Macbank Back On The Uphill Part

Sydney Morning Herald

Friday September 28, 2007

Edited by Danny John

Having got to within cooee of a ton, the bank is back on that track after a pit stop.

NEVER write off Macquarie Bank - especially when it lobs a 40 per cent first-half profit upgrade into the market that then smoulders for a couple of weeks before it puts a fire under the shares.

Unfairly hit, perhaps, by the ramifications of the global credit crunch (which has seen the shares of fellow US investment banks also take a serious tumble), Macquarie's stock is on the way back up with another $3.53 added to its price yesterday, taking it to $83.80 by close of business.

That takes the rise over the last 13 trading days to 18 per cent, or $12.60 in all, after the stock collapsed from a high of $98-plus in May to a market low of $63.92 in the midst of the liquidity dry-up inspired by the US subprime loan crisis.

Goldman Sachs JBWere says it will be an interesting couple of days ahead for Macquarie as shares in the subprime-exposed investment banks in the US and Japan rise strongly as a result of the fact that traders now find themselves short of the very stock that they were dumping a few weeks ago.

But for those Aussie buyers who snapped up Macquarie at the beginning of this month at the $68-$69 level, it's been a profitable September.

Fortescue over $50

Australia's third-largest "miner", Fortescue Metals Group, cracked the $50-a-share mark yesterday on growing expectations of a hefty iron ore price rise next year. In terms of market value, Andrew Forrest's little company has surpassed Qantas and is now in the same league as blue-chip stocks like Leighton Holdings and Wesfarmers - even though the iron ore developer has yet to earn cracker.

Fortescue expects to begin production from its $3.7 billion Pilbara project in May, just after the new prices take effect at the start of the Japanese financial year in April. The Merrill Lynch resources analyst Vicky Binns yesterday said a 50 per cent iron ore price rise was "certainly not unrealistic" given the outlook for supply and demand.

Going to auction

There were some cranky property players in Sydney and Melbourne yesterday when they were told by CVC-PBL that the planned sale of the Channel Nine Willoughby and Richmond sites would be thrown open to a public auction.

The station's owners had wasted a number of developers' and investors' time by seeking tenders for an expression of interest campaign, only to change their minds.

Colliers International has got the job to sell the properties and will kick off with a series of newspaper ads in about three weeks.

PBL Media's Ian Law has estimated the value is more than $150 million for the combined lots. In Sydney's north, Channel Nine sites occupy about three hectares in leafy Willoughby, where the average house price starts at $1 million. In Melbourne's Bendigo Street, Richmond, PBL Media owns about one hectare of prime inner-city developable land. Frank Packer moved to Willoughby when it was considered an outer suburb of Sydney, with lots of space for the main Channel Nine studios plus a helicopter pad.

The company's new owners have told staff at Channel Nine in both states the operations will be relocating within 18 months. Property agents say it is rare that companies nowadays own property, since land and buildings are idle assets on the books. Selling the land is an easy way for private equity to raise cash.

Lots more shops

More department stores mean more shoppers mean more sales and, hopefully, more profits for Myer and David Jones. No wonder the pair are planning to roll out new suburban stores.

Queensland is the setting for several, particularly around Brisbane and on the Sunshine and Gold coasts, thanks to a population of cashed-up retirees and fashionable youngsters after a new frock or sandals.

At Wednesday's full-year profit announcement, DJs boss Mark McInnes said new stores would soon open at Indooroopilly in Brisbane, on the Sunshine Coast and at Highpoint (near Moonee Ponds) in Melbourne.

McInnes was coy about letting the cat out of the bag in relation to other new stores but the UBS retail analyst Michael Peet tips extra outlets to be announced next year at Pacific Fair on the Gold Coast and the Macquarie Centre in Sydney's north-west.

McInnes said the retailer was opening stores in sites which were previously out of bounds.

Myer's sale to private equity has made it easier to secure good stores, since the shopping centre giant Westfield has shed its loyalty to Myer because it is no longer under the wing of the Coles Myer behemoth that gave the chain more clout in negotiations.

Locations to come the way of DJs include Burwood in the inner west of Sydney and Chermside in Melbourne. Bankstown had a DJs store until July but it is at present filled with builders and is due to reopen as Myer at the end of the year or early next year.

Next month, DJs is due to leave its Eastgardens store, which will also be taken over by Myer.

Shares in DJs rose 5c yesterday to $4.93.

Update is late

CuDeco's executive chairman, Wayne McCrae, yesterday teased his shareholders with lots of pretty pictures of his company's Cloncurry site - and some decent drill hits - but there's still no sign of the long-awaited update to the resource at the Rocklands copper project.

It's also starting to look as though some investors might be disappointed by the resource statement when it finally is released. McCrae said the priority was increasing the confidence of the current inferred resource of 25 million tonnes at 2.04 per cent copper equivalent to a measured and indicated status - meaning the tonnage may or may not be upgraded.

CuDeco shares have languished between $3 and $4 since February, closing 3c higher at $3.47 yesterday. Meanwhile, shares in CopperCo, a company with a project in nearby Mt Isa, closed 8c higher at a record $1.16 yesterday after it produced the first copper from its Lady Annie mine. Lady Annie will produce 19,000 tonnes a year.

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© 2007 Sydney Morning Herald

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