What matters this week
Myer's share price graph looks like a downhill ski run (black, not green), starting at the IPO price of $4.10 in late 2009, to 73 cents this week. And the bottom does not seem to be in sight. It has just released its FY-17 results (for the year ended 29-Jul-17). Sales struggled; flat on a same-store basis and down overall. Underlying profit fell 2.2% and operating profit was down 80.3%. The company has a long way to go to meet its key shareholder return target; return on funds employed of 15%. It is sitting at 8.9%.
The seemingly anti-private enterprise Labor (oops my mistake) Liberal (and National) government attempted to run interference on a commercial company again this week. AGL's CEO was marched to Canberra for a second time on Monday, but the bullying didn't work. AGL is sticking with its plan to "to assess the capacity that will be needed post 2022 to replace Liddell" (AGL, 6-Sep-17, own emphasis added). IOW: AGL is accountable to its Board and shareholders, and Turnbull et al can go jump. Assuming AGL comes up with a credible plan in the next 90 days, the government could come up looking pretty wrong-footed on this one.
We take careful note of announcements that may have a read-through for companies we are invested in, or indicate broader trends. This week the announcement of interest was from Genworth, provider of resi lenders mortgage insurance (LMI). One of the major ratings companies downgraded Genworth's credit rating, stating that "risks in the Australian housing market have risen, heightening the financial sector's sensitivity to adverse shocks". The company is well capitalised, and the more significant issue it is facing is lower demand for LMI as macro prudential measures, especially on high LVR loans, kick in.
The big political news of the week was media reforms...