tinto are some of the companies with mines in the area, with 400mm+ of rainfall associated with Debbie in parts.  The financial impact is tbd - lower production volumes will be offset to a unknown degree (currently) by factors such as stockpiles and potentially higher prices.

Renowned retailer Solomon Lew's Premier Investments took a stake in Myer, which has been the buzz on the market this week.  Premier Investments' announcement identified intent as a 'strategic investment' (with no current intention to launch a takeover).  Who knows what a 'strategic investment' really means.  His >10% holding certainly gives him a seat at the table should any takeover offer for Myer materialise.  Cynically, maybe it is a way to increase distribution of his Premier Investments brands such as Portmans, Smiggle and Peter Alexander.  With Myer's share price under pressure in recent times, this development resulted in a 14.8% bounce this week.

Retailers such as Myer aren't the only ones facing upheaval because of internet-driven, structural change (in retail, Amazon is of particular note at the moment).  Print media, such as Fairfax Media, is also facing structural decline (it does also own assets such as domain.com.au, a JV in Stan, and some radio).  And the press have been having a field day in relation to private equity (TPG) interest in taking the company over - preparing a $1.2 billion debt package (who really knows what the purpose is for, if one has been put together at all), and amassing an ownership stake (which would be pretty small as nothing over 5% has been declared to the market), with a bid expected to eventuate early next week.  Most of these press reports have been stories in the AFR, owned by guess who.  Read into this what you will...  The Australian came with a story that its research indicated no imminent plans for a takeover, and TPG has not acquired any shares in Fairfax.  Hhhmmmmm.

And finally, Bank of Queensland released its half year results to 28-Feb-17.  They weren't great results - but the company has indicated that lending inquiries indicate a return to growth in H2.  Additionally, fiscal health measures such as capital and bad debts looked okay.