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BHP Billiton Limited (BHP)

Open Access Genie Escapes

Fortescue Metals gained a significant victory in its bid to gain access to the Pilbara railways of BHP and RIO. Last week's decision by the High Court upheld an earlier decision that railways are not part of the production process and should not be exempt from third party access. Fortescue specifically targeted BHP's Mt Newman line, but the precedent is expected to impact the whole Pilbara rail system, including RIO's lines. Fortescue now only needs the Australian Competition Tribunal to rule in its favour to force BHP to negotiate access. Treasurer Wayne Swan is to consider separate applications by Fortescue to access the Goldsworthy, Robe River and Hamersley lines of the big two. The National Competition Council already released a draft ruling for BHP and RIO to negotiate access on commercial terms.
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Telstra Corporation Limited (TLS)

Opportunity knocks!

The TLS share price has touched a 52-week low in a skittish market. Following the banning of all forms of new short selling for at least 30 days by ASIC we understand some hedge funds used defensive stocks such as TLS and Woolworths to raise cash to pay for short covering and/or margin calls on short positions.
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Suncorp- Metway Limited (SUN)

Could SUN have to downgrade its dividend guidance?

SUN reported FY08 NPAT of $530.8m, down 50%. EPS decreased 64% to 57.1c. The final dividend was steady at 55.0c fully franked. SUN is guiding a flat FY09 dividend of 107.c.
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Origin Energy Limited (ORG)

A$9.6bn of Manna from Heaven

In recent ORG reports we noted the company would need to demonstrate to shareholders the inherent value of its coal seam gas (CSG) assets to justify the board's rejection of BG's $15.70ps takeover offer. The emphatic way in which the ConocoPhillips deal achieves this should surprise even the most ardent coal seam gas proponent. The numbers are colossal, A$9.6 billion for the joy of building and operating up to four 3.5Mtpa LNG trains. CEO Grant King will be feeling supremely confident in the independent future of ORG. Foreign Investment Review Board approval is required but BG can effectively walk away now. ConocoPhillips will acquire 50% of all ORG's coal seam gas assets, including those already dedicated under existing contracts. And despite a cooling in the energy and commodities space generally, at face value, the multiple implied betters the "white hot" figure PETRONAS gifted Santos in July. That deal sold 538PJ of 2P CSG reserves at A$4.91/GJ or 1,600PJ of 3P reserves for A$1.65/GJ. The Conoco deal sells 2,375PJ of 2P at a lesser A$4.04/GJ but 5,070PJ of 3P at an improved $1.88/GJ.
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Macquarie Group Limited (MQG)

Not dead yet!

Last week the 'Macquarie Model' was effectively given the last rites, well almost. Some major broking houses, hedge funds and commentators pronounced the passing with recommendations of short and stay short. Based on asset recycling - asset acquisition, re-packaging and on sale to listed or unlisted specialist funds managed by Macquarie - the model requires the combination of cheap and abundant funds coupled with asset inflation. All 3 requirements no longer exist - at least for the next year or so - following the fall out from the US sub-prime debacle. In addition leverage was progressively added as conditions in the global financial and credit markets changed.
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