As of 15 July 2024, Commonwealth Bank (CBA) shares continue to surge, puzzling analysts and fund managers alike. Despite widespread agreement that CBA is overvalued, the bank's stock has reached an all-time high of $132.50, outperforming expectations and driving the Australian market to record levels.
The unanimous bearish sentiment among institutional investors presents a unique opportunity for contrarian thinkers. With no "buy" recommendations from brokers and widespread scepticism from fund managers, CBA's persistent rally challenges conventional wisdom.
"CBA currently trades at the most expensive valuation in its history, despite offering no earnings growth for the next two years," L1 Capital warned investors recently.
The buying momentum seems to come from various sources:
Critics point to CBA's high valuation metrics:
While analysts acknowledge CBA's strong performance and market dominance, concerns about peak earnings cycle and overvaluation persist. However, the market's behaviour suggests that traditional valuation metrics may not tell the full story in this unprecedented rally.
In a significant development for Australia's renewable energy sector, Scott Farquhar's Skip Capital has announced its support for J-Power's $380 million takeover bid of Genex Power. This move substantially boosts the Japanese utility giant's chances of acquiring the ASX-listed renewable energy developer.
Kim Jackson, CEO of Skip Capital, stated:
"Genex's projects will play an important role in energy stability and security for Queensland, and will support Australia's transition to renewable energy."
Genex's portfolio includes the $777 million Kidston pumped hydro storage project in Queensland and the recently operational Bouldercombe battery in Rockhampton. These projects align with Skip Capital's focus on innovative climate and energy initiatives.
This takeover bid represents a growing trend of international investment in Australia's renewable energy sector. It follows other recent deals between Japanese firms and local energy companies, highlighting the increasing global interest in Australia's clean energy transition.
The Genex acquisition would bolster J-Power's presence in the Australian market, potentially accelerating the development of renewable energy projects across the country. With Genex's substantial portfolio of operational and planned projects, this deal could significantly impact Australia's renewable energy landscape.
In a significant shift from its previous strategy, Liontown Resources has signed its first lithium supply agreement with a Chinese customer. The deal, announced on 15 July 2024, marks a departure from the company's long-standing policy of partnering exclusively with Western offtakers.
Liontown has agreed to supply 100,000 tonnes of spodumene to Sinomine, a major Chinese critical minerals player, over a 10-month period. This short-term contract will help Liontown navigate the initial production phase at its Kathleen Valley project in Western Australia.
"We can't ignore it completely. The direction we want to take is to be an ex-China supplier of lithium, but we won't ignore the biggest market in the world," Liontown CEO Tony Ottaviano stated earlier this month.
The Sinomine agreement complements Liontown's existing long-term contracts with Tesla, LG Energy Solution, and Ford. By engaging with the Chinese market, which represents 80% of global demand, Liontown aims to achieve higher premiums during its plant's ramp-up phase.
Despite this new Chinese partnership, Liontown remains committed to compliance with the US Inflation Reduction Act, preserving its ability to supply American and South Korean customers who benefit from associated subsidies.
As Liontown progresses with its Kathleen Valley project, the company plans to commence supplying its long-term Western partners over the next 12 months. Additionally, Liontown and LG are exploring the possibility of building a refinery that would qualify for green metals incentives under US legislation.
On 15 July 2024, the Australian Securities Exchange (ASX) 200 index surpassed 8000 points for the first time, driven by significant gains in clean energy mining and healthcare sectors.
The standout performers since the ASX 200 first reached 7000 points in early 2020 include:
These companies have all achieved "10-bagger" status, with their share prices increasing more than tenfold.
Uranium miners Paladin and Boss Energy have seen extraordinary growth, with increases of 1506% and 1023% respectively. This surge is attributed to rising uranium prices and increased demand for nuclear power.
"Since 2020, there's been a [uranium] supply deficit as governments realise the best way to decarbonise is to keep nuclear power on," said Guy Keller, portfolio manager at Tribeca Investments.
In the biotech sector, Telix Pharmaceuticals and Neuren Pharmaceuticals have seen significant gains due to successful product launches and FDA approvals.
Gold miners have also performed well, with De Grey Mining leading the pack with a 2416% increase. The surge in gold prices, driven by inflation concerns, has boosted the sector's performance.
On the downside, Star Entertainment and Magellan Financial Group have been the worst performers, with declines of 87.3% and 85% respectively, due to scandals and management issues.
AirTrunk, the Asia-Pacific data centre powerhouse, is poised for a massive payday as its sale process heats up. Founded in 2015 by Robin Khuda, the company has rapidly expanded to become a major player in the region's tier 1 markets.
Initially valued at over $10 billion when the sale was announced in September, AirTrunk's worth has surged to an estimated $20 billion. This dramatic increase is fuelled by a jump in contracted annualised EBITDA, now approaching $900 million and expected to surpass $1 billion soon.
"AirTrunk's growth trajectory has exceeded all expectations, making it an incredibly attractive asset in the booming data centre market," said an industry analyst.
The sale has attracted a who's who of real estate and infrastructure investors, including:
These heavyweight contenders met with AirTrunk management last week at Goldman Sachs and Macquarie's Sydney offices, signalling the intensity of the bidding war.
The auction's second round kicked off in late June, with final bids due on 27 August. Bidders have access to comprehensive due diligence materials and a $7 billion staple debt package.
As the Asia-Pacific data centre market continues to boom, the AirTrunk sale is set to be a landmark deal in the Australian tech infrastructure landscape.
Sydney-based venture capital firm EVP has kicked off its fifth fund, aiming to raise $500 million over the next decade. The new opportunities fund, which opened last Thursday, has already secured $20 million from partners and existing investors.
