ASX Materials Shares News: OneSteel Ltd (OST)

OneSteel Ltd (ASX:OST) is an Australian manufacturer of steel and finished steel products and a leading metal distributor which is listed on the Australian Stock Exchange.

OST, which was spun out of BHP in October 2000, markets products used in the construction, manufacturing, housing, mining and agricultural industries.

OneSteel announced today that it will write-down $150 million of the value of its LiteSteel Technologies business due to weak residential construction activity.

The company said that the financial statements for last six months of the year will include $90 million of the write-down.

OneSteel also announced that it will sell its Piping System business for $67 million to US based McJunkin Red Man.

Together with the sale of related property investments the company expects proceeds of approximately $100 million.

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Gold Shares Buy-Back News: St Barbara (SBM)

St Barbara (ASX:SBM) is an Australian Small Cap gold producer and explorer.

SBM’s primary assets are its Southern Cross and Leonora operations, both of which are located in Western Australia. The company purchased the Gwalia (WA) mine in 2005, which has now become its main focus.

St Barbara today announced it has established an on-market share buy-back facility to repurchase up to a maximum of 15 million of its ordinary shares.

The buy-back will be conducted over a six month period.

The company stated the buy-back facility will enable it to apply its strong balance sheet and cash position to consolidate the company’s capital base for the benefit of shareholders.

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Materials Stocks Profit News: Macmahon Holdings (MAH)

Macmahon Holdings (ASX:MAH) is an engineering contracting company operating in the mining industry. The company operates in Australia, New Zealand and Malaysia. It was formed in 1963 and listed on the Australian Stock Exchange in December 1983. The business consists of four divisions: Civil, Open Cut, Underground and Services.

Macmahon Holdings announced today that it expects full year net profit for the FY12 to be more than $55 million.

Last month MAH had forecasted full year profit of around $45 million.

CEO Nick Bowen said that additional work and greater clarity on project commencement has combined for the improved outlook for the company.

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Australian Stocks News: Billabong (BBG)

Billabong (ASX:BBG) is a major international retailer whose core business is the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods.

BBG's products are licensed and distributed in more than 100 countries, and are distributed through specialised retailers and through their own branded retail outlets.

Billabong provided the market with a trading update today, in which it announced a strategic review of its operations and capital structure after a slowdown in Christmas sales.

The company also downgraded its EBITDA guidance for the first half of FY12 to $70-$75 million compared to the previous corresponding period’s $94.6million

Billabong said reasons for the slowdown varied by region, but it believes fears of a global recession are impacting consumer confidence and spending patterns.

Billabong has been one of the shares to sell amongst recent times.

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ASX Mining Shares to Sell: Kagara (KZL)

Kagara (ASX:KZL) is a copper, zinc-lead and nickel miner, with operations in North Queensland and WA. It has four operational hubs in North Queensland – Mungana, Mt. Garnet, Balcooma and Thalanga.

KZL’s North Queensland mines supply ore to three treatment facilities in Mt. Garnet (copper and polymetallic) and Thalanga (polymetallic).

A strategic review determined KZL’s nickel operations at Lounge Lizard, WA to be non-core, and so the group has put the assets up for sale.

The company faced major operational issues in FY11, which culminated in a $32.2 million loss.

An uncertain outlook for commodities has come at a poor time for Kagara, with its recently announced capital raising highlighting potential cash problems at the company.

Although KZL recently unveiled a five year turnaround strategy, we feel there are significant near-term headwinds that are likely to keep its share price under pressure.

Operational issues

KZL’s September quarter activities report revealed a 3% fall in copper output from the June quarter. However that was balanced by a 13% rise in zinc output.

Cash costs for both commodities fell on the quarter, reflecting the company’s focus on protecting its margins in the face of declining prices.

The quarterly output result followed a hugely disappointing FY11, which was characterised by a $32.2 million loss (compared to a $3.2 million profit in FY10).

The loss came on the back of a $48.5 million write-down of KZL’s Mt. Garnet and Mungana mines (Mungana Mines: MUX is 61.9% owned by KZL).

Production over the year was impacted by a prolonged wet season.  This was accompanied by rising cash costs over the year, which came about due to lower zinc output and adverse FX movements.

Uncertain commodities outlook

Europe’s debt crisis coupled with signs of a slowdown in Chinese economic activity has clouded the outlook for KZL’s key commodities – copper and zinc.

Copper has slumped around 17% from the highs it created in July, whilst zinc has suffered similar falls amid persistent concerns about global oversupply.

Copper is usually seen as an economic barometer, and its recent weakness suggests diminishing prospects for global growth.

