By Byron Kaye
SYDNEY (Reuters) – Australia’s biggest industrial property company Goodman Group bumped up its profit forecast on Tuesday, citing supply chain blockages and a scarcity of warehouse space around the world, driving its shares to a record.
The upgrade shows a company benefitting from a squeeze in shipping capacity that has pushed up costs for manufacturers and retailers globally, as well as prompting them to hold on to supplies, enlarging storage requirements.
Goodman, which is building a mega-warehouse for Amazon.com Inc (NASDAQ:) in Sydney’s outskirts, said it now expects to grow operating earnings per share 15% in the 2022 financial year, up from a forecast of 10% growth it gave in August.
“No one’s giving up warehouse space,” CEO Greg Goodman said in an interview.
“If you can get stock, you’re sitting on it and filling your warehouses out, whatever product lines you’re in,” added Goodman, who holds 2% of Australia’s 15th-largest company by market value.
Goodman shares rose 7% in afternoon trading, their biggest one-day gain since initial pandemic lockdowns in early 2020 drove analysts to upgrade their forecasts, touching their highest intraday level of A$23.95 before closing at A$23.49, up 5.6%. The broader market was down 0.3%.
“Increased demand, intensification, scale and duration of developments provide strong medium to long term earnings visibility and (assets under management) growth,” said Jefferies (NYSE:) analysts in a client note, which called Goodman’s update “ahead of our expectations”.
The company, which has 153 properties in Australia and a presence in 14 countries, expects total assets under management to grow to A$70 billion ($52.65 billion) by June 2022, from A$62 billion in September with around A$12.7 billion of development projects in progress.
CEO Goodman said he expected the benefit from supply chain stoppages to last after the stoppages were resolved since customers wanted to adapt to long-term changes like population growth in cities, demand for shorter freight journeys to cut carbon emissions, and takeup of electric delivery vehicles.
“It was happening pre-COVID; all COVID did was put a bit of an accelerator under it, and customers that were thinking about it longer term are now going, ‘I’ve got to think about it a bit shorter term’,” he said.
($1 = 1.3296 Australian dollars)
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Morgan Stanley: bear market rally to continue
One of Wall Street’s best-known bears, Michael Wilson, thinks the S&P 500 will rise another 7% before turning down, so the bear market rally will continue for now, writes Market Watch.
After the Dow Jones, S&P 500 and Nasdaq Composite joined their strongest weekly gains since at least May last Friday, Wilson, who is chief strategist and head of U.S. equity markets at Morgan Stanley (NYSE:MS), told clients that there could be another 5% to 7% before the downward trajectory of U.S. stocks resumes during the latest bear market recovery.
Wilson has held a bearish view of the stock market for about 2 years and correctly predicted a sell-off this year.
Wilson explained in a research note sent out to clients on Monday that a pullback in the 38-50% drop in the stock market this year “would not seem like something unnatural, not consistent with the previous bear market rally.”
While growth concerns have triggered a sell-off in commodities and lowered inflation expectations, the fact that the U.S. economy is already slowing and heading toward recession means that any market rally is likely to be short-lived, and U.S. stocks are likely to eventually fall.
Wilson mentioned in the note that the bear market is not over yet, although it may appear otherwise in the next few weeks as the market takes the rate cut as a sign that the Fed can still manage a “soft landing” and prevent a meaningful revision to earnings forecasts.
U.S. stocks rose last week as investors now hope the slowing economy and falling commodity prices may inspire the Fed to raise interest rates less sharply. Federal funds futures, a derivative used by investors to bet on the pace of the Fed’s monetary policy changes, estimate with a high probability that the Fed will be forced to start cutting interest rates again as soon as next summer.
They also consider the lower peak in the federal funds rate: it will peak around 3.5% at the end of 2022 instead of 3.75% just a couple of weeks ago. Wilson also pointed out the drop in Treasury yields: the 10-year Treasury bond yield went from 3.230% to a low of 3.07% on Friday before rebonding again on Monday.
Wilson expects the S&P 500 index to fall to around 3,400 points if the U.S. Federal Reserve manages to get a “soft landing” for the economy — which Fed Chairman Jerome Powell said last week would be “a very difficult thing to do.”
Wilson expects that if the U.S. economy plunges into recession, the S&P 500 index will fall to around 3,000 points. In any case, Wilson believes that U.S. stocks are still highly valued because the risk premium — that is, the measure of compensation that investors receive for the extra risk of owning stocks instead of bonds — remains about 300 basis points higher than the 10-year Treasury bond yield, which is considered a “risk-free rate.”
Easing chip shortages to help Volkswagen in H2 – CEO
© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo
BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.
“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.
This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.
“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.
Reliance Chairman Mukesh Ambani steps down as director of telecom arm
© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas
BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.
Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.
India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.
Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.
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