The fund's unique structure as a unit trust provides flexibility, with returns to investors starting after a three-year holding period. This approach sets it apart from traditional closed venture capital partnerships.
"We think we can bridge the gap between early-stage and mature software investing," said Misha Saul, who leads the new fund.
EVP, founded in 2014, has $300 million under management and has invested in over 40 local B2B software businesses. The opportunities fund will allow EVP to capitalise on its existing portfolio while also exploring new investments.
The fund's first investment will be in unicorn start-up Deputy, with plans to follow up with investments in tax disruptor Hnry, Mutinex, and Ignition. It will compete in a similar space to Ellerston Capital's $400 million JAADE fund.
With a target gross internal rate of return exceeding 25%, and quarterly redemption options after the initial holding period, the fund offers attractive liquidity for investors. This new initiative follows EVP's record year of deployment in 2023, completing nine new investments.
As of 15 July 2024, the Australian government's proposed criteria for accessing $6.7 billion in green hydrogen subsidies have sparked heated debate among industry experts. Clean hydrogen advocates warn that these rules could be "catastrophic" for the country's clean energy export ambitions.
Critics argue that the proposed standards fall short of matching the strict criteria set by the European Union and planned in the United States. This disparity could lead to several issues:
"It would put billions of dollars of taxpayers' money into a not-particularly green product that may not meet international standards in any case," says Steve Hoy, CEO of Enosi Energy.
The proposed rules lack two crucial elements present in EU regulations:
These omissions could lead to the "cannibalisation" of existing renewable energy sources, potentially forcing green power customers to switch back to fossil fuel-based electricity.
While clean hydrogen advocates push for stricter standards, gas producers express disappointment at being excluded from the incentives. The Australian Energy Producers lobby group argues for a technology-neutral approach that includes natural gas with carbon capture.
As the debate continues, the future of Australia's green hydrogen industry hangs in the balance, with significant implications for the country's clean energy export ambitions and climate goals.
In a move that signals a potential uptick in private equity exits, Adamantem Capital has enlisted Luminis Partners to oversee the sale of New Zealand-based processed meats business Hellers. This decision comes as buyout firms face mounting pressure to return capital to investors after a two-year lull in deal activity.
Adamantem acquired Hellers in 2018 for approximately $200 million. The company has since expanded into the Australian market through strategic acquisitions, including Moira Macs in 2019 and Cannon Foods in 2021.
"We're ready to sell assets from our first fund, which launched in 2017," said Rob Koczkar, Adamantem's co-founder and managing director.
This sale attempt follows a previous unsuccessful effort in 2021 when Credit Suisse was reportedly engaged to explore sale or float options for Hellers, then valued at over $500 million.
Investment bankers are optimistic about the second half of 2024, predicting a surge in private equity-backed mergers and acquisitions. With many firms holding assets beyond the typical 5-7 year timeframe, pressure to deliver returns could spark increased buyout activity.
As the private equity landscape evolves, all eyes are on Adamantem's move with Hellers, which could set the tone for future exits in the Australian and New Zealand markets.
On 15 July 2024, South Australia's newly merged Adelaide University unveiled its branding to 3,000 staff, marking a significant milestone in the Australian education sector. The institution, born from the fusion of the University of Adelaide and the University of South Australia, is set to welcome its first cohort in 2026.
The merger aims to propel Adelaide University into the global top 100, enhancing its appeal to high-quality international students. With an expected enrolment of 70,000 students, it's poised to become Australia's largest recruiter of domestic students.
"We are not beholden to international students for the success of this institution," said Professor Peter Hoj, former Vice-Chancellor of the University of Adelaide.
However, the university faces headwinds from the federal government's migration reforms. The plan to halve net migration to 260,000 next financial year poses significant challenges for the education sector, Australia's largest export industry in several states.
Stricter visa conditions and high refusal rates are already impacting university planning and budgets. Despite this, Adelaide University has modelled a 3% annual growth in international student numbers.
The new university plans to offer an innovative curriculum allowing students to customise their learning through microcredentials. South Australian Premier Peter Malinauskas has voiced concerns about reduced international student numbers, highlighting potential threats to the state's universities, research sector, and AUKUS partnership.
As Adelaide University embarks on this new chapter, it represents both the potential and challenges facing Australia's higher education sector in a changing global landscape.
The Thomas family will retain ownership of The Oaks Hotel, one of Sydney's most beloved pubs, after a record-breaking $175 million sale fell through. Located in affluent Neutral Bay, the sprawling venue at 118 Military Road has been a local favourite since 1938.
Despite being on the market for nearly two years, the mystery buyer - a local family - was unable to secure funding. Andrew Thomas, the hotel's general manager, confirmed they've taken the pub off the market and are in it for the "long haul".
"We have been here since 1975 and are happy to retain it," Mr Thomas told The Australian Financial Review. "We're undertaking a refresh and upgrade of some areas ahead of spring and summer."
The Oaks is reportedly trading well, outperforming last year's figures. Thomas noted, "When things get tough with the economy, people tighten their strings and go back to the pub, which offers a bit of value."
Famous for its beer garden dominated by an 80-year-old English oak tree, The Oaks stands on a prime 2188-square-metre corner site. The Thomas family, headed by 91-year-old David "Taffy" Thomas, acquired the leasehold in 1975 for just $250,000 and later purchased the freehold for nearly $12 million in 1990.
The pub's extensive renovations in 2019 include Taffy's Sports Bar, cocktail bar and grill Alala's, the iconic beer garden, a gaming room with 30 poker machines, function spaces, and a bottle shop.
As The Oaks continues under Thomas family ownership, it remains a testament to Sydney's rich pub culture and a beloved local institution.