Although longer-term we expect stronger demand for the red metal, we see more weakness in the near-term as Europe struggles to end its debt crisis.

Cap raising highlights problems

Kagara's problems ultimately led to a $25 million capital raising (completed today), which it said was to finalise the acquisition of the Einasleigh Copper Deposit at Mt. Garnet.

Einasleigh was bought from Copper Strike (CSE) for $16 million, as part of KZL’s push to ramp up production in the next five years.

The announcement of the raising was surprising considering it came less than three months after KZL unveiled its five year turnaround strategy.

The capital raising suggests KZL is facing cash problems, with the group in a precarious position as it looks to significantly increase exploration activities in North Queensland.

Worryingly, this leaves KZL vulnerable to continued declines in copper prices and any unforseen production delays.

Outlook

KZL has been hit hard in recent times due to operational issues at its mines.  A prolonged wet season led to production delays and write-downs at Mt. Garnet and Mungana, which was reflected in a massive loss for FY11.

Although KZL is to embark on a five year turnaround strategy, it has set itself lofty exploration and production goals. The group aims to produce 30,000tpa of copper by FY15 (FY11: 22,530t) and 71,000tpa of zinc by FY14 (FY11: 40,125t).

KZL’s immediate focus, however, is on ensuring it has enough cash to cover near-term development expenses.

The recently completed capital raising is a worrying sign, and suggests KZL has little room for error in a very uncertain global economy.

A worsening of Europe’s debt crisis could see copper prices come under further selling pressure, thus impacting KZL’s margins.

As a result, we feel there is further near-term weakness in store for KZL’s share price.

KZL’s woes have seen it being a major mover on the ASX, it has plummet more than 60% in 2011.

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Financials Stocks News: National Australia Bank (NAB)

National Australia Bank (ASX:NAB) is one of Australia’s “big four” banks, with a focus on regional banking, wealth management operations, international capital markets and institutional banking business. Brands within Australia include NAB and MLC, and the group is represented in New Zealand by Bank of New Zealand. In the UK the brands are Clydesdale Bank and Yorkshire Bank.

Financials Stock NAB held its AGM today, where it stated it expects a challenging 2012 as it faces a combination of volatile markets and subdued consumer and business sentiment.

CEO Mr Cameron Clyne said the group was committed to its strategic agenda, which drove a solid performance in 2011.

Mr Clyne also flagged increasing offshore funding costs which were placing further pressure on the bank’s margins.

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ASX Blue Chip News: Westpac Banking Corporation (WBC)

Westpac Banking Corporation (ASX:WBC) is Australia’s oldest bank operating a significant banking franchise in Australia and New Zealand.  WBC is considered an ASX Blue Chip Share. The company has balanced exposures to retail, corporate and institutional sectors.

Westpac has been one of the more acquisitive banks domestically with successful takeovers of Bank of Melbourne and Challenge Bank and Trust Bank in New Zealand. More recently WBC has aggressively expanded its wealth management activities with the acquisition of Rothschild Australia Asset Management, BT Funds Management and Hastings Funds Management.

Westpac today held their AGM where it warned that the European debt crisis will continue to impact the price and possibly the availably of funding to Australia’s banking sector.

CEO Mrs Gail Kelly said the outlook for the global economic outlook remained mixed with Australia not immune to these headwinds, with growth slowing and consumer and business spending cautious.

Mrs Kelly also hinted that WBC may not pass on future interest rate cuts to borrowers in full, citing the impact of higher funding costs on interest rate margins.

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ASX Materials Stocks News: Orica Ltd (ORI)

Orica Ltd (ASX:ORI) is a leading manufacturer of industrial & specialty chemicals, agricultural chemicals & fertilisers, commercial explosives & mining chemicals, paints & other consumer products in Australasia.

Orica has four broad business groups - Mining Services, Fertilisers, Chemicals and Consumer Products. ORI is a truly multinational company, with operations in over 40 countries. The company is listed on the Australian Stock Exchange and is part of the S&P/ASX 200.

Materials stock Orica announced today that it is resuming its Ammonium Nitrate production plant at Kooragang Island, near Newcastle.

The plant and several others have been closed since August, after thousands of litters of a dilute ammonium nitrate solution leaked from a storage facility.

Orica said re-start activities at the remaining facilities, are progressing.

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Australian Stock Report Launches the Speculative Report

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ASX Energy Shares News: Whitehaven Coal Limited (WHC)

Whitehaven Coal Limited (ASX:WHC) is a coal producer in the Gunnedah Basin. The Company is engaged in the development and operation of coal mines in New South Wales. Whitehaven operates five mines in the region: Narrabri (underground), Rocglen (open cut), Sunnyside (open cut), Tarrawonga (open cut) and Werris Creek (open cut). The company is listed on the Australian Stock Exchange and is part of the S&P/ASX 200.

