Leighton Surges, NAB Hikes Rates

123jump.com Staff
25 Mar, 2008
New York City

Australian stocks surged as markets in Asia rallied. ASX 200 gained 3.7% or 190.0 to 5,318.40. The sharp rise in stocks in the U.S. on better than expected home sales in February and revised bid for JP Morgan lifted the sentiment in the region. NAB increased its home loan rate by 0.09% to 9.36%. Santos chief executive resigned. Leighton surged 9% after it won a $795 million contract to build pipeline for ONGC near Mumbai, India.

[R]3:00AM New York, 7:00PM Sydney- ASX 200 index rose 3.7% as financial stock led the gainers.[/R]

Market Sentiments

ASX 200 index gained 3.7% or 190.9 to close at 5,318.40.

The preliminary market turnover on the Sydney stock exchange was 1.51 billion worth $6.95 billion, with 730 stocks trading higher, 479 trading lower and 320 unchanged. Centro Properties was the most active stock with 42 million shares trading volume worth $10.9 million.

Market Driver

National Australia Bank today announced an increase of 0.09% to its variable home loan interest rate to 9.36%. The new rate takes effect from tomorrow morning.

NAB''s latest rate rise comes almost three weeks after it became the first of the big banks to pass on the increase in the official cash rate imposed by the Reserve Bank of Australia this month.

In the first week of March the RBA lifted the official rate by 25 basis points to 7.25%. NAB then lifted its standard variable rate by 29 basis points but warned it may have to lift rates again. Its share gained 5.1%.

Commonwealth Bank gained 8% after saying it expected to make a pre-tax gain of about $355 million from the sale of its holding in Visa, which listed on the New York Stock Exchange last week.

Australia''s fifth largest bank, St George added 6.5% after it said it stood to make a pre-tax profit of about $75 million on the shares it received in the Visa IPO.

Gainers and losers

Of the ASX 200 index stocks, Allco Finance Group led the gainers with a rise of 102.4% followed by increases in Bendigo Bank Ltd of 19.4%, in Challenger Finance of 18%, in Babcock & Brown of 17.7%, and in Macquarie Group of 11.7%.

Of the ASX 200 index stocks, Centro Properties led the decliners with a fall of 14.5% followed by losses in Centro Retail GR of 9.1%, in Spotless Group of 7.9%, in Corp Express Aus of 5.5% and in Macquarie DDR TR of 4.4%.

Santos'' boss resigns

Santos today announced the resignation of its Managing Director and Chief Executive, John Ellice-Flint effective immediately. The company said a statement that he would however continue with the Company until June 30, 2008 as a consultant. Executive Vice President David Knox was appointed Acting Chief Executive Officer.

Since his appointment in 2000, Ellice-Flint has led Santos through a period of significant growth and development. His achievements include taking the Company from a domestic onshore oil and gas producer to become a leading regional oil and gas field operator as well as a producer of LNG and CSG.

Ellice-Flint has also been responsible for key projects such as the development of the Mutineer and Exeter offshore oil fields, the Bayu Undan LNG field, and recent initiatives such as the Gladstone LNG project, the Moomba Carbon Storage project and the agreement of the South Australian Government to repeal the 15% shareholding cap.

""John has driven the transformation of Santos'' reserves position and operations to underwrite a very promising long term growth outlook. He has also brought about a remarkable cultural change throughout the Company to make it far more innovative and regionally focused,"" Chairman Gerlach said.

Santos stock edged 0.5%.

Sigma shares rises on predictions of rise on annual profit

Australia''s biggest contract drugs maker, Sigma Pharmaceutical Ltd''s shares rose 3.7%, after the company announced that its annual profit would increase for the first time in three years.

Sigma, which announced its full year results for the year ending January 31 2008, forecast that net income of $88 million in the year ending Jan. 31, 2009 representing a 14% jump.

""The improved operating performance achieved in the second half 2007/08 is expected to continue in 2008/09, with EBITDA and EBIT expected to grow from 16% to 19% and from 14% to 18% respectively.

""The acquisition of Orphan Australia for $130 million, full-year impact of the $151.2 million share buyback, and higher costs of borrowing for all market participants will lead to significantly higher interest costs for 2008/09,"" said chief executive de Alwis.

The company said the growth would be underpinned by increased sales of generic medicines. Sigma released eight generic drugs under the Arrow brand last year and would start selling 20 more in 2008.

Sigma bought Arrow Pharmaceuticals in December 2005, gaining access to one-third of the $1.5 billion market for generic drugs in Australia, where demand for the lower priced medicines is growing at more than 12% a year.

Sigma announced for the full year ending 31 January 2008 profit after tax of $90.2 million on sales rise of 11% to $2.97 billion.

Allco''s share boosted by repayment extensions

Australian asset manager, Allco Finance Group Ltd''s share rose the most today after closing at 102.4% after two of its funds were granted more time to repay debts.

Bankers for Allco''s Rubicon Japan Trust and Allco Commercial Real Estate Investment Trust, agreed to extend maturity dates for the two entity''s loans and currency hedging arrangements.

Rubicon Japan today said that National Australia Bank Ltd had agreed to extend the maturity date for a loan and currency-hedging arrangements by a year to March 31 next year.

Allco Commercial said on March 20 it received approval to extend the maturity date for S$550 million of its bonds, two days after its credit rating was cut by Moody''s Investors Service.

Allco''s share jumped to 42.5 Australian cents at the close of trading after losing 93% of its value in the year so far.

Allco is trying to refinance $250 million of loans due May 1 by negotiating with its creditors while lenders are reviewing its ability to repay a further $900 million of debt.

Lihir bid for Equigold under threat from possible rival bids

Analysts have hinted that Lihir Gold Ltd could face stiff challenge for its $1 billion bid to buy Equigold NL.

According to a report compiled Credit Suisse Group, counter bids could come from the world''s second-largest gold producer, Newmont Mining Corp, Randgold Resources Ltd and AngloGold Ashanti Limited.

Randgold could step-up with a bid as it already had interests in the Ivory Coast and may want to strengthen it influence in West Africa. Equigold has projects in Australia and Ivory Coast. Equigold fell 0.9%.

Lihir offered 33 of its shares in exchange of 25 Equigold shares on March 20 to boost output by a quarter next year and increase gold reserves about 10%.

Leighton Holdings wins $795 million contract in India

Australia''s biggest construction company, Leighton Holdings Ltd has won a $795 million contract to build an oil and gas pipeline in India.
The contract, which starts in November involves the installation of more than 200 km of fixed and flexible pipelines for India''s Oil and Natural Gas Corporation in the Mumbai High field, about 80 km off the coast of Mumbai.

Leighton said in a statement today that work would be completed over the next three years between November and May when the weather is suitable. Stage one would be completed in May 2009, stage two in 2010, and stage three in 2011.

ONGC, India''s largest oil and gas producer, awarded the contract to Leighton International.

""The project pushes our work in hand to a record US$3.2 billion. We expect to be able to further increase this figure over the next few months, with the conversion of a number of good prospects in the Arabian Gulf,"" said managing director David Savage.

The company holds the largest share of hydrocarbon acreages in India and contributes over 78% of Indian''s oil and gas production.

Leighton shares gained 8.8%.