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KFM Weekly Investment Update: Friday, 17 January 2014

Local Market Summary

• The Revenue from the first LNG Production will hit K1.6 to K2 billion annually until early 2020, the Government has projected. The World Bank during a briefing recommended that dividends would first be used to service loans that funded state equity holding in the LNG and then finance equity in future resource projects via the sovereign wealth fund.

• PNG Ports Corporation Limited (PNGPCL) will earn K250 million over the next 10 years by providing pilot services to PNG LNG. This was signed by PNGPCL and Esso Highlands Limited (EHL) during the week. This contract calls for PNGPCL to provide line boats, security and surveillance services to the PNG LNG project.

• The Net Tangible Asset of Kina Asset Management Ltd was K1.06 as of 31 December 2013.

• Newcrest Mining Ltd (NCM) has signed documentation with a new bank to provide a bilateral loan facility for an additional US$200 million on terms consistent with the Company’s existing bilateral loan facilities, for a period of three years (maturing in January 2017). The new facility provides Newcrest with additional Liquidity headroom, expertise and diversity, as well as extending the average debt maturity of its bilateral loan facilities. Newcrest also announced production for the December 2013 quarter of 621,125 ounces of gold and 22,603 tonnes of copper, reflecting strong production performance during the first six months of the 2014 financial year. Newcrest maintains its guidance for gold and copper production, with gold production expected to be around the top end of the guidance range (2.3 million ounces) subject to market and operating conditions.

• The ANZ Banking Group (PNG) Ltd released its Key Disclosure Statement for the financial year ended 30th September 2013. The Net Operating Profit after tax decreased to K312,978 compared to K320,405 in the previous corresponding period, total Assets was K6,125,100.00 compared to K5,681,356.00 in the previous corresponding period, Total Loans and Advances was K3,061,196.00 compared to K2,130,910 in the previous corresponding period.

• KSI was down 0.1% at 3,869 while KSI Home Index was flat for the week at 8,215.

International Market Summary

• The second largest mining company in the world, Rio Tinto Group beat its 2013 cost-cutting targets as fourth-quarter iron ore production advanced to a record as a result of increased Chinese demand of iron ore. Output climbed 7 percent to 55.5 million metric tons last quarter from 52 million tons a year earlier, London based Rio said in a statement. The market responded positively to the news. (See Chart in the PDF attachment below).

• Woodside Petroleum has secured an agreement with the government of Canada’s British Columbia province for its proposed liquefied natural gas export venture near Prince Rupert on the Pacific coast. Meanwhile on ASX, the share price closed at A$38.63 and was up 13.2% in 2013.

• Telstra announced early this week that it will sell a 70 per cent stake in its directories business Sensis to a US based private equity firm for just over $450 million. Under this deal, Telstra will retain whole ownership of the White and Yellow Pages and its voice services business.

• Bipartisan passage of a $1.1 trillion bill to finance the U.S. government through September 30 clears the way for lawmakers to focus on the next potential fiscal showdown: Raising the federal debt ceiling.

• Bank of England reported an unexpected fall in inflation rate to below the Bank’s expected 2% for Q4 2013. As reported, the surprise fall drove the country’s CPI to its lowest (1.9%) since 2009. Meanwhile, European stocks remained mostly lower on Thursday, after the release of inflation data. EURO STOXX 50 fell 0.20%, France’s CAC 40 shed 0.21%, while Germany’s DAX 30 slipped 0.13%.

• Oil (Brent) price was down 1.6% at US$105.55 and light crude also closed 1.5% lower at US$94.09 for the week.

• Gold closed 0.3% lower at US$1,243.70 for the week.

• During the week the Kina appreciated against the AUD by 1.90% to 0.4498 and USD depreciated 0.2% to USD0.39762

Click on the link below to view full report in PDF.

PDFKFM Weekly Investment Update: Friday, 17 January 2014

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