Whitehaven Coal and Aston Resources have reached an agreement that will create the largest strictly coal producer in Australia.

The deal, in which WHC offers 1.89 of its shares for each of Astons share, will create a company with a market value of approximately $5.1 billion.

The merger which has been billed by the companies as merger of equals has the unanimous support of both Aston’s and Whitehaven’s boards.

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ASX Stocks to Watch: Aristocrat Leisure (ALL)

Aristocrat Leisure (ASX:ALL) develops, manufactures, and distributes gaming machines and systems in Australia, New Zealand, the Americas, Asia Pacific, South Africa and Europe.

ALL is the largest gaming machine company in Australia and the world's second-largest slot machine maker.

The company has been a basket case over the past few years amid weak consumer spending and adverse FX movements, as well as industry and operational problems.

Although ALL’s 1H11 profit was down sharply on-year, certain elements of the earnings release indicate the company is better placed to leverage off a cyclical rebound in its core markets - Australia and the US.

Gambling on weak 1H11

Aristocrat Leisure reported a 1H11 net profit of $24.9 million, which was down 49.5% from 1H10.  On a normalised basis, earnings were down 32% (1H10’s profit was inflated by a one-off gain on an asset sale). An interim dividend of 2.5 cents was declared.

The profit was impacted mostly by higher net interest costs, adverse FX movements and an 8.8% fall in revenue to $310.6 million.

Sales weakened amid tough trading conditions in North America - ALL’s biggest segment.  The division’s EBIT margin also contracted 5.6 basis points due to a higher proportion of second hand sales.

However the Australian operations performed solidly, with revenue there rising 5.5% on-year to $73.4 million.

The launch of the Viridian WS cabinets was well received by customers, driving average selling prices higher and improving margins despite competitive market conditions.

Encouraging outlook

Despite a tough half, ALL confirmed FY11 net profit guidance of 10% - 20% growth on FY10’s $77.2 million.

Although the North American division struggled, there was positive momentum towards the end of the half, with average daily fees increasing due to the rollout of new game titles.

Assuming a continuation of this trend, higher selling prices could be an important driver of earnings in the second half. Also, as legacy products are cycled out, ALL’s margins could see a turnaround due to a more favourable selling mix.

The operating environment is at least showing signs of improvement, with US consumer sentiment having shot higher in recent weeks.

Although market conditions were expected to remain challenging in Australia, Aristocrat Leisure nevertheless forecast a continuation of top line momentum, along with improved selling prices and margins.

Importantly, Aristocrat Leisure’s new product rollout makes it well placed to leverage off a cyclical rebound in both countries.

Market sentiment towards the stock has improved in recent months, and we believe there is further near-term upside to come.

ALL is a defiantly a stock to watch.

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ASX Energy Stocks News: AWE Ltd

AWE Limited (ASX:AWE) is a small oil and gas explorer and producer. The majority of its operations are located in Australia and New Zealand, though the company is becoming increasingly interested in international operations.

The company’s major projects are the onshore Casino gas field (Otway Basin, SA), Cliff Head project (Perth Basin, WA), the BassGas project (VIC & TAS), and now in the Perth Shale Gas Basin. AWE is listed on the Australian Stock Exchange and is a member of the S&P/ASX 200.

AWE today agreed to sell a stake of its Bass Basin gas project to Toyota Tsusho for a cash consideration of $80 million.

The company stating that the sale will inject cash into the balance sheet, and also reduce the risk-exposure to the capital expenditure requirements for the Bass Basin project.

AWE also announced a special $0.05 fully franked cash dividend.

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Financials Shares News: Lend Lease Corporation (LLC)

Lend Lease Corporation (ASX:LLC) is an international group involved in project design, construction and maintenance, property development and property funds management.

LLC operates in over 40 countries, with a significant presence in Australia, Asia, Europe, and the USA.  Lend Lease is listed on the Australian Stock Exchange and is a member of the ASX 200.

LLC today announced the sale of its 75% interest in the Chelmsford Meadow Unit Trust for approximately A$65 million.

The sale of the asset to was to Legal & General property.

CEO & Managing Director Steve McCann, said that the proceeds will be used to develop more significant projects that are currently in the pipeline.

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Seven Group Holdings (SVW) Takeover News

Seven Group Holdings (ASX:SVW) is a diversified operating and investment group listed on the Australian Stock Exchange. The operating business encompasses WesTrac, a global top five Caterpillar dealership. It also is a minority holder in Seven West media and major shareholder National Hire.

Seven Group Holdings Ltd has today finalised its takeover of equipment hire company National Hire.

Major shareholder Elph, which was a holder of 21.9% of National Hire stock, accepted Seven’s increased offer of $3.75 per share.

SVW can now compulsorily acquire the remainder of National Hire shares.

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Australian Stocks Advice: APN News & Media Limited (APN)

APN News and Media Limited (AXS:APN) is one of Australasia’s largest and fastest-growing multi media companies. Listed on the ASX in 1992, APN publishes 23 daily and over 100 non-daily newspapers across Australia and New Zealand. Importantly, APN’s newspapers service Australia’s fastest growing region of southern Queensland and northern New South Wales.

APN News and media held an investor Conference today, where it announced expected full year net profit will be between $75 million to $77 million, which is slightly below market consensus.

The company said in a statement that trading in the second half will be better than the first half, which was impacted by a series of natural disasters in Queensland and New Zealand.

CEO Brett Chenoweth said that management have remained vigilant and have exceeded the cost reduction targets announced in April.

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Australian Gold Shares to Buy: Saracen Mineral Holdings Ltd (SAR)

Saracen Mineral Holdings Ltd (ASX:SAR) is an Australian mid-tier gold producer based in WA.

The company bought its major assets off Sons of Gwalia back in 2006 - when the latter went bankrupt – and has done well to develop the assets and move from an explorer to a producer.

SAR’s key assets are located in the South Laverton mining district, 120km North-East of famed gold mining town Kalgoorlie, in Western Australia. This includes around 200 granted tenements and applications pending spread over 2,500 square kilometres.

Since purchasing these assets, SAR has spent money exploring the tenements and developing the projects to production.

The company completed a Definitive Feasibility Study on the South Laverton gold project in December 2008 and started producing gold in early 2010.

Ramping up

Having started production in April last year, SAR has achieved strong production quite quickly and established itself as an enticing small producer.

The company produced 111,163 ounces of gold in FY11, its first full year of production, at an average cash cost of $738 an ounce.

SAR has forecast production of around 125,000 ounces in FY12 at costs of around $700-$750 an ounce. So far FY12 is off to a solid start, with the company recently releasing its September quarter Activities Statement. Production of 31,790 ounces at cash cost of $730 was right in light with guidance.

By de-watering some of its flooded pits, SAR hopes to ramp up production to over 160,000 ounces a year by 2015.  Management has proven to be conservative and reliable so far, offering some reassurance in what is a speculative sector.

Saracen Mineral Holdings has managed significant upgrades to its gold resources and reserves, presently standing at around 3,300,000oz and 880,000oz respectively.  Most of the reserves are open-pit, which allows for easier and cheaper mining.

The sizeable resources and potential underground mining pave the way for a long mine life, while the company has extensive exploration potential to upgrade this further.

The hunt for Red October

SAR’s has planned to spend $35 million on exploration activities in FY12, a sizeable budget given the size of the company.

The company recently completed a placement, raising $50.2 million and helping the company to end the September quarter with $60.3 million in net cash and no debt. A share purchase plan and subsequent placement have raised a further $15 million since.

Together with cash generated from production (almost $10 million last quarter), SAR will not need to raise significant fresh capital to fund this.

Much of SAR’s exploration efforts will be in exploring its Red October project. The company expects to have completed dewatering the pits shortly, to be followed by underground development work.

Previous drilling results have confirmed the continuity of ore body at Red October and further exploration efforts could lead to significant resource upgrades relatively quickly.

Production from Red October is expected to commence in FY12, but potential major exploration success could provide a major share catalyst before then.

Outlook

SAR only started gold production just over 18 months ago but is already generating output of around 125,000 ounces a year.

Incremental production upgrades could come in the next few years, but the significant upside potential comes from the development of its Red October operation.

While SAR offers significant exploration upside, its existing production provides extra protection, and suggests that the market could re-rate the stock and push SAR shares much higher than current levels.

SAR is a defiantly a stock to watch.

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ASX Energy Stocks News: Oil Search (OSH)

Oil Search (ASX:OSH) is an oil and gas exploration and development company that has been operating in Papua New Guinea (PNG) since 1929 and is listed on the S&P/ASX 200.

OSH now explores, develops and produces oil and gas in Papua New Guinea and Australia, not to mention Yemen, Libya, Iraq and Tunisia.

Oil Search said the large gas export venture in Papua New Guinea with Exxon Mobil has had a budget increase of US$700 million.

The company announced today that the increase was due to the impact of the high Australian dollar.

Oil Search said that it has ample liquidity to increase its equity contribution to the project.

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